BAC q3

[anders]

"Our focus on strengthening the balance sheet continued this quarter," said Chief Financial Officer Bruce Thompson. "We ended the quarter with record Tier 1 common capital ratio of 11.41 percent and an estimated Basel 3 Tier 1 common capital ratio of 8.97 percent, up from 7.95 percent as of the second quarter of 20121. With these gains, we have turned our attention to driving core earnings."

 

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Right on track!  :)

[Parsad]

Yeah, it's pretty impressive.  The markets barely reacted, but they've made enormous progress over the last two years.  This was a bank on the verge of collapse four years ago, and still choking on Countrywide two years ago. 

 

- Now, excluding legacy issue costs (most of which they've reserved for), they are one of the best-capitalized banks in the U.S., as well as the rest of the world. 

- They've paid down a ton of long-term debt and reduced interest costs. 

- They've settled many of the larger legacy issues. 

- Their main segments of growth are finally stabilized and starting to turn around.

- They will pass their stress test with flying colors, and finally return more capital to shareholders through dividends and buybacks.

- They've gotten lean and mean, cutting as much fat as they can and focusing their core businesses.

- They've maintained the value of their deposit base, as well as many core relationships in other segments.

- The culture of the company has completely shifted...we don't want to be big, we want to be a great bank and help our customers!

 

One of the great turnarounds in the last two decades.  Clear some more legacy issues in 2013 and start to produce clean quarters from 2014 on.  Cheers! 

[tng]

http://video.cnbc.com/gallery/?video=3000120859&play=1

 

The analyst says that he thinks BAC will be a "home run 3 years out", but in the next 6-12 months, it is not exciting because it is pretty close to his short term price target. We had the same behavior at AIG too before the +50% run up where analysts realize that it is a simple insurance company now and it is far cheaper than any other insurance company out there, but due to whatever reasons (most likely career risk) they cannot give it high marks because of stuff like the government will own it for one or two more years. It is a good position to be in when everybody rationally concludes that it will double in a few years, but then their brains turn off and they are avoidng/selling because it won't double tomorrow.

[JRH]

http://video.cnbc.com/gallery/?video=3000120859&play=1

 

The analyst says that he thinks BAC will be a "home run 3 years out", but in the next 6-12 months, it is not exciting because it is pretty close to his short term price target. We had the same behavior at AIG too before the +50% run up where analysts realize that it is a simple insurance company now and it is far cheaper than any other insurance company out there, but due to whatever reasons (most likely career risk) they cannot give it high marks because of stuff like the government will own it for one or two more years. It is a good position to be in when everybody rationally concludes that it will double in a few years, but then their brains turn off and they are avoidng/selling because it won't double tomorrow.

 

One of my very favorite market irrationalities is hearing investors and analysts say a stock is a "long-term buy but a short term sell".  My experience suggests they are so consistently wrong about getting a better "entry price" later that you could just about build a quant model off it!

[racemize]

It seems like the sweet spot is after the big value guys go in (BB) and before/during these analyst comments.

[MrB]

Considering the average holding period for a stock on for example the NYSE is between 3 and 4 months, the above makes total sense.

Having a 3-5 year holding period alone gives you a competitive advantage.