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BAC Passes Stress Test According to WSJ!


Parsad

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Does anyone know off hand what Berkowitz has for an average cost in BOA?

 

Thanks Dazel

 

As of July his average price was around $15 with the most expensive shares being around $18. He bought in the sell off as low as $6.06 according to gurufocus as of 9-30-2011. Could of been purchases after that as well.

 

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ok  I have a fairly large position in BAC now but is this one of those back the truck up and load up for a big windfall. SD was my horse but I am thinkng of placing a bet on two.

 

Back up the truck was several months ago, when a handful of us were backing up the truck.  Now it's stay the course on BAC and WFC, and look for other ideas for capital.  Cheers!

 

You could do worse than putting money into BAC or WFC at current prices.  Actually, it sort of

depends on the rate of return you're expecting from investing and how concentrated you already are in those names.

 

I likely will not be adding to those particular names. 

 

 

 

I was still buying options in and around 8.  I think this will sprint to TBV now.  I bet its past $9 tomorrow, and $10 by weeks end.  But then,  My powers of prediction aren't as good since I lost my tin foil hat.

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ok  I have a fairly large position in BAC now but is this one of those back the truck up and load up for a big windfall. SD was my horse but I am thinkng of placing a bet on two.

 

Back up the truck was several months ago, when a handful of us were backing up the truck.  Now it's stay the course on BAC and WFC, and look for other ideas for capital.  Cheers!

 

You could do worse than putting money into BAC or WFC at current prices.  Actually, it sort of

depends on the rate of return you're expecting from investing and how concentrated you already are in those names.

 

I likely will not be adding to those particular names. 

 

 

 

I was still buying options in and around 8.  I think this will sprint to TBV now.  I bet its past $9 tomorrow, and $10 by weeks end.  But then,  My powers of prediction aren't as good since I lost my tin foil hat.

 

I hope you're right.  Not sure what would hold it back from hitting $10, but markets don't like any sort of uncertainty.  I'm thinking tangible book by Christmas because of the litigation overhang, but I sure hope you are right instead.  Cheers!

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ok  I have a fairly large position in BAC now but is this one of those back the truck up and load up for a big windfall. SD was my horse but I am thinkng of placing a bet on two.

 

Back up the truck was several months ago, when a handful of us were backing up the truck.  Now it's stay the course on BAC and WFC, and look for other ideas for capital.  Cheers!

 

You could do worse than putting money into BAC or WFC at current prices.  Actually, it sort of

depends on the rate of return you're expecting from investing and how concentrated you already are in those names.

 

I likely will not be adding to those particular names. 

 

 

 

I was still buying options in and around 8.  I think this will sprint to TBV now.  I bet its past $9 tomorrow, and $10 by weeks end.  But then,  My powers of prediction aren't as good since I lost my tin foil hat.

 

I had been buying options in and around 8 when BAC was on its way down.  So I have a pretty large position.

 

You know, if any of my other positions were to work out and I were to find myself with a wad of cash, I could very well be putting money into BAC at prices above $8.  Hell, even at $10, BAC is cheap, IMO.

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Guest Dazel

 

 

Thanks for the Berkowitz responses...I knew he was buying awhile ago but did not know he was buying in the high teens...

 

Here some cheap advise for those that are caught up emotionally in the BAC roller coaster (I have not seen anything like it since the Fairfax days!)...well done on all the homework you guys have done.

 

The market cap is $91b.....forget $6, $8, $10, $15....before the crisis Boa, Merrrill, Cointrywide combined had a market cap of over $250b...boa alone was $200b.

 

Royal bank of Canada market cap $85b....

 

Don't forget the numbers that count when getting emotional...disclosure our average cost is 8... We are just getting started...For those that were here for Fairfax remember buying in the $80's but for those that bought in the $120's did real well on the way to $400!

 

That was a $1b market cap move to $8b for those who were counting...dilution obviously had a little effect...we were okay with it!

 

Dazel

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ok  I have a fairly large position in BAC now but is this one of those back the truck up and load up for a big windfall. SD was my horse but I am thinkng of placing a bet on two.

 

Back up the truck was several months ago, when a handful of us were backing up the truck.  Now it's stay the course on BAC and WFC, and look for other ideas for capital.  Cheers!

 

You could do worse than putting money into BAC or WFC at current prices.  Actually, it sort of

depends on the rate of return you're expecting from investing and how concentrated you already are in those names.

 

I likely will not be adding to those particular names. 

 

 

 

I was still buying options in and around 8.  I think this will sprint to TBV now.  I bet its past $9 tomorrow, and $10 by weeks end.  But then,  My powers of prediction aren't as good since I lost my tin foil hat.

 

I had been buying options in and around 8 when BAC was on its way down.  So I have a pretty large position.

 

You know, if any of my other positions were to work out and I were to find myself with a wad of cash, I could very well be putting money into BAC at prices above $8.  Hell, even at $10, BAC is cheap, IMO.

