BAC-WT - Bank of America Warrants

[ERICOPOLY]

Jeez Eric, you cherry picked my comment.  ;)

 

What is your feeling on Apple?  uh oh....

 

My HP Pavilion running Windows 7 blows Apple's product away for one simple reason:

 

http://h20000.www2.hp.com/bizsupport/TechSupport/Document.jsp?objectID=c00958213

 

I just swipe my finger tip to logon when I open the laptop.  Then when I go to a website like Ebay, I swipe it again and it enters my user name and password automatically.  Then when I pay with PayPal, you guessed it, I just swipe my fingertip.

 

Apple can't touch Windows in ease of use  ;D

[berkshiremystery]

Jeez Eric, you cherry picked my comment.  ;)

 

What is your feeling on Apple?  uh oh....

 

My HP Pavilion running Windows 7 blows Apple's product away for one simple reason:

 

http://h20000.www2.hp.com/bizsupport/TechSupport/Document.jsp?objectID=c00958213

 

I just swipe my finger tip to logon when I open the laptop.  Then when I go to a website like Ebay, I swipe it again and it enters my user name and password automatically.  Then when I pay with PayPal, you guessed it, I just swipe my fingertip.

 

Apple can't touch Windows in ease of use  ;D

 

Hahaha,... damn Eric,... I also have a HP Pavilion with the swipe my finger feature ,... and Apple could never compete with it -- never. I got my Pavilion last year with 2x 1TB hard drives,... Apple notebooks could never compete on those level's. They never offered those maximum levels.

[ERICOPOLY]

I looked at the Q2 conference call transcript last night.

 

They had $17b in non-interest expense in Q2.

 

$1b of that expense was due to legal expenses.

 

Any guesses on how much that (legal expense) will come down in a "normal" operating environment -- when the legacy issues are fully behind them?

 

They had $2.5b quarterly expense from $300b of long term debt, and only $0.5b quarterly expense from $1T of deposits.  Clearly shifting funding from LT debt to deposits is a huge opportunity.  Any guesses on how low they can bring this long term debt over the next 5 years?

 

I believe they have something like $100b or so of loans in runoff -- presumably as these run off they will wipe out $100b of LT debt.  That would save $3.3b a year in interest expense, not to mention the losses those loans generate.

[bmichaud]

http://m.cnbc.com/cnbcvideos/top/1

 

Interesting comments by Gundlach regarding the risk of owning banks in the event Germany decides to not backstop the periphery banking system.

 

Not entirely sure how an American bank would go "kapoot" in that event, but perhaps he's just not sharing the details of how that could play out...

[fareastwarriors]

http://m.cnbc.com/cnbcvideos/top/1

 

Interesting comments by Gundlach regarding the risk of owning banks in the event Germany decides to not backstop the periphery banking system.

 

Not entirely sure how an American bank would go "kapoot" in that event, but perhaps he's just not sharing the details of how that could play out...

 

Part 1

http://video.cnbc.com/gallery/?video=3000116244&play=1

 

Part 2

http://video.cnbc.com/gallery/?video=3000117051&play=1

[ERICOPOLY]

http://m.cnbc.com/cnbcvideos/top/1

 

Interesting comments by Gundlach regarding the risk of owning banks in the event Germany decides to not backstop the periphery banking system.

 

Not entirely sure how an American bank would go "kapoot" in that event, but perhaps he's just not sharing the details of how that could play out...

 

Why would they not just leave the common currency?

 

Germany can leave if they don't want to help pay for the periphery debts.

[bmichaud]

Its export economy and banking system would be in shambles - stronger currency would inhibit exports and EUR denominated banking assets would collapse in value.

[Uccmal]

Its export economy and banking system would be in shambles - stronger currency would inhibit exports and EUR denominated banking assets would collapse in value.

 

That about sums it up.  Germany has more to lose than some of the other members. 

 

Its all politics and rhetoric anyway.  These are all wealthy countries.  Everyone is just angling for the best deal for their constituents.  Take it from a Canadian - its been going on here for 140 years.

