gary17 Posted November 10, 2015 Share Posted November 10, 2015 do owners of warrants sell short term calls for some extra tiny income ? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted November 10, 2015 Share Posted November 10, 2015 Looking at Jan 18 BAC put option, bid at $0.79. If you sell put, you are pocketing the premium, and BAC has to go down 30% for you to not make money. Given the upcoming rate increase, is the buyer of the contract really that pessimistic? Somebody buying a put could be extremely bullish on the stock. You don't know why they buy the put. One reason could be that they are buying more common shares using debt and they buy the put so that it's non-recourse debt. One never knows. Anyway, I think you made a typo in your post -- 30% is a lot more than 79 cents. Link to comment Share on other sites More sharing options...
benchmark Posted November 10, 2015 Share Posted November 10, 2015 Looking at Jan 18 BAC put option, bid at $0.79. If you sell put, you are pocketing the premium, and BAC has to go down 30% for you to not make money. Given the upcoming rate increase, is the buyer of the contract really that pessimistic? Somebody buying a put could be extremely bullish on the stock. You don't know why they buy the put. One reason could be that they are buying more common shares using debt and they buy the put so that it's non-recourse debt. One never knows. Anyway, I think you made a typo in your post -- 30% is a lot more than 79 cents. I was referring to BAC $13 Jan 18 put option. Given that the stock is around $18, and the put option is $79c, if the stock was going down 30%, you'll get put the stock. ($18 * 0.7 = $12.6), but you pocket the premium of $79c, so you are still ahead. Link to comment Share on other sites More sharing options...
OracleofCarolina Posted December 3, 2015 Share Posted December 3, 2015 Brian Moynihan was on Charlie Rose yesterday. The full interview is up on his site, but I haven't had a chance to watch yet. http://charlierose.com/ Link to comment Share on other sites More sharing options...
dcollon Posted December 4, 2015 Share Posted December 4, 2015 Thanks for posting the link Oracle. Link to comment Share on other sites More sharing options...
sswan11 Posted December 10, 2015 Share Posted December 10, 2015 Stress test approved: http://www.wsj.com/articles/fed-approves-bank-of-americas-resubmitted-stress-test-1449756121 Link to comment Share on other sites More sharing options...
redskin Posted December 30, 2015 Share Posted December 30, 2015 Can anyone explain the logic behind the dividend adjustment for the A warrants. Here are some examples on how the strike price would adjust at different market prices and dividends... Market price 17.15 Quarterly Dividend .05 Current strike price 13.107 New strike price 13.076 Strike adjustment .0306 Market price 17.15 Quarterly Dividend 0.10 Current strike price 13.107 New strike price 13.038 Strike adjustment 0.068 Market price 17.15 Quarterly Dividend .25 Current strike price 13.107 New strike price 12.92 Strike adjustment .183 Market price 30 Quarterly Dividend 0.25 Current strike price 13.107 New strike price 13.002 Strike adjustment .10 Market price 10 Quarterly Dividend 0.25 Current strike price 13.107 New strike price 12.79 Strike adjustment .314 Link to comment Share on other sites More sharing options...
racemize Posted December 30, 2015 Share Posted December 30, 2015 It's just simulating the effect of reinvesting the dividend. So it's based on the dividend yield. Link to comment Share on other sites More sharing options...
StubbleJumper Posted December 31, 2015 Share Posted December 31, 2015 Stress test approved: http://www.wsj.com/articles/fed-approves-bank-of-americas-resubmitted-stress-test-1449756121 Just finished reading the article. Almost choked when I read this: “We spent 100 million some dollars to get the process right for the resubmission,” he said, referring to how much the bank set aside for stress-test improvements, including consultants and new employees, after the Fed’s rebuke. “We took an army and went after it.” This is like Sarbanes-Oxley on steroids... Link to comment Share on other sites More sharing options...
