BAC-WT - Bank of America Warrants

[ERICOPOLY]

Alledgedly Tom Brown wrote the following when the Countrywide acquisition was announced:

 

There's still a awful lot of meat on the bones at Countrywide, and Ken is getting it at a great price. It's been at least a decade since I liked any of B of A's deals. But this one may make sense.

[valuecfa]

Alledgedly Tom Brown wrote the following when the Countrywide acquisition was announced:

 

There's still a awful lot of meat on the bones at Countrywide, and Ken is getting it at a great price. It's been at least a decade since I liked any of B of A's deals. But this one may make sense.

 

In Tom's defense (...i can't believe i am defending Tom), practically no analysts or financial journalists understood the significance of the reps & warranties and other legal exposures until quite a while after the acquisition.

[Parsad]

Alledgedly Tom Brown wrote the following when the Countrywide acquisition was announced:

 

There's still a awful lot of meat on the bones at Countrywide, and Ken is getting it at a great price. It's been at least a decade since I liked any of B of A's deals. But this one may make sense.

 

Tom Brown was probably one of the people who got the credit crisis more wrong than anyone else.  I would take what he says with a grain of salt.  I liked how concise his analysis was in that article, as it summed up most of our sentiments about BAC, but I wouldn't view his analysis one way or the other.  Cheers!

[PlanMaestro]

BofA shifts derivatives to UK.

http://www.ft.com/intl/cms/s/0/bfa85380-68a4-11e2-8c20-00144feab49a.html#axzz2J8s0hfT4

 

Bank of America, the world’s number 10 bank by assets, is currently one of the biggest banks in Ireland. Although its domestic Irish operations are small, it has traditionally routed a large chunk of its European operations – corporate lending and cash management as well as the derivatives book – through the Dublin subsidiary. BofA inherited the operation, MLIB, when it acquired Merrill Lynch at the height of the financial crisis.

 

But bankers said Irish officials had made it clear they were uncomfortable with such a large book of business being Dublin-based, theoretically posing a risk to Irish taxpayers. At the same time UK regulators were keen to have closer control of Bank of America’s European business, whose operational management is in London.

 

[…]

 

According to its most recent disclosures, the bank is sitting on more than $8bn of so-called deferred tax assets in the UK, against which it can offset profits to reduce or eliminate its corporate tax bill.

 

There is added time pressure on the bank to use up its DTAs because their eligibility as core capital will be eliminated by the incoming Basel III capital rules.

 

[Uccmal]

Alledgedly Tom Brown wrote the following when the Countrywide acquisition was announced:

 

There's still a awful lot of meat on the bones at Countrywide, and Ken is getting it at a great price. It's been at least a decade since I liked any of B of A's deals. But this one may make sense.

 

Tom Brown was probably one of the people who got the credit crisis more wrong than anyone else.  I would take what he says with a grain of salt.  I liked how concise his analysis was in that article, as it summed up most of our sentiments about BAC, but I wouldn't view his analysis one way or the other.  Cheers!

 

 

And boy did he ever get it wrong.  I used to read his blog frequently until summer 2008 when he was completely off base.  His present day BAC analysis seems fairly sound though.

 

I really enjoyed BMs Davos interview.  He has improved.  More experience, less stress.  Can you imagine the learning curve involved in taking over that job.  I like that he is not charismatic but is just a plain boring banker.

[Kraven]

Alledgedly Tom Brown wrote the following when the Countrywide acquisition was announced:

 

There's still a awful lot of meat on the bones at Countrywide, and Ken is getting it at a great price. It's been at least a decade since I liked any of B of A's deals. But this one may make sense.

 

Tom Brown was probably one of the people who got the credit crisis more wrong than anyone else.  I would take what he says with a grain of salt.  I liked how concise his analysis was in that article, as it summed up most of our sentiments about BAC, but I wouldn't view his analysis one way or the other.  Cheers!

 

Agreed.  At the end of the day I think he is a good bank analyst, all things considered.  Obviously he got the credit crisis very wrong though.    That being said, I have never understood a number of the stocks he holds at his fund.  I have always viewed what he says as interesting and as you say to be taken with a grain of salt, but I little credence to his individual stock selections.

[Parsad]

Seeking Alpha article on the move of BAC's DTA book from Dublin to London.  Cheers!

 

http://seekingalpha.com/article/1137811-bank-of-america-s-deferred-tax-assets-worth-almost-2-per-share?source=yahoo

[vinod1]

Seeking Alpha article on the move of BAC's DTA book from Dublin to London.  Cheers!