 

 

well I didn't back the truck up but I did lower the tail gate and added more - will average up over time and lessen SD as I do

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The market cap is $91b.....forget $6, $8, $10, $15....before the crisis Boa, Merrrill, Cointrywide combined had a market cap of over $250b...boa alone was $200b.

 

Royal bank of Canada market cap $85b....

Dazel

 

Itau: 97B 2.4x BV

Bradesco: 70B 2.2x BV

 

If Banamex were traded publicly, and not as part of Citigroup, it would be probably worth around 30B. The large American banks valuations do not make any sense. They are all cheap and are probably among the safest banks in the world.

 

That was a very good comment and I've been adding too.

 

 

 

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Thanks for the Berkowitz responses...I knew he was buying awhile ago but did not know he was buying in the high teens...

 

Here some cheap advise for those that are caught up emotionally in the BAC roller coaster (I have not seen anything like it since the Fairfax days!)...well done on all the homework you guys have done.

 

The market cap is $91b.....forget $6, $8, $10, $15....before the crisis Boa, Merrrill, Cointrywide combined had a market cap of over $250b...boa alone was $200b.

 

Royal bank of Canada market cap $85b....

 

Don't forget the numbers that count when getting emotional...disclosure our average cost is 8... We are just getting started...For those that were here for Fairfax remember buying in the $80's but for those that bought in the $120's did real well on the way to $400!

 

That was a $1b market cap move to $8b for those who were counting...dilution obviously had a little effect...we were okay with it!

 

Dazel

 

We're not adding.  We like what we have and the price we paid.  We're up 70% on the equity and our warrants are up 15% now too.  We did back up the truck, so it is a big position.  We really thought this would be a four-bagger over 5 years, and I still think it's going to hit $25-30 in less than five years barring any significant broad market correction.  Cheers!

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Thanks for the Berkowitz responses...I knew he was buying awhile ago but did not know he was buying in the high teens...

 

Here some cheap advise for those that are caught up emotionally in the BAC roller coaster (I have not seen anything like it since the Fairfax days!)...well done on all the homework you guys have done.

 

The market cap is $91b.....forget $6, $8, $10, $15....before the crisis Boa, Merrrill, Cointrywide combined had a market cap of over $250b...boa alone was $200b.

 

Royal bank of Canada market cap $85b....

 

Don't forget the numbers that count when getting emotional...disclosure our average cost is 8... We are just getting started...For those that were here for Fairfax remember buying in the $80's but for those that bought in the $120's did real well on the way to $400!

 

That was a $1b market cap move to $8b for those who were counting...dilution obviously had a little effect...we were okay with it!

 

Dazel

 

We're not adding.  We like what we have and the price we paid.  We're up 70% on the equity and our warrants are up 15% now too.  We did back up the truck, so it is a big position.  We really thought this would be a four-bagger over 5 years, and I still think it's going to hit $25-30 in less than five years barring any significant broad market correction.  Cheers!

 

The last time you mentioned it, I think you said it was 5%--did you up from there?

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Thanks for the Berkowitz responses...I knew he was buying awhile ago but did not know he was buying in the high teens...

 

Here some cheap advise for those that are caught up emotionally in the BAC roller coaster (I have not seen anything like it since the Fairfax days!)...well done on all the homework you guys have done.

 

The market cap is $91b.....forget $6, $8, $10, $15....before the crisis Boa, Merrrill, Cointrywide combined had a market cap of over $250b...boa alone was $200b.

 

Royal bank of Canada market cap $85b....

 

Don't forget the numbers that count when getting emotional...disclosure our average cost is 8... We are just getting started...For those that were here for Fairfax remember buying in the $80's but for those that bought in the $120's did real well on the way to $400!

 

That was a $1b market cap move to $8b for those who were counting...dilution obviously had a little effect...we were okay with it!

 

Dazel

 

We're not adding.  We like what we have and the price we paid.  We're up 70% on the equity and our warrants are up 15% now too.  We did back up the truck, so it is a big position.  We really thought this would be a four-bagger over 5 years, and I still think it's going to hit $25-30 in less than five years barring any significant broad market correction.  Cheers!

 

The last time you mentioned it, I think you said it was 5%--did you up from there?

 

No, we had 5% in equity and 5% in the A warrants.  So that has grown to about 14% of the fund now.  Not to mention we had about 7% in WFC and that has grown to almost 10%.  I'm comfortable with that exposure and not interested in adding any more.  Cheers!

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JPM report on the credit side of the whole CCAR results in case you care

 

A couple of excerpts that I found interesting:

WFC is the only money center bank that has to build reserves under the stress scenario, while the rest of the names experience reserve releases.

