Bank of America

Raskolnikov

Is anyone looking at this? It looks absurdly cheap to me. Now trading at nearly 1/3rd of tangible book value, is expected to be in profit and has improving levels of NPA's (non-performing assets). Bruce Berkowitz (fund manager of the decade, apparently) has a presentation on the company available here. A bit simplistic, but the best ideas are always ones that can be explained succinctly.

Thoughts?

Gandalph

I bought literally 1 day before Buffet (6.90) & its been a rollercoaster ride since then but I see it will work out in the long run

xertpo

Raskolnikov wrote: »

Is anyone looking at this? It looks absurdly cheap to me. Now trading at nearly 1/3rd of tangible book value, is expected to be in profit and has improving levels of NPA's (non-performing assets). Bruce Berkowitz (fund manager of the decade, apparently) has a presentation on the company available here. A bit simplistic, but the best ideas are always ones that can be explained succinctly.

Thoughts?

It hadn't caught my eye, but I'll take a look over the next few days. Thanks for the pointer.

royaler83

Gandalph wrote: »

I bought literally 1 day before Buffet (6.90) & its been a rollercoaster ride since then but I see it will work out in the long run

I bought a few days after Buffet, if it's good enough for Warren Buffet....

willietherock

royaler83 wrote: »

I bought a few days after Buffet, if it's good enough for Warren Buffet....

Didn't Buffet buy warrants rather than shares?

turbobaby

Rask, Id be more worried about the off balance sheet shenanigans!

Gandalph

willietherock wrote: »

Didn't Buffet buy warrants rather than shares?

Preferred shares afaik

Raskolnikov

The reason I brought Bank of America up is because they're currently as cheap as Bank of Ireland (on a tangible book value basis) but the difference between the quality of the loan book is just on a different level.

It simply makes no sense whatsoever to choose Bank of Ireland over Bank of America.

Raskolnikov

turbobaby wrote: »

Rask, Id be more worried about the off balance sheet shenanigans!

That's a concern, however, litigation is going to take a long time to play out. I hold Lehman Brothers bonds for example and bankruptcy proceedings are still going on over three years later. Even in the nightmare scenario of a multi-billion Dollar settlement, Bank of America will be making profits in the mean time, meaning a buffer of capital can be built up.

It's all too easy to get lost in short-term negativity here. Market cap is $50 billion, normalised earnings is $25 billion. Not only that, but you're buying with the backing of the United States government.

Cavanjack

royaler83 wrote: »

Gandalph wrote: »

I bought literally 1 day before Buffet (6.90) & its been a rollercoaster ride since then but I see it will work out in the long run

I bought a few days after Buffet, if it's good enough for Warren Buffet....

Didn't buffet lose $200m on boi and aib a couple of years ago?

royaler83

Cavanjack wrote: »

Didn't buffet lose $200m on boi and aib a couple of years ago?

Are you suggesting Warren Buffet doesn't know what he's doing?! You might want to be careful with your answer

liammur

Raskolnikov wrote: »

Is anyone looking at this? It looks absurdly cheap to me. Now trading at nearly 1/3rd of tangible book value, is expected to be in profit and has improving levels of NPA's (non-performing assets). Bruce Berkowitz (fund manager of the decade, apparently) has a presentation on the company available here. A bit simplistic, but the best ideas are always ones that can be explained succinctly.

Thoughts?

Not far from bankruptcy.

irishh_bob

royaler83 wrote: »

Are you suggesting Warren Buffet doesn't know what he's doing?! You might want to be careful with your answer

buffett got stuff wrong over the years too , he has always dismissed gold outright despite the fact that it has risen five fold since 2000

Gandalph

royaler83 wrote: »

Are you suggesting Warren Buffet doesn't know what he's doing?! You might want to be careful with your answer

He may be the grandaddy but he has made some mistakes, not everything he touches turns to gold. Pretty sure berkshire hathaway was all one big mistake that he made work out in the end.