jay21 Posted December 31, 2015 Share Posted December 31, 2015 Stress test approved: http://www.wsj.com/articles/fed-approves-bank-of-americas-resubmitted-stress-test-1449756121 Just finished reading the article. Almost choked when I read this: “We spent 100 million some dollars to get the process right for the resubmission,” he said, referring to how much the bank set aside for stress-test improvements, including consultants and new employees, after the Fed’s rebuke. “We took an army and went after it.” This is like Sarbanes-Oxley on steroids... Now imagine being a small bank. Now imagine being a non-bank being held to bank standards. Its pretty rough but a boom for consultants and accountants. Link to comment Share on other sites More sharing options...
meiroy Posted December 31, 2015 Share Posted December 31, 2015 http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=11082818-5933-12791&type=sect&TabIndex=2&dcn=0000070858-15-000116&nav=1&src=Yahoo Bank of America today announced the redemption of $2.0 billion of trust preferred securities. Beginning in January of 2016 these securities, unlike the corporation’s other outstanding series of trust preferred securities, will completely phase-out from regulatory capital. As a result of the Bank of America Merrill Lynch merger in 2009, the company recorded a discount to par value as purchase accounting adjustments associated with these securities. Bank of America will record a non-cash reduction to net interest income and to pretax income of approximately $600 million in the fourth quarter of 2015 for the remaining discount to par value. The company expects to realize cash savings from lower funding costs as a result of the redemption. The redemption affects all of the trust preferred securities of each trust listed in the table below. The redemption date for all such trust preferred securities is January 29, 2016, and the redemption price is 100 percent of the liquidation amount per trust preferred security, plus accumulated and unpaid distributions on the trust preferred securities through the redemption date." Link to comment Share on other sites More sharing options...
gary17 Posted December 31, 2015 Share Posted December 31, 2015 is this good news ? happy new year to all Link to comment Share on other sites More sharing options...
meiroy Posted December 31, 2015 Share Posted December 31, 2015 is this good news ? happy new year to all It's an opportunity. Link to comment Share on other sites More sharing options...
nodnub Posted December 31, 2015 Share Posted December 31, 2015 is this good news ? happy new year to all It's an opportunity. All the issues to be redeemed were already trading above par. What opportunity am I failing to see here? Link to comment Share on other sites More sharing options...
StubbleJumper Posted December 31, 2015 Share Posted December 31, 2015 is this good news ? happy new year to all Since TRuPs no longer count as regulatory capital, they effectively play the same role as debt financing in BAC's capital structure. At 7% or 7.5%, it represents $2 billion of very expensive debt. BAC can retire the TRups and replace them with lower cost debt, or given their existing comfortable regulatory capital levels, perhaps they can just not be replaced altogether. So, yeah, it's a minor good thing. The only bad thing is having to recognize a gain on the re-purchase which will trigger an income tax bill for an event which is otherwise of little significance. SJ Link to comment Share on other sites More sharing options...
Rasputin Posted December 31, 2015 Share Posted December 31, 2015 is this good news ? happy new year to all Since TRuPs no longer count as regulatory capital, they effectively play the same role as debt financing in BAC's capital structure. At 7% or 7.5%, it represents $2 billion of very expensive debt. BAC can retire the TRups and replace them with lower cost debt, or given their existing comfortable regulatory capital levels, perhaps they can just not be replaced altogether. So, yeah, it's a minor good thing. The only bad thing is having to recognize a gain on the re-purchase which will trigger an income tax bill for an event which is otherwise of little significance. SJ what gain on the re-purchase? they're not re-purchasing it at a discount. Link to comment Share on other sites More sharing options...
