ERICOPOLY Posted January 16, 2013 Share Posted January 16, 2013 Eric, are you still 100% in BAC or have you cut it down a bit after the recent run up? I haven't sold any BAC. I added some MBI common and AIG calls. Did you lighten up on the warrants or calls? For what it's worth, you're my hero. 8) The only tweaking I've done was to get out of the 2014 BAC calls in my Roth IRA and reinvest in the 2015 BAC calls. I lost a bit of leverage there due to the higher premiums on the 2015 calls. I still have all of the warrants and all of the common. Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 16, 2013 Share Posted January 16, 2013 I might repost the 50 year BofA chart (SRC Green Book of 50 Years) from my post last year ----> ------ http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/bac-wt-bank-of-america-warrants/msg81396/#msg81396 BofA visual overview until 1961 in the "SRC Green Book of 50 Years" (at page 7). http://www.srcstockcharts.com/wp-content/uploads/digital-prods/Dow30-50YearCharts.pdf Specially around the mid 1970's the BAC share price takes a big dive in 1974, from around $5 to $1 (-80%). From there it slowly grows/doubles again from $1 to around $2 (+100%) over some period of 7-8 years,... it goes almost sideways. But then in the early 1980's BofA starts to rise like Peter Lynch type of multi-bagger-rocket til the millennium. ------ Personally I never read charts, because it's a waste of time to read technical horoscopes. But it makes sense to have an occasional peek, the Lynch & Soros way, probably also Buffett's style to see these long-term 20-50 SRC charts that also show the "long term underlying earning streams", so I would consider them actually earnings stream charts. They could also be viewed as fundamental charts, because without enough fuel an airplane couldn't cross the atlantic, the same way a stock couldn't be over a decade a ten-bagger, if the earnings aren't a ten-bagger, or at least go up 5x and the rest comes from an normalizing PE ratio (i.e. expending from an excessively low PE to a more normal PE), so it achieves a 10-bagger. I would never hold BAC or another major bank for 50 years, even if I would still be alive, because over such a long period it did grow only some 7.5% annualized (total return: price + dividends), and this is a reflection of the input of bad credit cycles that can hurt a not-owner managed bank too much. I surely give credits to our Giofranchi's stated opinion recently ;), but for a total upswing of this current credit cycle of perhaps a decade I feel very comfortable holding it. Since we currently write the date, January 2013, not sure yet, but my gut feeling might me comfortable to hold them at least through the decade end. Time will tell, and I will difinilty not fall in love forever with them. But currently we are maybe only in the third inning of a nine or even more innings game. Haven't sold any BAC or AIG (common & warrants), only done myself some tweaking with the BAC leaps from the 2014 cycle to the 2015 cycle. Link to comment Share on other sites More sharing options...
stahleyp Posted January 16, 2013 Share Posted January 16, 2013 Thanks, man. I really do value your thoughts on things. :) Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 16, 2013 Share Posted January 16, 2013 WSJ says Bank of America wants a 'mortgage mulligan' 2012-01-16 Charlotte Business Journal A multibillion-dollar mulligan? That's what The Wall Street Journal is calling Charlotte-based Bank of America's attempt to rejuvenate its mortgage business. http://www.bizjournals.com/charlotte/blog/bank_notes/2013/01/wsj-says-bank-of-america-wants-a.html?ana=yfcpc ------ High Expectations For Bank Of America's 4Q 2012 Earnings Release January 16, 2013 | SeekingAlpha.com http://seekingalpha.com/article/1114741-high-expectations-for-bank-of-america-s-4q-2012-earnings-release?source=yahoo Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 17, 2013 Share Posted January 17, 2013 BofA earnings are out,... and they are even a little better,... the average census estimate was at 2 cents, but they are now 3 cents,... well they already told us before that they would be good if someone would have read between the lines in recent days ;-) ------- Bank of America Reports Fourth-Quarter 2012 Net Income of $0.7 Billion, or $0.03 Per Diluted Share http://finance.yahoo.com/news/bank-america-reports-fourth-quarter-120000116.html