Raskolnikov

irishh_bob wrote: »

buffett got stuff wrong over the years too , he has always dismissed gold outright despite the fact that it has risen five fold since 2000

Did you know what Warren Buffet once controlled a significant amount of the world's silver production about a decade ago?

royaler83

irishh_bob wrote: »

buffett got stuff wrong over the years too , he has always dismissed gold outright despite the fact that it has risen five fold since 2000

In fairness he should be judged on what he has invested in, not what he missed out on.

He hasn't done to bad for himself despite ignoring gold

Tech3

I've been looking at this stock myself. It's certainly a better option than BOI. Cant see much gain over this year but possibly a good gain when the world economy recovers over 2012 or 2013. A high risk stock though.

neil.p.b

If anyones looking to get in here todays probably the day to do it, or yesterday if you can! Going to open about 10% probably.

cena

so they are letting people buy stock from them. were do you go to get this stock.

FISMA

Raskolnikov wrote: »

Is anyone looking at this? It looks absurdly cheap to me...
Thoughts?

Rasko,
You'd better do some homework and invest on better advice than buy BAC because someone else already has.

Have you checked the EPS on BAC? How does it look? :eek:

Have you seen what % of BAC is owned by the big boys/institution and compared them to the likes of GS, MS?

Have you checked their exposure to EU banks?

turbobaby wrote: »

Rask, Id be more worried about the off balance sheet shenanigans!

+1

I think BAC is garbage. However, money can be made off of garbage.

Are you trading or investing?

Also, it is a sub $10.00 stock. Make sure you understand the ramifications of being so cheap.

Slan

Raskolnikov

FISMA wrote: »

Rasko,
You'd better do some homework and invest on better advice than buy BAC because someone else already has.

Have you checked the EPS on BAC? How does it look? :eek:

Have you seen what % of BAC is owned by the big boys/institution and compared them to the likes of GS, MS?

Have you checked their exposure to EU banks?

I wouldn't have suggested it if I hadn't looked at it, indeed, I have already addressed two of the points you have asked me about.

Like I said, normalised earnings are about $2.50 a share. Short-term earnings will probably be in the $1 region. Even discounting normalised earnings and assuming existing earnings are the new norm, it's trading at a PE of 5.

Like I have also said, Bruce Berkowitz (voted fund manager of the decade) has Bank of America as his biggest position. Buffett obviously believes in the company enough to tether the Berkshire Hathaway name to it. These are people with proven track records putting their money and reputation behind the company.

Exposure to Europe as a % of overall assets is minimal, Fitch have come out and said it's manageable.

Fitz123

So Bank of America share price is just a smidge under $8 now. Anyone who posted in this thread buy in ? I bought 1,000 shares in mid December.

Didn't expect them to move upwards so much so soon, was more of a long term play (not that I am complaining mind you). I see they have pulled the sale of MBNA Europe and are now planning to sell and lease back a lot of their own real estate. Lots of news about more litigation too.

IMHO it will be an interesting ride, but still lots of upside. A better investment than the Irish banks I think

Raskolnikov

FISMA wrote: »

I think BAC is garbage.

Up over 50% since I started this thread The recent quarterly results showed improving metrics across the board; non-performing assets were down to 3.3%, tier 1 common capital is now at nearly 10%, NIM up slightly - all signs show that Bank of America bottomed in mid-2011 and has shown gradual improvement in every quarter since then. As the American economy continues to pick-up, this will only mean good things for BAC. I will be holding the stock as long as it is undervalued and is doing all the right things.

xertpo

Raskolnikov wrote: »

Up over 50% since I started this thread The recent quarterly results showed improving metrics across the board; non-performing assets were down to 3.3%, tier 1 common capital is now at nearly 10%, NIM up slightly - all signs show that Bank of America bottomed in mid-2011 and has shown gradual improvement in every quarter since then. As the American economy continues to pick-up, this will only mean good things for BAC. I will be holding the stock as long as it is undervalued and is doing all the right things.

