Parsad Posted October 22, 2012 Share Posted October 22, 2012 Must say to anyone watching the screen today the outperformance is becoming more noticeable on BAC. A technical break above $9.60 this week sends us to $10 in a jiffy. Moore, you are so smart, why even throw around the technical mumbo-jumbo! ;D It's going to $10 regardless, break out or not. And it will hit $12 by Christmas...again, no technical mumbo-jumbo, just the plain fact that they should have a good stress test, 4th quarter, and there is no reason why it shouldn't be close to TBV. Speaking of technical analysis, are you going to the Jefferson Conference in New Orleans this week. My partner Alnesh has to go, as he is CFO on a couple of junior resource companies, but I looked at the list of speakers and just shook my head. I would be pulling my hair out listening to many of the speakers there. Cheers! Link to comment Share on other sites More sharing options...
moore_capital54 Posted October 22, 2012 Share Posted October 22, 2012 Must say to anyone watching the screen today the outperformance is becoming more noticeable on BAC. A technical break above $9.60 this week sends us to $10 in a jiffy. Moore, you are so smart, why even throw around the technical mumbo-jumbo! ;D It's going to $10 regardless, break out or not. And it will hit $12 by Christmas...again, no technical mumbo-jumbo, just the plain fact that they should have a good stress test, 4th quarter, and there is no reason why it shouldn't be close to TBV. Speaking of technical analysis, are you going to the Jefferson Conference in New Orleans this week. My partner Alnesh has to go, as he is CFO on a couple of junior resource companies, but I looked at the list of speakers and just shook my head. I would be pulling my hair out listening to many of the speakers there. Cheers! Haha no way on the New Orleans Conference. Have been there before its pretty crazy. TA helps guide entries and exits while fundamentals are the reason we buy or sell a security. Cant help but notice BAC about to break through a resistance level that was set in March and it feels very exciting. Not all TA is hogwash Parsad even if you follow BAC only by looking at the last stock price without a chart (something I could never imagine anybody doing) you should still be noticing the price action is indicative of a large move to the upside. Link to comment Share on other sites More sharing options...
Parsad Posted October 22, 2012 Share Posted October 22, 2012 Must say to anyone watching the screen today the outperformance is becoming more noticeable on BAC. A technical break above $9.60 this week sends us to $10 in a jiffy. Moore, you are so smart, why even throw around the technical mumbo-jumbo! ;D It's going to $10 regardless, break out or not. And it will hit $12 by Christmas...again, no technical mumbo-jumbo, just the plain fact that they should have a good stress test, 4th quarter, and there is no reason why it shouldn't be close to TBV. Speaking of technical analysis, are you going to the Jefferson Conference in New Orleans this week. My partner Alnesh has to go, as he is CFO on a couple of junior resource companies, but I looked at the list of speakers and just shook my head. I would be pulling my hair out listening to many of the speakers there. Cheers! Haha no way on the New Orleans Conference. Have been there before its pretty crazy. TA helps guide entries and exits while fundamentals are the reason we buy or sell a security. Cant help but notice BAC about to break through a resistance level that was set in March and it feels very exciting. Not all TA is hogwash Parsad even if you follow BAC only by looking at the last stock price without a chart (something I could never imagine anybody doing) you should still be noticing the price action is indicative of a large move to the upside. It's moving up because they are removing uncertainty. As more issues disappear, the stock will be fully priced closer to book...may be two years out though. But there is no reason that it should not be at TBV right now. A discount to book...yes...due to legacy issues and litigation. But the discount to TBV assumes that their provisions should be doubled for losses and I think the markets do not realize that would be incredibly excessive. Their provisions may be out even 30-50%, and you still should have the stock at TBV. It's always fun to watch these things unfold. Cheers! Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 22, 2012 Share Posted October 22, 2012 It's moving up because they are removing uncertainty. That's why I boosted my stake after Wednesday's report. I assume rational people will do the same. Link to comment Share on other sites More sharing options...
rkbabang Posted October 23, 2012 Share Posted October 23, 2012 I'm not sure my BAC position could get much more aggressive. I seem to like the class A warrants a lot. You can always get more aggressive. Sell everything and put 100% into Nov 2012 $18 calls. The ask is just 2 cents right now, I bet you could get some for a penny. Link to comment Share on other sites More sharing options...