Bank of America Corporation today reported net income of $0.7 billion, or $0.03 per diluted share, for the fourth quarter of 2012, compared to $2.0 billion, or $0.15 per diluted share in the year-ago period. Revenue, net of interest expense, on a fully taxable-equivalent (FTE)B basis was $18.9 billion. ----- Here's the article from days ago ----> 1 Reason Bank of America's Earnings Will Be Good 2013-01-14 Fool.com http://www.fool.com/investing/general/2013/01/14/1-reason-bank-of-americas-earnings-will-be-good.aspx ------ So, how could B of A's earnings be good? At this point, you're probably wondering why I believe that B of A's earnings could in any way be good. And the answer to this is simple: It's already told us so. In the same press release cited above, B of A concluded by saying (emphasis added): "Taking into account the effects of all the items above, Bank of America expects earnings per share to be modestly positive for the fourth quarter of 2012." Now, while I can appreciate that this may at first not seem like anything to write home about, I urge you to think about it for a second longer. Despite nearly $6 billion in charge-offs, B of A expects its earnings to be positive. And not barely positive, but modestly positive. This is huge, as it's indicative of how profitable B of A will be once all its legacy issues related to the financial crisis are behind it -- which will happen. On an annualized basis, that's between $2 and $3 per share in earnings, suggesting there's significant upside to both its quarterly dividend payout and underlying share price. Link to comment Share on other sites More sharing options...
Arden Posted January 17, 2013 Share Posted January 17, 2013 These earnings are considered good? They missed forecasts by 14 cents Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 17, 2013 Share Posted January 17, 2013 These earnings are considered good? They missed forecasts by 14 cents Arden,... I myself could become a Woody Allen, if I just stare at the short term news headlines in the last minutes,... ;D don't be so much analytical, and be lazy and relax. MarketWatch ---> Bank of America profits falls after charges Fortune ---> Bank of America beats estimates on weak revenue Reuters ---> Bank of America fourth-quarter profit falls after mortgage-related charges Briefing.com ---> Bank of America beats by $0.01, misses on revs --- Maybe the best headline should be ---> I'm a journalst and I can't decide if BofA made a profit or loss in the 4th Qtr. By Woody Allen, the bipolar business Journalist ;D 2023-01-17 http://www.woodyallen.com/projects.html --- ... the average census estimate at the Yahoo! finance page currently says $0.02 @ 4th qtr 2012 http://finance.yahoo.com/q/ae?s=BAC+Analyst+Estimates . it seems that Bloomberg had other estimates compared with Yahoo! finance, but anyway adjusted for one-time items, they made $0.29 beneath the actual numbers !!! ------ BofA Profit Falls Less Than Estimated After Loan Accord 2013-01-17 Bloomberg.com http://www.bloomberg.com/news/2013-01-17/bofa-profit-falls-less-than-estimated-after-loan-accord.html?cmpid=yhoo Net income dropped in the fourth quarter to $732 million, or 3 cents a diluted share, from $1.99 billion, or 15 cents, a year earlier, according to a statement today from the Charlotte, North Carolina-based company. Adjusted for one-time items, profit was 29 cents a share, beating the 20-cent estimate of 18 analysts surveyed by Bloomberg. --- We here at the boards came to the conclusion that they might give $7b back this year, but there are also some higher estimates. We will see who is right. --- Bank of America may commit as much as $10 billion to dividends and share repurchases in 2013, Ed Najarian, an analyst at International Strategy & Investment Group Inc., said in a November research note. The lender has improved capital by the most among the biggest U.S. banks and could fare comparatively well after Federal Reserve stress tests, he wrote. Passing Grade Moynihan, 53, said Dec. 4 he’s confident Bank of America will pass. The Fed’s approval could lead to a higher dividend or share repurchases. Link to comment Share on other sites More sharing options...
wescobrk Posted January 17, 2013 Share Posted January 17, 2013 TBV declined 12 cents from q3. Basel 3 at 9.25 (75 basis buffer) Link to comment Share on other sites More sharing options...