[ERICOPOLY]

Its export economy and banking system would be in shambles - stronger currency would inhibit exports and EUR denominated banking assets would collapse in value.

 

Kaletsky pushes his argument further, noting that while a German exit would hammer German insurance companies and banks "because of a mismatch between their euro assets and their new D-Mark liabilities", the German government would be able to bail them out since it would no longer have to spend huge amounts on bailing out peripheral EU states. Moreover, and this is a very telling point, unlike a threatened Greek exit, a German exit would not prompt a capital flight from German banks since the D-Mark would be expected to appreciate in value against the euro, not depreciate.

 

...

 

The German government would gain since it could elect to repay existing German bunds in legacy euros rather than in appreciating D-Marks. German bond holders would get burned, but that's their problem. The alternative, as Kaletsky notes, would be the German government handing bund holders a windfall by repaying them in appreciating D-Marks.

 

 

http://www.econmatters.com/2012/06/merkel-outflanked-in-summit-will.html

[bmichaud]

Forgot to add the Target2 balance owed to the Bundesbank. though it is a good point about being able to bail out the banks post exit...

[meiroy]

Back in August 2010, it's a "value play" with a $16.50 price target:

 

Guggenheim Securities analyst Marty Mosby calls Bank of America a "value play," and upgraded the shares to a buy rating on August 13, with a 12-month target of $16.50.

 

http://www.cnbc.com/id/39068483/Bank_of_America_A_Play_for_the_Recovery

 

Somewhere along the line he lowers it to $10.

 

Then last October he says that it has one of the highest potential returns, so naturally he cuts his price target to $6.50 from $10  ;):

 

Mosby dropped Bank of America to "neutral" from "buy" while lowering his price target to $6.50 from $10. Nonetheless he believes Bank of America "represents one of the highest potential long-term returns."

 

http://www.thestreet.com/story/11272637/1/bank-of-america-downgraded-by-mosby.html

 

Then he sees it cross $5 per share and recommends nothing, waits until it breaks $10 before gaining confidence in saying that it's a "buy" on April 10th after a small pullback and a new $11 target price:

 

http://video.cnbc.com/gallery/?video=3000083572&play=1

 

And I bet he's better than most analysts out there  :P

 

To be fair, isn't this what his clients probably want, to have someone to predict the future for them? To have a false sense of confidence with their gambling? He delivers, and they will keep paying. This is my understanding of this business.

[arbcon]

article in reuters(from wsj) accelerating 16000 in job cuts by end of year(6% of workforce) to counter declining revenues.

http://www.reuters.com/article/2012/09/20/us-bankofamerica-jobs-idUSBRE88J05320120920

 

[JRH]

Kaletsky pushes his argument further, noting that while a German exit would hammer German insurance companies and banks "because of a mismatch between their euro assets and their new D-Mark liabilities", the German government would be able to bail them out since it would no longer have to spend huge amounts on bailing out peripheral EU states. Moreover, and this is a very telling point, unlike a threatened Greek exit, a German exit would not prompt a capital flight from German banks since the D-Mark would be expected to appreciate in value against the euro, not depreciate.

 

...

 

The German government would gain since it could elect to repay existing German bunds in legacy euros rather than in appreciating D-Marks. German bond holders would get burned, but that's their problem. The alternative, as Kaletsky notes, would be the German government handing bund holders a windfall by repaying them in appreciating D-Marks.

 

 

What is the purpose of re-denominating existing assets (deposits, etc...) during a transition to a new currency?

 

I suppose I really need to read Kindleberger.  It seems like a transitioning government would be fine simply transitioning NEW spending/taxation and leave all existing assets alone (except for sovereign debt, which they could repudiate if needed).