LC Posted October 23, 2012 Share Posted October 23, 2012 It's moving up because they are removing uncertainty. That's why I boosted my stake after Wednesday's report. I assume rational people will do the same. I doubled up on A-Warrants today...they seem to be the most attractive way to leverage up this situation. In absolute dollar terms I'm split about 60/40 between common and warrants. With just under 6 years of time value on a stock that is already undervalued....I won't struggle to sleep easy tonight, Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 23, 2012 Share Posted October 23, 2012 I'm not sure my BAC position could get much more aggressive. I seem to like the class A warrants a lot. You can always get more aggressive. Sell everything and put 100% into Nov 2012 $18 calls. The ask is just 2 cents right now, I bet you could get some for a penny. I'm probably about 2.6x levered (notional value) at $10 stock price (this assumes warrants at expiry convert to 1.2 shares with $10 strike price). Mostly I can put it in cruise control after this stock works out -- this is orbit-gathering velocity. My taxable account is all common+ 'A'warrants (and a few 2015 $10 calls), and my Roth IRA is a mix of $7,$10, and 'A' warrants. Link to comment Share on other sites More sharing options...
JEast Posted October 23, 2012 Share Posted October 23, 2012 Ye ole New Orleans Conference. That should be a favorite of you northern junior mining experts. However, I guess after Bre-x much interest has been lost. Back to the theme at hand, I found the chart of divergence of BAC compared to the A Warrants interesting over the last four (4) months. http://s18.postimage.org/n9xjdl20p/BAC_Warrants_vs_BAC_Common.png Cheers JEast Link to comment Share on other sites More sharing options...
Uccmal Posted October 23, 2012 Share Posted October 23, 2012 It's moving up because they are removing uncertainty. That's why I boosted my stake after Wednesday's report. I assume rational people will do the same. I doubled up on A-Warrants today...they seem to be the most attractive way to leverage up this situation. In absolute dollar terms I'm split about 60/40 between common and warrants. With just under 6 years of time value on a stock that is already undervalued....I won't struggle to sleep easy tonight, I have added to A's and 10$ 2015s - My Investment in Bac will surpass Ffh very soon. Those warrants are insanely cheap - 25000 and counting.... As an aside, BAc was consistently in the top Traded stocks on the pre-market for nearly two years until a couple of weeks ago. The speculative froth is dropping off, I guess. My stab at TA for this decade. Link to comment Share on other sites More sharing options...
LC Posted October 23, 2012 Share Posted October 23, 2012 Back to the theme at hand, I found the chart of divergence of BAC compared to the A Warrants interesting over the last four (4) months. I'm actually surprised the correlation was so strong in the past: I would expect the warrants to lag the underlying stock given the time value of the option. Link to comment Share on other sites More sharing options...
Arden Posted October 23, 2012 Share Posted October 23, 2012 In july, when the share price was 6.5$ and the warrant traded at 3.2$, the breakeven price was over 25$. Right now it's 19.6$. This is very, very significant as when a share rises, you expect the breakeven point to rise, not fall. Just to illustrate how different the situation is now- in july you needed an average annual rise in the share of 24.6% annualy until the strike to break even with the share. At the moment you need an average rise of 12.1%. The situation has changed completely, and for the better. I disagree that this is due to the time value- this only makes sense if the share rises less than it is expected to in a given time period, but certainly if the share rises by almost 50% the warrant should rise much more than that. Could be the drop in volatility though. Link to comment Share on other sites More sharing options...
meiroy Posted October 23, 2012 Share Posted October 23, 2012 Or maybe the price in July was "incorrect" to begin with, if we were to choose a different comparison bias... Or, maybe, someone with a very large holding is slowly dumping their shares. Who knows. Link to comment Share on other sites More sharing options...
Arden Posted October 23, 2012 Share Posted October 23, 2012 I agree, Did I say the price in July was correct? What I've calculated- the breakeven price- is objective, not a matter of opinion or bias. Also, my "conclusion" that the situation has changed for the better is also pretty objective. I'm not trying to explain why this is so, and I'm not predicting anything, I apologize if I was unclear. Link to comment Share on other sites More sharing options...
Uccmal Posted October 23, 2012 Share Posted October 23, 2012 I agree, Did I say the price in July was correct? What I've calculated- the breakeven price- is objective, not a matter of opinion or bias. Also, my "conclusion" that the situation has changed for the better is also pretty objective. I'm not trying to explain why this is so, and I'm not predicting anything, I apologize if I was unclear. Whether the prices were or are correct is not meaningful. The "a"s are trading at about a 60% discount to their peers at JPM and WFC: WFC.ws - 9.94 - WFC trading at the strike price Jpm.ws - 11.52 - JPM trading at 0.40$ below strike price - call it even bac.ws.a - stock is 3.80 below strike price. Add this difference to 3.70 and you get 7.50; or at least 2$ cheaper than either of the above. For comparison AIG warrants stirke is 45 and they are trading at 14.50, with common at 9.50 below strike. That adds up to 24$ if they were actually at the strike. Now, I am fully cognizant that the math on this is very bad, but it seems the BAC warrants are cheap on a ballpark basis. I expect as the stock closes on the strike the warrants will price upward very rapidly, probably on a nearly, one to one basis. Link to comment Share on other sites More sharing options...
