rranjan Posted March 17, 2012 Share Posted March 17, 2012 this thread makes me nervous :) i personally dont like to cheer until the profits are actually booked. i own truckloads of bac and im not cheering about it.. yet. There is a separate thread for cheering which you can join after you sell :). Business had turned around a while back but due to possibility of regulators forcing BAC to raise equity, it got stupid cheap from being already cheap. I am not in cheering mood yet, it will happen when it reaches close to fair value in due time. Link to comment Share on other sites More sharing options...
rranjan Posted March 17, 2012 Share Posted March 17, 2012 Lol I thought I was nuts for having a 27% common position in BAC. Guess not! Gratz guys. ;) (I was up 8.5% in 2011 and now around 30% for 2012. No leverage of any kind. Small portfolio.) Those are extremely good returns. I have been sick with volatility. Hopefully I may not find myself in such a deep hole again. Based on your posts, the impression I have that you take big concentrated positions more frequently. Volatility is bit difficult to avoid if thats the case. Link to comment Share on other sites More sharing options...
benchmark Posted March 17, 2012 Share Posted March 17, 2012 It is hard not to let the price chart influence the decision-making process. This is a 50 cent dollar at the current price. Everybody now: "fortress balance sheet". Is it still 50 cent dollar? It would take a long time for bac to get back to 20+ Link to comment Share on other sites More sharing options...
onyx1 Posted March 17, 2012 Share Posted March 17, 2012 Right after Q1 earnings MisterStockWell informed us that Doug Kass "took out a short rental at $7.20". How is that guy doing with that short by the way? A couple of weeks ago I saw him pass a comment that he was expecting a pullback of 6%-10% and named BAC as one of the stocks to buy on the weakness (so he was recommending people to buy it for more than where he shorted it at). 11 months ago Doug Kass tweeted "repeating for emphasis - msft is a value trap". MSFT closed at $25.50. This one not working out so well either. Link to comment Share on other sites More sharing options...
mhdousa Posted March 17, 2012 Share Posted March 17, 2012 Right after Q1 earnings MisterStockWell informed us that Doug Kass "took out a short rental at $7.20". How is that guy doing with that short by the way? A couple of weeks ago I saw him pass a comment that he was expecting a pullback of 6%-10% and named BAC as one of the stocks to buy on the weakness (so he was recommending people to buy it for more than where he shorted it at). 11 months ago Doug Kass tweeted "repeating for emphasis - msft is a value trap". MSFT closed at $25.50. This one not working out so well either. I guess the question is why anyone listens to Doug Kass: http://www.businessinsider.com/doug-kass-just-bought-shares-of-berkshire-hathaway-2012-3 A while back, someone I knew was considering investing with Seabreeze (Kass's firm) and showed me their results. It essentially matched the market. Link to comment Share on other sites More sharing options...
enoch01 Posted March 17, 2012 Share Posted March 17, 2012 It is hard not to let the price chart influence the decision-making process. This is a 50 cent dollar at the current price. Everybody now: "fortress balance sheet". Is it still 50 cent dollar? How much would you pay for $20Billion in annual pre-provision net revenue (including put-back expenses) in the Fed's stress scenario? Just on that case I think this is a 50cent dollar. But if we dare: how much would you pay for, say $30Billion in a more normal environment (are we allowed to even talk about normal environments yet)? How much would you pay if you knew they wouldn't be allowed to fail? It would take a long time for bac to get back to 20+ Maybe. But this is a financial, it's leveraged. I think everyone was panicking about massive dilution, and at the end of last year that was providing a positive feedback to drive the price down. That turned into people worrying about a bank run, Chris Whalen writing about a restructuring, etc. That phenomenon could reverse just as quickly, especially when everyone realizes Moynihan has built a castle of liquidity and is on a mission to squeeze waste (and risk) out of the company. Imagine what could happen if the Fed allows, say, a 40 cent annual dividend, starting this summer (hey a guy can dream). But I'm not trying to convince anyone of anything... Link to comment Share on other sites More sharing options...