 

 

[berkshiremystery]

BofA to cut 16,000 jobs

Sep. 21, 2012

 

http://www.bizjournals.com/dayton/blog/morning_call/2012/09/bofa-to-cut-16000-jobs.html?ana=yfcpc

 

 

Bank of America plans to cut 16,000 jobs by the end of the year, The Wall Street Journal reported Thursday according to New Mexico Business Weekly.

 

The job cuts are part of an accelerated plan to trim the bank’s size and make it more profitable and would leave the company with 260,000 employees, the newspaper said.

 

 

 

-------

 

 

Bank of America Puts This Scary Plan in Action

Sep. 22, 2012

http://wallstcheatsheet.com/stocks/bank-of-america-puts-a-plan-in-action.html/?ref=YF

According to an internal document distributed to top management, Bank of America (NYSE:BAC) plans to refocus its business strategy and cut costs, a proposal that would cut 16,000 jobs by December and end the company’s reign as U.S. banking’s largest employer

 

Under Moynihan’s leadership, Bank of America has dropped several international credit-card units, private-equity holdings, an insurance unit, and stakes in overseas banks. As a result, its total assets have decreased by 7 percent to $2.16 trillion. However, the bank has predicted that the two phases of Project New BAC will result in $8 billion in annual savings by 2015, and so far this year shares in the company are up 69 percent.

 

[berkshiremystery]

 

BofA Unit Said to Lose Millions on Options Error

Sep. 21, 2012

http://online.wsj.com/article/SB10000872396390444620104578011112447236182.html?ru=yahoo&mod=yahoo_hs

 

http://online.wsj.com/article/SB10000872396390444620104578011112447236182.html

 

 

Bank of America Merrill Lynch on Friday sustained a loss approaching $10 million because of an error handling a controversial type of stock-option trading, according to people with knowledge of the issue.

 

An operational error within the banking group's Merrill Pro unit was behind the problem, these people said, though clients of the business weren't affected. The error has since been corrected, they said. Bank of America Merrill Lynch is a division of Bank of America Corp.

 

The error was seen tied to ...

[Olmsted]

Bank of America Merrill Lynch on Friday sustained a loss approaching $10 million because of an error handling a controversial type of stock-option trading, according to people with knowledge of the issue.

 

Not exactly the London Whale or KCG.

[berkshiremystery]

Interesting video discussing interest rate margins at BAC.

 

3 Reasons Bank of America Is So Cheap

Sep. 23, 2012 - The Motley Fool

http://www.fool.com/investing/general/2012/09/23/3-reasons-bank-of-america-is-so-cheap.aspx

 

-----

 

Julius Baer to cut up to 880 jobs at Merrill Lynch unit:

Sep. 23, 2012 - Reuters

http://finance.yahoo.com/news/julius-baer-cut-880-jobs-122721744.html

 

Julius Baer plans to cut between 660 and 880 jobs at Bank of America Merrill Lynch's overseas wealth management business as the integration of the newly acquired unit gets under way

 

 

[biaggio]

Thanks for posting

 

re video

I think I agree with most of what they say, except it seems like there is a bit contradiction. They are concerned with possible decreased interest margin due to QE, yet they love their profitability and ability to right off their bad loans.

 

Hey there's always risk. Its just not that easy.

 

I like the fact that they can borrow for 0.5% and lend out for 3+%, plus all the fees that they can add as needed.

 

I am going with the thesis here that they will be able to grow out of their various issues (bad loans), and if they have trouble then the government will do something to make sure they do ok.

 

It seems that the big worry is QE to infinity + possible recession due to the upcoming fiscal cliff.

 

Over the long run (i.e more than 3 years), will all the QE and expanding money and financial assets not help the banks in that they earn say 1% on assets, and there will be more assets to manage? And hence more profit?

 

If we get a contracting economy due to the fiscal cliff they talk about, the stock price will drop, will this not be an opportunity to average in? We ll get a recession but it won t last forever. There will be more profit later.