I bought some May 2012 calls and they're doing extremely nicely at the moment. Thanks for bring BOA to my attention Raskolnikov.

Gandalph

I may only have a virtual portfolio but this stock was terrorizing it for a bit but now its shot up like crazy, wish I had of bought in reality when it was at its low just a month ago!

Fitz123

I see the share price is $9.8 as at yesterdays close. Good going so far !

California Man

Is it still a good investment at the current price?

Fitz123

Just hovering around the $10 mark today. Has made some good movement since the stress test results (http://www.reuters.com/article/2012/03/14/us-bankofamerica-stressed-idUSBRE82D1FC20120314)

Still a long way to go however, but it should be a fun ride on the way

turbobaby

BAC holders, how do you feel about the Fed's stress tests not including a scenario in which interest rates go up?

Would increased rates harm BAC?

Something to consider.

Raskolnikov

turbobaby wrote: »

BAC holders, how do you feel about the Fed's stress tests not including a scenario in which interest rates go up?

Would increased rates harm BAC?

Something to consider.

Interest rates are staying low for awhile yet, and by the time they do rise, the economy will be in much better shape than today. The important thing is that Bank of America are still generating gobs of free cash flow, they are working through the bad loans, they're deleveraging, etc. The CEO, Moynihan has done a tremendous job and has reigned-in the "growth, at all costs" management that used to be good for their pay packets, but not so much for shareholders.

Long-term, BOA only need to keep doing what they're doing and this thing is going to appreciate significantly!

California Man

Raskolnikov wrote: »

Interest rates are staying low for awhile yet, and by the time they do rise, the economy will be in much better shape than today. The important thing is that Bank of America are still generating gobs of free cash flow, they are working through the bad loans, they're deleveraging, etc. The CEO, Moynihan has done a tremendous job and has reigned-in the "growth, at all costs" management that used to be good for their pay packets, but not so much for shareholders.

Long-term, BOA only need to keep doing what they're doing and this thing is going to appreciate significantly!

Thank you.

turbobaby

Raskolnikov wrote: »

Interest rates are staying low for awhile yet, and by the time they do rise, the economy will be in much better shape than today. The important thing is that Bank of America are still generating gobs of free cash flow, they are working through the bad loans, they're deleveraging, etc. The CEO, Moynihan has done a tremendous job and has reigned-in the "growth, at all costs" management that used to be good for their pay packets, but not so much for shareholders.

Long-term, BOA only need to keep doing what they're doing and this thing is going to appreciate significantly!

Just an alternative view for California Man....

The Fed has planned to keep interest rates at zero and will buy US Treasuries with fresh dollars to ensure treasuries and therefore mortgage rates are kept at record lows.

Now, if confidence is lost in the Dollar (afterall they are not even trying to rectify their major overspending problems) and the Fed is left to buy a larger proportion of USTs, they may not be able to control interest rates. If mortgage rates were to rise, the US real estate problems would multiply and put heavy pressure on Bank of America and its stock pricce.

Despite how well they might be run, I think the very real danger of rising interest rates before any real recovery in the US is something to consider as a negative when buying BAC.

Fitz123

Was up to $11.20 odd at one stage today. Steady enough progress here, interesting to see how it develops.

Fitz123

Above $12 now. Still lots going on in the legal side to clear up historic issues. Fed stress tests soon also.

Fitz123

Good results from stress test including permission to buy back $5.5 billion 8% preferred and approx $5 billion in common stock. Shares at about $12.50 now.

Fitz123

Still ticking along nicely !

Fitz123

Seems to be a decent enough set a results today on skim reading. Seems to be a nice reduction in non interest expenses. Slight rise in NIM also.

Remains to be seen in the future how a tapering of the $85bn in Fed buying will impact the value of bonds BOA has on it's books. Still litigation to be sorted also.

Very nice increase though since this thread started.