 

http://seekingalpha.com/article/1137811-bank-of-america-s-deferred-tax-assets-worth-almost-2-per-share?source=yahoo

 

I do not see how the math adds up.

 

Since we know BAC has about $8 billion in deferred tax assets in its British subsidiary and we also know that most (or all) of the net income that will be used to retire the DTAs will accrue after the April lowering of the corporate tax rate in the U.K., we can assume that the DTAs are worth in the neighborhood of $1.84 billion to the parent company and its shareholders. With BAC's roughly 10.8 billion shares outstanding, this means $0.17 per share in net income will theoretically accrue to BAC over the next few years or sooner. At an earnings multiple of 10, this should add something like $1.50 to $2.00 to BAC's share price over the period when the DTAs are retired.

 

In other words, how does something that is worth $1.84 billion amount to $1.5 to $2 per share of BAC. The author seems to be annualizing what should be a one time gain of $1.84 billion.

 

Vinod

 

 

[Parsad]

Seeking Alpha article on the move of BAC's DTA book from Dublin to London.  Cheers!

 

http://seekingalpha.com/article/1137811-bank-of-america-s-deferred-tax-assets-worth-almost-2-per-share?source=yahoo

 

I do not see how the math adds up.

 

Since we know BAC has about $8 billion in deferred tax assets in its British subsidiary and we also know that most (or all) of the net income that will be used to retire the DTAs will accrue after the April lowering of the corporate tax rate in the U.K., we can assume that the DTAs are worth in the neighborhood of $1.84 billion to the parent company and its shareholders. With BAC's roughly 10.8 billion shares outstanding, this means $0.17 per share in net income will theoretically accrue to BAC over the next few years or sooner. At an earnings multiple of 10, this should add something like $1.50 to $2.00 to BAC's share price over the period when the DTAs are retired.

 

In other words, how does something that is worth $1.84 billion amount to $1.5 to $2 per share of BAC. The author seems to be annualizing what should be a one time gain of $1.84 billion.

 

Vinod

 

Yeah, that does not make sense.  Cheers!

[onyx1]

Seeking Alpha article on the move of BAC's DTA book from Dublin to London.  Cheers!

 

http://seekingalpha.com/article/1137811-bank-of-america-s-deferred-tax-assets-worth-almost-2-per-share?source=yahoo

 

I do not see how the math adds up.

 

Since we know BAC has about $8 billion in deferred tax assets in its British subsidiary and we also know that most (or all) of the net income that will be used to retire the DTAs will accrue after the April lowering of the corporate tax rate in the U.K., we can assume that the DTAs are worth in the neighborhood of $1.84 billion to the parent company and its shareholders. With BAC's roughly 10.8 billion shares outstanding, this means $0.17 per share in net income will theoretically accrue to BAC over the next few years or sooner. At an earnings multiple of 10, this should add something like $1.50 to $2.00 to BAC's share price over the period when the DTAs are retired.

 

In other words, how does something that is worth $1.84 billion amount to $1.5 to $2 per share of BAC. The author seems to be annualizing what should be a one time gain of $1.84 billion.

 

Vinod

 

I had the same reaction.  Plus, he says the UK operation is losing money and the DTAs will be worth more when transfered to the UK?

[Parsad]

Moynihan Calls For Renewed Focus on Customers.  Cheers!

 

http://www.reuters.com/article/2013/01/29/bankofamerica-service-idUSL1N0AXKSW20130129?feedType=RSS&feedName=financialsSector&rpc=43

[Liberty]

Moynihan Calls For Renewed Focus on Customers.  Cheers!

 

http://www.reuters.com/article/2013/01/29/bankofamerica-service-idUSL1N0AXKSW20130129?feedType=RSS&feedName=financialsSector&rpc=43

 

"Bank of America posted the lowest score among four large U.S. banks in a report last month by the American Customer Satisfaction Index, and was the only large bank whose score had not matched or eclipsed pre-crisis levels. "

 

Not good, but also an opportunity to improve.

[fareastwarriors]

http://www.bloomberg.com/news/2013-01-29/bofa-argues-aig-can-t-sue-over-devalued-mortgage-bonds.html

 

BofA Argues AIG Can’t Sue Over Devalued Mortgage Bonds

 

 

Bank of America Corp. lawyers asked a federal judge to dismiss American International Group Inc. (AIG)’s fraud claims over devalued Countrywide Financial mortgage-backed securities it had to sell as part of the government bailout.