 

Bank of America

Bank of America has always been perceived to have the riskiest loan book, one that is most leveraged to the housing market as well as the consumer. We think the stress test should put this perception to rest; it is hard for any one to argue that Bank of America has significantly more losses on its loan book than Wells Fargo given the data from the stress test. We think management has been very prudent on capital, and these tests highlight the change that has taken place at Bank of America. One year, or even 6 months ago, Bank of America was generally considered to be the bank with the greatest capital challenges. After boosting Tier 1 common capital by 160bp over the past 2 quarter, it maintains a respectable 5.9% ratio through the stress period, putting it square in the middle of the range of other CCAR participants (Figure 2).

However, Figure 1 highlights that BAC spread do not reflect this improvement. The name continues to trade much wider than peer banks that would do worse or as badly in a stressed environment, such as Citi, USB, PNC and WFC.

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JPM report on the credit side of the whole CCAR results in case you care

 

A couple of excerpts that I found interesting:

WFC is the only money center bank that has to build reserves under the stress scenario, while the rest of the names experience reserve releases.

 

Bank of America

Bank of America has always been perceived to have the riskiest loan book, one that is most leveraged to the housing market as well as the consumer. We think the stress test should put this perception to rest; it is hard for any one to argue that Bank of America has significantly more losses on its loan book than Wells Fargo given the data from the stress test. We think management has been very prudent on capital, and these tests highlight the change that has taken place at Bank of America. One year, or even 6 months ago, Bank of America was generally considered to be the bank with the greatest capital challenges. After boosting Tier 1 common capital by 160bp over the past 2 quarter, it maintains a respectable 5.9% ratio through the stress period, putting it square in the middle of the range of other CCAR participants (Figure 2).

However, Figure 1 highlights that BAC spread do not reflect this improvement. The name continues to trade much wider than peer banks that would do worse or as badly in a stressed environment, such as Citi, USB, PNC and WFC.

 

Yup, good quotes.  And the fact that they made up even more ground in terms of Tier 1 capital in the 4th quarter 2011 is an after thought.  They raised Tier 1 common equity in the 4th Q by over one whole percentage point from the 3rd Q!  That's huge for ANY bank!  Cheers! 

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ok  I have a fairly large position in BAC now but is this one of those back the truck up and load up for a big windfall. SD was my horse but I am thinkng of placing a bet on two.

 

Back up the truck was several months ago, when a handful of us were backing up the truck.  Now it's stay the course on BAC and WFC, and look for other ideas for capital.  Cheers!

 

You could do worse than putting money into BAC or WFC at current prices.  Actually, it sort of

depends on the rate of return you're expecting from investing and how concentrated you already are in those names.

 

I likely will not be adding to those particular names. 

 

 

 

I was still buying options in and around 8.  I think this will sprint to TBV now.  I bet its past $9 tomorrow, and $10 by weeks end.  But then,  My powers of prediction aren't as good since I lost my tin foil hat.

 

Well, weve made $9.00 on schedule.  :P

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ok  I have a fairly large position in BAC now but is this one of those back the truck up and load up for a big windfall. SD was my horse but I am thinkng of placing a bet on two.

 

Back up the truck was several months ago, when a handful of us were backing up the truck.  Now it's stay the course on BAC and WFC, and look for other ideas for capital.  Cheers!

 

You could do worse than putting money into BAC or WFC at current prices.  Actually, it sort of

depends on the rate of return you're expecting from investing and how concentrated you already are in those names.

 

I likely will not be adding to those particular names. 

 

 

 

I was still buying options in and around 8.  I think this will sprint to TBV now.  I bet its past $9 tomorrow, and $10 by weeks end.  But then,  My powers of prediction aren't as good since I lost my tin foil hat.

 

Haha this is great. My position grew from 17 to 27% and its not like the rest of my portfolio did bad. I'll have to sell some at TBV out of risk management. ;x

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Had to laugh at this one:

 

Bank of America's share price has plunged into the single digits

 

Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.

 

 

 

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Had to laugh at this one:

 

Bank of America's share price has plunged into the single digits

Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.

 

Yeah, nice timing!

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I don't have much BAC and I don't have very high conviction on it.

 

I am surprised how little u guys put in given how bullish u guys seem..

 

like what percentage u guys put in?

 

I first hit 100% notional in-the-money upside in the low $5 range, and I've been adding to it on the way up.  A few more pennies and my $10 strikes come into the money, then my $12.50s.

 

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I don't have much BAC and I don't have very high conviction on it.

 

 

I am surprised how little u guys put in given how bullish u guys seem..

 

like what percentage u guys put in?

 

I am surprised how little u guys put in given how bullish u guys seem..

Or

like what percentage u guys put in?

Which is the correct one... just pulling your leg.

 

 

I had around 35% in warrants when they were in $2-2.20 range. I had 2% in leaps as well. I don't think that everyone will have that high concentration but most people, who were bullish on this, will have decent size position. But again decent size position or big position will mean different for different people. I meant if normal position for some one is 2-3% then even 5% will look like like a big position. Some guys are holding more than one bank so concentration will be less on BAC but they have large exposure to banks.

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