Parsad Posted March 17, 2012 Author Share Posted March 17, 2012 Right after Q1 earnings MisterStockWell informed us that Doug Kass "took out a short rental at $7.20". How is that guy doing with that short by the way? A couple of weeks ago I saw him pass a comment that he was expecting a pullback of 6%-10% and named BAC as one of the stocks to buy on the weakness (so he was recommending people to buy it for more than where he shorted it at). 11 months ago Doug Kass tweeted "repeating for emphasis - msft is a value trap". MSFT closed at $25.50. This one not working out so well either. That's pretty funny, because we had a shitload of MSFT call options too! More than we had in BAC or Wells...10% of the fund was in MSFT call options...and we bought them when MSFT was around $24.50 at a $20 strike! Unfortunately, in my infinite wisdom of averaging in and averaging out, we averaged out of alot of the MSFT call options over the last four months. That's the problem with no lockup...you're always making sure you mitigate risk and maintain adequate liquidity! If I had kept all of the MSFT options, we would be having the best quarter in our history...still a damn good quarter...but it would have been a blowout on par or better than Berkowitz's! And that's with OSTK being a real dog still and 40% cash in both funds. Our director Glen Rollins gave me a quote by Peter Lynch when I lamented this fact..."Make sure you don't cut the flowers and water the weeds!" Cheers! Link to comment Share on other sites More sharing options...
racemize Posted March 17, 2012 Share Posted March 17, 2012 I've always loved that quote. Sounds a lot like Fisher. Link to comment Share on other sites More sharing options...
hardincap Posted March 17, 2012 Share Posted March 17, 2012 Right after Q1 earnings MisterStockWell informed us that Doug Kass "took out a short rental at $7.20". How is that guy doing with that short by the way? A couple of weeks ago I saw him pass a comment that he was expecting a pullback of 6%-10% and named BAC as one of the stocks to buy on the weakness (so he was recommending people to buy it for more than where he shorted it at). 11 months ago Doug Kass tweeted "repeating for emphasis - msft is a value trap". MSFT closed at $25.50. This one not working out so well either. That's pretty funny, because we had a shitload of MSFT call options too! More than we had in BAC or Wells...10% of the fund was in MSFT call options...and we bought them when MSFT was around $24.50 at a $20 strike! Unfortunately, in my infinite wisdom of averaging in and averaging out, we averaged out of alot of the MSFT call options over the last four months. That's the problem with no lockup...you're always making sure you mitigate risk and maintain adequate liquidity! If I had kept all of the MSFT options, we would be having the best quarter in our history...still a damn good quarter...but it would have been a blowout on par or better than Berkowitz's! And that's with OSTK being a real dog still and 40% cash in both funds. Our director Glen Rollins gave me a quote by Peter Lynch when I lamented this fact..."Make sure you don't cut the flowers and water the weeds!" Cheers! parsad, im interested in hearing your take of OSTK. what is the investment rationale there? congrats on the financial bets Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 17, 2012 Share Posted March 17, 2012 Lol I thought I was nuts for having a 27% common position in BAC. Guess not! Gratz guys. ;) (I was up 8.5% in 2011 and now around 30% for 2012. No leverage of any kind. Small portfolio.) Those are extremely good returns. I have been sick with volatility. Hopefully I may not find myself in such a deep hole again. Based on your posts, the impression I have that you take big concentrated positions more frequently. Volatility is bit difficult to avoid if thats the case. Yes, I have trouble controlling my excitement when the Miss Hawaiin Tropic bus breaks down. I clear my schedule and I focus all of my energy on the one I like the most. It's risky I suppose because eventually there may be a lapse of judgement or the Euro collapse actually happens and financial system actually does crumble.. I was thinking a lot about the opportunity cost of just having a small slice of the portfolio double, and I didn't want to give up the opportunity to have the whole thing double.. Link to comment Share on other sites More sharing options...