 

[onyx1]

How has BAC benefited so far the recently announced QE? As of Fridays close,

 

10-year swap spreads are unchanged from 6/30/2012:

http://www.economagic.com/em-cgi/data.exe/fedbog/day-swp10y

 

and Agency MBS are up over two points in price:

http://www.mortgagenewsdaily.com/mbs/charts.aspx?Product=FNMA35&interval=5

 

Why does this matter?  BAC owned $194 billion in agency MBS as of 6/30/2012!  (page 156, 10-Q)

That's over $4 billion (or $0.37 increase in TBV) in asset appreciation in one week thanks the Fed who is buying every MBS in sight.  Thanks Ben!

[Liberty]

https://www.privateinternetaccess.com/blog/2012/09/warning-bank-of-america-giving-access-to-random-accounts/

[Rabbitisrich]

http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=57646&terms=@ReutersTopicCodes+CONTAINS+%27ANV%27

 

Like his Manhattan federal court colleague Paul Crotty, who granted summary judgment to the bond insurer Syncora in its case against EMC in June, Rakoff said that Assured must only show that the breaches in representations and warranties materially increased the risk that the insurer would suffer losses.

I can already envision MBS noteholders citing this language, which isn't restricted to the insurance contracts, in Rakoff's opinion: "It should also be noted that the transaction documents do not mention 'cause,' 'loss' or 'default' with respect to the defendants' repurchase obligations. If the sophisticated parties had intended that the plaintiff be required to show direct loss causation, they could have included that in the contract, but they did not do so."

[PlanMaestro]

BofA seeks to strengthen M&A arm

http://www.ft.com/cms/s/0/16359e22-0439-11e2-b91b-00144feabdc0.html#ixzz27aVY29oS

 

The departures resurrected memories of how the Charlotte-based bank has suffered from an exodus of former Merrill Lynch dealmakers after its takeover of the investment bank in 2008. It laid bare the mismatch between the bank’s strong position in capital markets and its persistent weakness in M&A advice.

 

In the first eight and a half months of the year, the second-largest US bank by assets ranks sixth globally in M&A advice when measured by fees for completed deals, according to data by ThomsonReuters. “We are number two in all investment banking fees globally and we are leading in financing areas. In M&A we are not yet, so we are focused on rectifying that,” Mr Meissner told the Financial Times.

 

After Mr Orcel’s departure, the Austrian-born Mr Meissner moved quickly to shore up the team. Within a few months, BofA hired seasoned banker Alex Wilmot-Sitwell from UBS to replace Mr Moulds and brought in dealmaker Diego De Giorgi from Goldman Sachs, who will start early next year as co-head of European corporate and investment banking.

 

Mr Meissner, who moved with his family to New York this summer but still spends about half his time in London, can concentrate on Bank of America’s formidable challenge in corporate finance: its weak position in M&A advice.

...

 

People close to Mr Meissner suggest that Mr Orcel’s departure – somewhat counterintuitively – enabled the former Goldman and Lehman banker to further improve BofA’s M&A business.

 

They say the bank will make more money with mandates from Santander – one of Mr Orcel’s key clients – than in the year before. It will also do business with BBVA, the Spanish bank’s domestic rival – a door that had been shut for many years given Mr Orcel’s close association with Santander.

 

 

[hardincap]

bac b warrant pricing continues to confound me. it is at .65, the same price when the stock was at $7 in July. but the stock is now at $9 and the warrants are still stuck at .65. anyone know whats up with that?

[racemize]

bac b warrant pricing continues to confound me. it is at .65, the same price when the stock was at $7 in July. but the stock is now at $9 and the warrants are still stuck at .65. anyone know whats up with that?

 

b warrants are too much leverage for me--maybe there's just not enough people interested in them?

[LC]

bac b warrant pricing continues to confound me. it is at .65, the same price when the stock was at $7 in July. but the stock is now at $9 and the warrants are still stuck at .65. anyone know whats up with that?

 

b warrants are too much leverage for me--maybe there's just not enough people interested in them?

 

I agree with hardincap: most likely not enough volume for the prices to be liquid.