wescobrk Posted January 17, 2013 Share Posted January 17, 2013 The Fed should approve for 8-10 billion. For 2012 (and q4) return on tangible common equity was sub 3%. cost of equity is low double digits. Until BAC can post at least high single digit rotce, probably a good chance we stay below tbv by mr market. JPM has earned 15% rotce for several quarters and they are trading at 1.2 tbv and .9 book. I know Moynihan will have a lot of pressure to boost the dividend but he should do the absolutle minimum and only double to 2 cents a quarter and tell shareholders the rest will go to buyback as long as stock stays below tbv, once it rises the board will decide how much to go to dividends after that. If Moynihan gets any push back (for those of you that have seen Lincoln) he should point at 3 people on the board regarding everything beyond 2 cents a quarter to go to buybacks and yell:"Now, now, now!" Link to comment Share on other sites More sharing options...
wescobrk Posted January 17, 2013 Share Posted January 17, 2013 I know the whole M&M theory I could use dividends to buy own stock, but it can be a pain. Link to comment Share on other sites More sharing options...
racemize Posted January 17, 2013 Share Posted January 17, 2013 Bruce just said that the successor liability for MBIA is independent of the 8.5 billion settlement. Edit: remainder of the question they avoided any specific comments. Link to comment Share on other sites More sharing options...
Sunrider Posted January 17, 2013 Share Posted January 17, 2013 Yeah - thought that was interesting. Don't think he could've said much else though without prejudicing their negotiation position. Also noted the "[..] they owe us a lot of money in the Global Markets business, which we've marked at cents on the dollar". C. Link to comment Share on other sites More sharing options...
Grenville Posted January 17, 2013 Share Posted January 17, 2013 Around the 20min mark on the CC they clarified the status of the reserves for rep & warrants: Q412 total - 19bln BONY - 8.5bln GSE -6bln remain - 4.5bln Link to comment Share on other sites More sharing options...
racemize Posted January 17, 2013 Share Posted January 17, 2013 Around the 20min mark on the CC they clarified the status of the reserves for rep & warrants: Q412 total - 19bln BONY - 8.5bln GSE -6bln remain - 4.5bln and the GSE 6bln should drop down to 1 or less after they finish the settlement, I believe. Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 17, 2013 Share Posted January 17, 2013 Will Bank of America Deliver on Moynihan's Promise? 2013-01-17 Fool.com http://www.fool.com/investing/general/2013/01/17/will-bank-of-america-deliver-on-moynihans-promise.aspx ----- The 5 Biggest Mortgage Originators in 3Q12 by Market Share http://www.fool.com/investing/general/2012/11/28/the-5-biggest-mortgage-originators-in-3q12.aspx Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 17, 2013 Share Posted January 17, 2013 I own the stock for it's future (not current) earnings, and on this front the quarter was stellar. I think it's their best quarter yet, no? 60+ days delinquent loans serviced declined by 163K, or 17% from 3Q12 Declines in 60+ days delinquent loan trends expected to continue including announced MSR sales (232K) 60+ days delinquent first mortgages in servicing portfolio (# of loans in thousands)773 Total LAS staffing decreased 9K from 3Q12 driven by 6K contractor and offshore reductions as declines in delinquent loans allow for reduced workforce Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 17, 2013 Share Posted January 17, 2013 You see, 773k less 232k (selling the rights to service those loans) leaves them with only 541k troublesome loans left to service. Normalized level is only 250k - 300k of troublesome loans. So they now only have to get through 241k to 291k of excess troublesome loans! Just in Q4 alone, they hacked their way through 163k troublesome loans. They now have fewer than twice that many remaining, and their promise is to not be down to the normalized level for another 8 quarters! LAS expenses should do a cliff dive by year end. And here I was waiting for mid-2015... Underpromise and overdeliver. Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 17, 2013 Share Posted January 17, 2013 I own the stock for it's future (not current) earnings, and on this front the quarter was stellar. I think it's their best quarter yet, no? 60+ days delinquent loans serviced declined by 163K, or 17% from 3Q12 Declines in 60+ days delinquent loan trends expected to continue including announced MSR sales (232K) 60+ days delinquent first mortgages in servicing portfolio (# of loans in thousands)773 Total LAS staffing decreased 9K from 3Q12 driven by 6K contractor and offshore reductions as declines in delinquent loans allow for reduced workforce Bruce says quarterly net interest income estimated to be around $10.5 billion over next several quarters Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 17, 2013 Share Posted January 17, 2013 A couple of months ago Moynihan mentioned that there's a lag of about 6 months before the expenses fully drop off after LAS is down to normal levels. I guess that's charges related to letting people go, waiting for their contracts to run off, etc... So if they get their staff substantially down to normal levels over the next two quarters, we can expect perhaps early in 2014 to get that $12b annual LAS expense down to just $2b. A savings of $10b. Or at least most of it. I don't expect the number of troublesome loans to keep coming down at the rate of 160k per quarter, but at just half that rate we're 100% done by year end. Even by mid-2014 it's just gravy -- we were waiting for mid-2015. Link to comment Share on other sites More sharing options...