Parsad Posted March 18, 2012 Author Share Posted March 18, 2012 Right after Q1 earnings MisterStockWell informed us that Doug Kass "took out a short rental at $7.20". How is that guy doing with that short by the way? A couple of weeks ago I saw him pass a comment that he was expecting a pullback of 6%-10% and named BAC as one of the stocks to buy on the weakness (so he was recommending people to buy it for more than where he shorted it at). 11 months ago Doug Kass tweeted "repeating for emphasis - msft is a value trap". MSFT closed at $25.50. This one not working out so well either. That's pretty funny, because we had a shitload of MSFT call options too! More than we had in BAC or Wells...10% of the fund was in MSFT call options...and we bought them when MSFT was around $24.50 at a $20 strike! Unfortunately, in my infinite wisdom of averaging in and averaging out, we averaged out of alot of the MSFT call options over the last four months. That's the problem with no lockup...you're always making sure you mitigate risk and maintain adequate liquidity! If I had kept all of the MSFT options, we would be having the best quarter in our history...still a damn good quarter...but it would have been a blowout on par or better than Berkowitz's! And that's with OSTK being a real dog still and 40% cash in both funds. Our director Glen Rollins gave me a quote by Peter Lynch when I lamented this fact..."Make sure you don't cut the flowers and water the weeds!" Cheers! parsad, im interested in hearing your take of OSTK. what is the investment rationale there? congrats on the financial bets I'll just lay it out in one long paragraph...I just think the business is cheap...they have a decent model and could offer other services to their demographic (primarily 35-55)...core base of about 25M annual customers...$1.1 B in sales, so they realistically should be able to achieve a minimum of 1.5% net profit margin on that...they should be able to grow at a minimum of 12-15% a year for the next 10 years...not much debt...their closest competitor sold for 7 times their current valuation...CEO takes almost zero compensation...board owns 35% of the company...Fairfax owns another 15%...Chou Funds own 15%...our board and funds own 3.5%...so you have a tightly held group of shareholders...there are a handful of other, smaller things as well...customer service is great for online retailers...partnership agreements with Travelocity, etc...flexibility management gives to executives (could be good or bad). The main problem is they blow too much company on expenses (corporate, legal, technology) and not enough on driving traffic to the site. The CEO needs to focus on the business and less on his legal battles and blog. They need a true marketing expert...which they have hired and should be announced pretty soon. Cheers! Link to comment Share on other sites More sharing options...
Uccmal Posted March 18, 2012 Share Posted March 18, 2012 Just for context. BAC stock price last year at this time was around 14.75. A year ago we were steeped in the Greek/Eu crisis - not much changed there. But everything else has changed since for BAC, most of it positive, as outlined on this board, over and over. Since the stress test institutional buyers appear to have clearance to start accumulating again. The not so smart money is just starting to buy. Soon to be followed by the real dumb money. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 18, 2012 Share Posted March 18, 2012 Just for context. BAC stock price last year at this time was around 14.75. A year ago we were steeped in the Greek/Eu crisis - not much changed there. But everything else has changed since for BAC, most of it positive, as outlined on this board, over and over. Since the stress test institutional buyers appear to have clearance to start accumulating again. The not so smart money is just starting to buy. Soon to be followed by the real dumb money. Al, I think you called it. $9.88 after hours -- I think we can round that up to $10. Where is it headed by next weekend? Link to comment Share on other sites More sharing options...
Parsad Posted March 18, 2012 Author Share Posted March 18, 2012 Just for context. BAC stock price last year at this time was around 14.75. A year ago we were steeped in the Greek/Eu crisis - not much changed there. But everything else has changed since for BAC, most of it positive, as outlined on this board, over and over. Since the stress test institutional buyers appear to have clearance to start accumulating again. The not so smart money is just starting to buy. Soon to be followed by the real dumb money. Al, I think you called it. $9.88 after hours -- I think we can round that up to $10. Where is it headed by next weekend? I said tangible book by Christmas, but you turkeys seem to be nailing the increases on the head. Ok Al, when do you think it will now hit tangible book...so say around $12.50? Eric? Cheers! Link to comment Share on other sites More sharing options...