 

U.S. District Judge Mariana Pfaelzer, at a hearing today in Los Angeles, didn’t rule on Bank of America’s request. The bank, which acquired Countrywide in 2008, argued that AIG transferred the right to sue over the securities when it sold them as part of a $21 billion transaction to an entity created by the Federal Reserve Bank of New York.

 

“AIG cannot pursue claims here that it long ago signed away as part of the government bailout,” Bank of America lawyer Richard St. John said at the hearing.

 

 

[fareastwarriors]

fyi

[jeffmori7]

Thanks fareastwarriors! Chou has a pretty big position I must say.

 

But I'm also curious to know how large are this board positions in BAC and AIG? I am wondering it there could be a way to set up an intelligent anonymous poll which would help us estimate our total stake here on this board..this must be impressive too!

[Kraven]

Moynihan Calls For Renewed Focus on Customers.  Cheers!

 

http://www.reuters.com/article/2013/01/29/bankofamerica-service-idUSL1N0AXKSW20130129?feedType=RSS&feedName=financialsSector&rpc=43

 

I always find this kind of thing humorous.  It's the type of thing that comes out of the annual offsite meeting of top managers where some highly paid consultant comes up with the bullet points of top priorities for the upcoming year.  It looks something like this:

 

- focus on customer

- focus on high value engagements

- be a trusted advisor to clients

- monitor costs

 

This is shown in a power point between lunch and dinner.  Most people are fading, but pretending not to.  The line at the table with coffee and cookies gets longer and longer and people keep stepping out to "use the bathroom", but 30 min later you see them pacing the hall while on their cell phone gesturing wildly so that anyone who sees them knows they are on an important call and can't possibly return to the room.

[Sunrider]

Moynihan Calls For Renewed Focus on Customers.  Cheers!

 

http://www.reuters.com/article/2013/01/29/bankofamerica-service-idUSL1N0AXKSW20130129?feedType=RSS&feedName=financialsSector&rpc=43

 

I always find this kind of thing humorous.  It's the type of thing that comes out of the annual offsite meeting of top managers where some highly paid consultant comes up with the bullet points of top priorities for the upcoming year.  It looks something like this:

 

- focus on customer

- focus on high value engagements

- be a trusted advisor to clients

- monitor costs

 

This is shown in a power point between lunch and dinner.  Most people are fading, but pretending not to.  The line at the table with coffee and cookies gets longer and longer and people keep stepping out to "use the bathroom", but 30 min later you see them pacing the hall while on their cell phone gesturing wildly so that anyone who sees them knows they are on an important call and can't possibly return to the room.

 

Hey!

 

You forget the "no regret" and "bold moves" a McK favourite!

 

C.

[Kraven]

Moynihan Calls For Renewed Focus on Customers.  Cheers!

 

http://www.reuters.com/article/2013/01/29/bankofamerica-service-idUSL1N0AXKSW20130129?feedType=RSS&feedName=financialsSector&rpc=43

 

I always find this kind of thing humorous.  It's the type of thing that comes out of the annual offsite meeting of top managers where some highly paid consultant comes up with the bullet points of top priorities for the upcoming year.  It looks something like this:

 

- focus on customer

- focus on high value engagements

- be a trusted advisor to clients

- monitor costs

 

This is shown in a power point between lunch and dinner.  Most people are fading, but pretending not to.  The line at the table with coffee and cookies gets longer and longer and people keep stepping out to "use the bathroom", but 30 min later you see them pacing the hall while on their cell phone gesturing wildly so that anyone who sees them knows they are on an important call and can't possibly return to the room.

 

Hey!

 

You forget the "no regret" and "bold moves" a McK favourite!

 

C.

 

Yes, of course.  There's also the consultant who gives the talk.  He's always in his 40s or 50s, but young looking and very dynamic.  Kind of like a Tony Robbins type.  He likes to take the microphone and walk around where the tables are.  Just in case you don't know he spends a lot of time with senior management he jokes around with them and refers to them by first name and mentions one or 2 inside jokes. 

 

Then it's time for questions from the crowd.  A few earnest people will ask for more color on things. ''Can you explain more about focusing on customers?"  "A number of us would like to become more trusted advisors to our clients, but we're not sure we have the tools.  Is this something you can help with?"

[enoch01]

Thanks for the early morning laughs Kraven!  Sounds like you've been through that once or twice  :)

 

We just endured something similar where I work, and you are uncannily accurate.