MYDemaray Posted January 17, 2013 Share Posted January 17, 2013 You see, 773k less 232k (selling the rights to service those loans) leaves them with only 541k troublesome loans left to service. Normalized level is only 250k - 300k of troublesome loans. So they now only have to get through 241k to 291k of excess troublesome loans! Just in Q4 alone, they hacked their way through 163k troublesome loans. They now have fewer than twice that many remaining, and their promise is to not be down to the normalized level for another 8 quarters! LAS expenses should do a cliff dive by year end. And here I was waiting for mid-2015... Underpromise and overdeliver. Thought I heard "down to 400k by end of 2013". You hear that as well? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 17, 2013 Share Posted January 17, 2013 You see, 773k less 232k (selling the rights to service those loans) leaves them with only 541k troublesome loans left to service. Normalized level is only 250k - 300k of troublesome loans. So they now only have to get through 241k to 291k of excess troublesome loans! Just in Q4 alone, they hacked their way through 163k troublesome loans. They now have fewer than twice that many remaining, and their promise is to not be down to the normalized level for another 8 quarters! LAS expenses should do a cliff dive by year end. And here I was waiting for mid-2015... Underpromise and overdeliver. Thought I heard "down to 400k by end of 2013". You hear that as well? Haven't done the CC yet -- just dealing with getting my kids to school first. Had time for the slide deck only so far. 400k by year end leaves only 100k to 150k of excess troublesome loans. I wonder how much extra staff they need on hand to deal with that load level? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 17, 2013 Share Posted January 17, 2013 This of course is good news for the 2015 call options. The kids may start to believe again if they here Santa's bell ringing strong by the end of 2014. Today they don't believe in Christmas. Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 17, 2013 Share Posted January 17, 2013 Merrill spurs Bank of America revenue though broker count falls 2013-01-17 Reuters.com http://finance.yahoo.com/news/merrill-spurs-bank-america-revenue-154040016.html Thursday was strong news about its global wealth and investment management division, comprised primarily of its Merrill Lynch retail operations. Profit at the unit, which includes the bank's US Trust and other private banking businesses, more than doubled from the fourth quarter of 2011 to $578 million while revenue climbed 6.3 percent to $4.2 billion. Merrill ended 2012 with 14,917 brokers, down 9 percent from 16,413 a year earlier. The total excludes about 1,500 salespeople at Bank of America's Merrill Edge unit for less-affluent clients, which is part of its consumer banking division. Link to comment Share on other sites More sharing options...
ECCO Posted January 17, 2013 Share Posted January 17, 2013 What the market was expecting to drop the stock by more than 3% this morning??? These result are good and conform to what was expected, no? Link to comment Share on other sites More sharing options...
racemize Posted January 17, 2013 Share Posted January 17, 2013 What the market was expecting to drop the stock by more than 3% this morning??? These result are good and conform to what was expected, no? Yeah, I don't really know--I feel like I didn't learn a ton that I didn't already know a few weeks ago. Link to comment Share on other sites More sharing options...
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