StubbleJumper Posted December 31, 2015 Share Posted December 31, 2015 is this good news ? happy new year to all Since TRuPs no longer count as regulatory capital, they effectively play the same role as debt financing in BAC's capital structure. At 7% or 7.5%, it represents $2 billion of very expensive debt. BAC can retire the TRups and replace them with lower cost debt, or given their existing comfortable regulatory capital levels, perhaps they can just not be replaced altogether. So, yeah, it's a minor good thing. The only bad thing is having to recognize a gain on the re-purchase which will trigger an income tax bill for an event which is otherwise of little significance. SJ what gain on the re-purchase? they're not re-purchasing it at a discount. You are correct. It's a small loss, not a small gain. Link to comment Share on other sites More sharing options...
sswan11 Posted January 4, 2016 Share Posted January 4, 2016 Bank Of America In 2016, by Christopher Davis http://seekingalpha.com/article/3787496-bank-of-america-in-2016?app=1&auth_param=iq1d:1b8kb2k:f0a8a92a21bc8e86a02e3a423e89144d&uprof=45 Link to comment Share on other sites More sharing options...
karthikpm Posted January 6, 2016 Share Posted January 6, 2016 Anyone buying warrants at this price? Link to comment Share on other sites More sharing options...
FCharlie Posted January 7, 2016 Share Posted January 7, 2016 I feel a little like we've got a value trap here. We've got a company that's 40% below book value. They are buying back $800 million of stock per quarter, which is accretive to per share book value... On top of this, the Fed won't allow them to distribute all of their earnings, so book value is rising even more. It seems like this should be a slam dunk investment... However, this situation has existed for years now. Perhaps I'm doing the right thing, or perhaps I'm the idiot here, but I was buying today. Link to comment Share on other sites More sharing options...
gary17 Posted January 7, 2016 Share Posted January 7, 2016 I thought the Fed's approval is based on LAST year's earnings So 2015 returns were not very much because 2014's reported earnings were very little due to the legal expenses. 2015 has so far been doing better... 0.37 0.45 0.27 ----- 1.09 Analysts are expecting 0.31 in Q4 so would make 2015 total 1.40 $ EPS. I believe all of 2014 EPS was $0.36 LOL So shouldn't we see a few fold increase in dividends & buybacks? Link to comment Share on other sites More sharing options...
karthikpm Posted January 7, 2016 Share Posted January 7, 2016 I feel a little like we've got a value trap here. We've got a company that's 40% below book value. They are buying back $800 million of stock per quarter, which is accretive to per share book value... On top of this, the Fed won't allow them to distribute all of their earnings, so book value is rising even more. It seems like this should be a slam dunk investment... However, this situation has existed for years now. Perhaps I'm doing the right thing, or perhaps I'm the idiot here, but I was buying today. Buying common or warrants? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 7, 2016 Share Posted January 7, 2016 Stock is $15.80 today, tangible book was $15.50 last quarter, and a quarter has passed since then (earnings in 2 weeks). Likely trading at roughly tangible book today. So the odds of getting better than 10%-12% forward returns are quite high, even without any multiple expansion. Compared to the general market, not bad. Link to comment Share on other sites More sharing options...
gary17 Posted January 7, 2016 Share Posted January 7, 2016 I believe BAC is quite attractive - in US $ terms As a Canadian... it's now actually more expensive than it was at these levels a while back when the exchange rate was around $1.2... $15.75 x 1.2 = $18.9 CAD/share $15.75 x 1.41 = $22.2 CAD/share We've been making money south of the border here LOL..... I also learned that unless BAC shares are held in the Canadian registered retirement account (RRSP); we will be paying the taxes on BAC shares as if they were income... so for some investors that's still working full time; it could mean 25 - 40%..... albeit one can deduct the 15% withholding tax the US government takes & also the gain can be reduced against interest paid if one uses margin... Still; my rough math seems to suggest if they ever pay a $2 dividend/buyback; one uses leverage could still get about 20% after tax return just on the free cash returned to the shareholders alone; without any multiple expansion.... not too shabby. Link to comment Share on other sites More sharing options...
stahleyp Posted January 7, 2016 Share Posted January 7, 2016 Eric, what are you thinking about the warrants today? Link to comment Share on other sites More sharing options...
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