Uccmal Posted March 18, 2012 Share Posted March 18, 2012 Tbv before Christmas. Didn't we think it might hit TBV by Eric's birthday which I think was April 20th, ot was it the 10 th. lol FWIW, I am expecting some bumps in the road, perhaps this week coming. Although I dont really see how institutions can avoid buying. Wouldn't want to be left out on the pick of the year, eh? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 18, 2012 Share Posted March 18, 2012 I can't really predict how banks as a sector will be viewed due to macro forecasting being all the rage these days. My forecast though was really for $12 by July, to give room for a couple more BAC earnings reports. I'm happy to pile on with Al's forecast of TBV by April 10th (my birthday) -- it does make perfect sense to me. In my mind all of the discount was due to the uncertainty of whether regulators would push BAC into a capital raise. Now nobody believes that anymore. Even if we get the ECRI's recession, there still won't be a capital raise. BAC made the most improvement in the past 12 months. But look at the results: BAC vs Citi: http://finance.yahoo.com/q/bc?t=1y&s=BAC&l=on&z=l&q=l&c=C BAC vs JPM: http://finance.yahoo.com/q/bc?t=1y&s=BAC&l=on&z=l&q=l&c=JPM BAC vs WFC: http://finance.yahoo.com/q/bc?t=1y&s=BAC&l=on&z=l&q=l&c=WFC The gap is smallest in the BAC vs Citi comparison, probably due to Citi getting hurt the most from expectations of slower global economic growth. Link to comment Share on other sites More sharing options...
biaggio Posted March 18, 2012 Share Posted March 18, 2012 Eric, when you talk about gap I was thinking of the gap in valuation (price vs what it may be worth-though I understand it may be difficult to compare). http://www.gurufocus.com/compare.php?symbol=BAC -based on valuation the gap may be wider than those based on just market price. Is this a valid comparison? Should they be trading at a similar multiple to say TBV? If so perhaps there is even more price appreciation in the future. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 18, 2012 Share Posted March 18, 2012 Eric, when you talk about gap I was thinking of the gap in valuation (price vs what it may be worth-though I understand it may be difficult to compare). http://www.gurufocus.com/compare.php?symbol=BAC -based on valuation the gap may be wider than those based on just market price. Is this a valid comparison? Should they be trading at a similar multiple to say TBV? If so perhaps there is even more price appreciation in the future. I'm just using the charts to set mimimum expectations based on how buyers behaved before the big scare last year. The banks at that time were all trading below their intrinsic value and all had further room to go. So because I can't guess when Wall Street will value them on intrinsic value, I'm instead looking at how they value them relative to each other. Once that relative valuation gap has been closed, I might then find good reason to diversify a bit into maybe WFC and JPM. Link to comment Share on other sites More sharing options...
biaggio Posted March 18, 2012 Share Posted March 18, 2012 Got it, thanks for the reply. makes cents. Link to comment Share on other sites More sharing options...
biaggio Posted March 18, 2012 Share Posted March 18, 2012 I was reading on the recent stress tests on BAC: " the test parameters focused on the results of hypothetical economic conditions, rather than worst-case losses from its legal challenges" Is that true? I would have thought some sort of assumption or allocation would be made for the legal troubles...otherwise why even bother doing the stress test on BAC. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 18, 2012 Share Posted March 18, 2012 There are probably at least a few traders out there playing this valuation gap closing strategy. Maybe they are shorting the JPM and WFC banks and going long BAC. This way if a big macro event happens they have some protection. As long as recapitalization is off the table, it's a trade that seems hard to lose on. Link to comment Share on other sites More sharing options...
StubbleJumper Posted March 19, 2012 Share Posted March 19, 2012 I was reading on the recent stress tests on BAC: " the test parameters focused on the results of hypothetical economic conditions, rather than worst-case losses from its legal challenges" Is that true? I would have thought some sort of assumption or allocation would be made for the legal troubles...otherwise why even bother doing the stress test on BAC. I'm a little late to this party, but I've never quite understood the fixation with litigation. If they lose a lawsuit, won't they just launch 10,000 appeals which will take until about 2025 to resolve? By then, the financial crisis will be a faint memory and BAC's capital position should be much different. Or am I being too cynical about the US legal system? SJ Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 19, 2012 Share Posted March 19, 2012 Al, It cracked $10 18 minutes into trading. You were soooo close. Link to comment Share on other sites More sharing options...
racemize Posted March 19, 2012 Share Posted March 19, 2012 Al, It cracked $10 18 minutes into trading. You were soooo close. maybe you guys should get into short term trading! (j/k) Link to comment Share on other sites More sharing options...
Parsad Posted March 19, 2012 Author Share Posted March 19, 2012 Al, It cracked $10 18 minutes into trading. You were soooo close. Doesn't this remind you guys so much of the old Fairfax days when it traded under $100...and then took off. We were all watching it like this then too. Cheers! Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now