Sunrider Posted October 23, 2012 Share Posted October 23, 2012 Yes - the volatility has come down in the warrants - still above the common though so further IV compression may well offset gains in the stock for a while. C. Link to comment Share on other sites More sharing options...
Uccmal Posted October 23, 2012 Share Posted October 23, 2012 Brian blowing the BAC horn: http://www.bloomberg.com/news/2012-10-23/bofa-ceo-moynihan-declares-victory-over-capital-doubters.html Link to comment Share on other sites More sharing options...
meiroy Posted October 23, 2012 Share Posted October 23, 2012 Now, I am fully cognizant that the math on this is very bad, but it seems the BAC warrants are cheap on a ballpark basis. I expect as the stock closes on the strike the warrants will price upward very rapidly, probably on a nearly, one to one basis. If it gets to the strike tomorrow, than maybe. If a year from now than maybe not due to the decay in time value. I'm saying this because you are implying the BAC.A should behave similar to the WFC warrants (thus they are cheaper) and the fact is that when WFC common passed the strike price nothing really happened. Do you have any idea how all these TARP warrants were priced in the first place? Would love to know the answer to that. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted October 23, 2012 Share Posted October 23, 2012 I wonder if Berkowitz hogging 5,570,428 BAC "A" warrants (as of the end of May 2012) skews the comparison to common at all. Link to comment Share on other sites More sharing options...
LC Posted October 23, 2012 Share Posted October 23, 2012 Brian blowing the BAC horn: http://www.bloomberg.com/news/2012-10-23/bofa-ceo-moynihan-declares-victory-over-capital-doubters.html If the dividend increases I wonder how the warrants will move in regards to the adjusted strike price. Link to comment Share on other sites More sharing options...
Parsad Posted October 23, 2012 Share Posted October 23, 2012 Brian blowing the BAC horn: http://www.bloomberg.com/news/2012-10-23/bofa-ceo-moynihan-declares-victory-over-capital-doubters.html He didn't go overboard or anything, but I would prefer if he just kept his head down and kept on plowing away. Don't worry about the competition, just go about your business and keep doing the right thing. Cheers! Link to comment Share on other sites More sharing options...
mysticdrew Posted October 23, 2012 Share Posted October 23, 2012 I wonder if Berkowitz hogging 5,570,428 BAC "A" warrants (as of the end of May 2012) skews the comparison to common at all. First thought would be it probably does skew it... but then again it would in my mind skew it towards being overvalued relative to common since the supply is much more limited and I thunk the view is it's undervalued relative to common. Who knows! Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 23, 2012 Share Posted October 23, 2012 Last summer it was hard to purchase the A warrants without moving the price. Lately, if I put in a large order it fills easily. There is much more eagerness to fill my orders. Back in March the A warrants reached $5.50 on a $10.10 stock price. So that's like 5% higher stock price than yesterday, yet a 48% higher warrant price. Link to comment Share on other sites More sharing options...
benchmark Posted October 23, 2012 Share Posted October 23, 2012 Last summer it was hard to purchase the A warrants without moving the price. Lately, if I put in a large order it fills easily. There is much more eagerness to fill my orders. Back in March the A warrants reached $5.50 on a $10.10 stock price. So that's like 5% higher stock price than yesterday, yet a 48% higher warrant price. Same here, my A warrant purchase was filled easily, and I don't understand the price action -- I just get as much as I can :) Link to comment Share on other sites More sharing options...
bobp Posted October 23, 2012 Share Posted October 23, 2012 I don't know if the formula for dividend adjustment has been covered here. Here goes: As an example - BAC trading at $10 pays a .06 quarterly div. The 13.60 exercise should adjust to 13.532. The adjustment is greater than the div. 9.95 (10 - .05 (div. - .01 threshold) / Price 10 = .995 .995 times the current ex price 13.60 = 13.532 new exercise price. If the price and div remained the same the next quarter, 10 and .06, then .995 times 13.532 gives a new strike of 13.4643. The strike adjusts more than the div minus the penny threshold. If a div is paid with the stock higher than strike, the adjustment is less than the div. If any of this is incorrect please correct me but this is the formula as I read it in the prospectus. The amount of shares purchaseable? increases slightly as well. 13.6/13.532 = 1.005 shares. Not really a factor I guess. Hartford warrants, for an example, have adjusted by the same formula. Also, many of these tarp warrants charted against their common have underperformed in 2012. They've obviously lost some time but I think they've been ignored or are just out of favor. Of course they could just have been overpriced previously. Whew. That tired me out. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 23, 2012 Share Posted October 23, 2012 Last summer, '11, we had a discussion about how the AIG warrants looked to be very attractive but relatively speaking the A warrants for BAC looked quite a bit more expensive. Now the AIG warrant is priced at about 40% of the common price, and the BAC warrant is also now priced at about 40% of the common. And both stocks are priced fairly similarly relative to the warrant strike. Link to comment Share on other sites More sharing options...
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