[Kraven]

Thanks for the early morning laughs Kraven!  Sounds like you've been through that once or twice  :)

 

We just endured something similar where I work, and you are uncannily accurate.

 

Once or twice.  So if you just had something similar, here's what comes next.  Within days after the meeting the emails from senior management start to fly.  Everyone is excited, there's an "energy" people have after the great couple of days together.  Ideas are flowing.  So the emails will lay out the gameplan for the next couple of months and assure everyone that unlike after past meetings this time there will be real followup. 

 

There will be direction to group heads to come up with a realistic plan so that the goals from the meeting can be implemented.  Group heads will forward these emails on and tell people to get back to them ASAP.  Privately they will bitch about it, but say "hey, that's what they want".  There will be some half hearted lunches in the office and the shit will roll down hill so that the most junior person in the room gets stuck putting something together that can be forwarded back to management.

 

Within a month or so, senior management will say they've been gathering reports from the group heads and "we're making fantastic progress".  They say they will get back to everyone within a week or 2 at the absolute latest.  6 months later some foolish young soul will ask in a meeting, "hey, whatever happened to our presentation on customer focus?"  Ah, now pandora's box has been opened because once the words are voiced now no one can pretend they didn't hear it and someone is forced to follow up.  An email will be sent by someone senior enough to matter, but junior enough to be forced to do it.  They'll ask at the bottom of a very long email about a completely different topic and there will be no response.  People will breathe a sigh of relief.

 

4-5 months later the emails will start going around from HR or the equivalent saying that "we're planning the next offsite and would love for you to forward us any ideas you have.  The meeting will be here before you know it!  Look forward to seeing you all there!"  The meeting will arrive, everyone will gather in a similar ballroom eating cookies and drinking coffee 3 minutes after just having had a big lunch at 11 am.  A power point will be waiting on the screen and it will be no mystery what happens next.

[warrior]

LOL!!! Excellent observation…..

I would add, that on the “new” offside gathering you might  see  a “new” strategy  , and sometimes "new "consultants and of course the “new” strategy  such as… customer satisfaction ,  gaining market share , be one bank- one adviser ect……

 

 

[stylized_fact]

Thanks for the early morning laughs Kraven!  Sounds like you've been through that once or twice  :)

 

We just endured something similar where I work, and you are uncannily accurate.

 

Sounds like an expanded definition of Institutional Imperative.  It would be funny if it wasn't so true and so widespread!  Thanks for sharing nonetheless.

[fareastwarriors]

per PlanMaestro request,

 

snapshot of holders of

B warrants

[enoch01]

Thanks for the early morning laughs Kraven!  Sounds like you've been through that once or twice  :)

 

We just endured something similar where I work, and you are uncannily accurate.

 

Once or twice.  So if you just had something similar, here's what comes next.  Within days after the meeting the emails from senior management start to fly.

Check - already happened.

 

Everyone is excited, there's an "energy" people have after the great couple of days together.  Ideas are flowing.

Check - already happened.

 

So the emails will lay out the gameplan for the next couple of months and assure everyone that unlike after past meetings this time there will be real followup.

Check - already happened. 

 

There will be direction to group heads to come up with a realistic plan so that the goals from the meeting can be implemented.  Group heads will forward these emails on and tell people to get back to them ASAP.  Privately they will bitch about it, but say "hey, that's what they want".  There will be some half hearted lunches in the office and the shit will roll down hill so that the most junior person in the room gets stuck putting something together that can be forwarded back to management.

 

We are somewhere around this point.  We have a "taskforce" already, which has made some recommendations that will be considered by the board.  Then...well then I'm not sure what will happen specifically.

 

I am almost zealously skeptical of these processes.  I just can't see how much breakthrough in transformation / improvement can come from having (1) so many people involved in the process (diluted insights and recommendations), and (2) an outside consultant involved (they have no skin in the game).

 

I wonder how much human capital is constrained by such nonsense happening year in and year out.

 

Thanks again for your comments - struck my funny bone.

[gokou3]

Looks like BAC will save millions of rents soon:

 

http://www.bloomberg.com/news/2013-02-01/brookfield-office-rallies-on-lower-manhattan-lease-talks.html?cmpid=yhoo

 

Brookfield, lower Manhattan’s largest office landlord, has about 3 million square feet of pending vacancies at World Financial Center, which is being renamed Brookfield Place. Most of that is space Bank of America Corp. (BAC) inherited with its 2009 takeover of Merrill Lynch & Co. Those leases will expire by the end of the year.