BAC-WT - Bank of America Warrants

[xazp]

I can't tell if we are agreeing or disagreeing.  Are you assuming that BAC earns $2/share in 2013?  To me that's an aggressive assumption.  I don't see that level of earnings until 2015 at the earliest.  And $2/share in 2015 I see as possible, but not likely. 

 

 

Can you go a bit deeper into your assumptions?  For example:

 

what earnings are you assuming each year?  Are you subtracting the dividends out of TE as they are paid? 

 

are you making assumptions about stock buybacks?  Because if you are saying that a $20TE/sh = $30/sh price, then buybacks have the impact of lowering TE/share.

 

For now, buybacks have the impact of boosting TE/share, but we are not far from the point where it will actually reduce TE/share.  So I think you have to be more explicit about your

capital return assumptions to show how we'd get to $33/share. 

 

It was by no means an elaborate model, but simply started with normalized earnings of 15% ROTE of current TE (~$2 per share), and presumed some growth of normalized earnings from there--I'm still tinkering with the idea in my head while working today. 

 

However, I do not think the TE should decrease if they are paying out 33% of the earnings--it should in fact go up by the remaining 66% of earnings, or 33% if the other 33% is used for buybacks, unless I'm missing something.  The TE would go up by $1.33 per year under the 33% dividend/no buyback model. 

 

I have generally not been considering that BAC will have a lower TE now than in the future--is that part of your understanding/modeling?

 

Edit: please punch holes in this if I'm making any bad assumptions!

[racemize]

Well, I guess I was talking about what earnings would be possible with current TE, but I don't expect them until 2015-2016, so I agree there.  From that point, the question is how much we can expect earnings to increase by the end of 2018.  It isn't too difficult to get over $30 a share on dividend basis if earnings are in the high $2 per share (maybe we can get to $3?), is my main point.

[xazp]

I think where I differ from many here: I think BAC is a mediocre bank.  A mediocre bank of BAC's size can probably earn $2/share.  That's pretty much inline with BAC's investor day presentation outlining their "normalized earnings" which they put at about $37Bn pre-tax, which at a 33% tax rate works out to a little above $2/share after-tax. 

 

I view JPM as a good bank.  JPM's normalized earnings are around $27.5Bn.  But JPM has been investing in growth while BAC has been cleaning up their old mess.  JPM is both a bigger bank, and a better run bank.  I don't view BAC as earning more than JPM, which is what your upper $2 estimate implies. 

 

The only real way I think BAC could push up their earnings is to really cut back on their share count.  But, to my continuing disappointment, they have done poorly.  When they gave away warrants to Buffett at $7, and when they issued bonuses in equity also in the single digits, they have really been wasting shareholder value. 

 

I think my view is kind of close to Tom Brown's which is that he's just anticipating for them to return to mediocrity.  That should get BAC stock into the high teens or low $20's, which is a pretty awesome return.  But at least for me, I would probably be a seller at around $20. 

 

Well, I guess I was talking about what earnings would be possible with current TE, but I don't expect them until 2015-2016, so I agree there.  From that point, the question is how much we can expect earnings to increase by the end of 2018.  It isn't too difficult to get over $30 a share on dividend basis if earnings are in the high $2 per share (maybe we can get to $3?), is my main point.

[jay21]

Can you elaborate on why you think BAC is a mediocre bank and JPM is a good bank?

 

I think where I differ from many here: I think BAC is a mediocre bank.  A mediocre bank of BAC's size can probably earn $2/share.  That's pretty much inline with BAC's investor day presentation outlining their "normalized earnings" which they put at about $37Bn pre-tax, which at a 33% tax rate works out to a little above $2/share after-tax. 

 

I view JPM as a good bank.  JPM's normalized earnings are around $27.5Bn.  But JPM has been investing in growth while BAC has been cleaning up their old mess.  JPM is both a bigger bank, and a better run bank.  I don't view BAC as earning more than JPM, which is what your upper $2 estimate implies. 

 

The only real way I think BAC could push up their earnings is to really cut back on their share count.  But, to my continuing disappointment, they have done poorly.  When they gave away warrants to Buffett at $7, and when they issued bonuses in equity also in the single digits, they have really been wasting shareholder value. 

 

I think my view is kind of close to Tom Brown's which is that he's just anticipating for them to return to mediocrity.  That should get BAC stock into the high teens or low $20's, which is a pretty awesome return.  But at least for me, I would probably be a seller at around $20. 

 

Well, I guess I was talking about what earnings would be possible with current TE, but I don't expect them until 2015-2016, so I agree there.  From that point, the question is how much we can expect earnings to increase by the end of 2018.  It isn't too difficult to get over $30 a share on dividend basis if earnings are in the high $2 per share (maybe we can get to $3?), is my main point.

[racemize]

I think where I differ from many here: I think BAC is a mediocre bank.  A mediocre bank of BAC's size can probably earn $2/share.  That's pretty much inline with BAC's investor day presentation outlining their "normalized earnings" which they put at about $37Bn pre-tax, which at a 33% tax rate works out to a little above $2/share after-tax. 

 

So, from the above, you think it will start earning $2 a share (let's call it 2016) and just not grow at all going forward (e.g., through 2018)?  I would generally expect even a mediocre bank to have some growth in earnings.

[xazp]

I think BAC earnings jump from say 2012-2016, from basically a loss to something like $20Bn/year just by things normalizing from them.  On that point we're roughly in agreement.  I view this earnings growth as a function primarily of lowering excess expenses borne from the financial crisis and countrywide acquisition.  Over this period, they will grow very quickly.  I mean $0 to $20Bn in earnings in a few years.  That's when I want to be in the stock. 

 

After earnings hit normal levels, sure earnings will grow - at the same rate as other big banks, which in turn is approximately at the rate of growth of the economy overall.  I'm not interested in owning big banks growing at the same rate as the economy - there will be other companies at that point that will seem like better deals IMO. 

 

 

 

 

I think where I differ from many here: I think BAC is a mediocre bank.  A mediocre bank of BAC's size can probably earn $2/share.  That's pretty much inline with BAC's investor day presentation outlining their "normalized earnings" which they put at about $37Bn pre-tax, which at a 33% tax rate works out to a little above $2/share after-tax. 

 

So, from the above, you think it will start earning $2 a share (let's call it 2016) and just not grow at all going forward (e.g., through 2018)?  I would generally expect even a mediocre bank to have some growth in earnings.

[ERICOPOLY]

Well, I guess I was talking about what earnings would be possible with current TE, but I don't expect them until 2015-2016, so I agree there.  From that point, the question is how much we can expect earnings to increase by the end of 2018.  It isn't too difficult to get over $30 a share on dividend basis if earnings are in the high $2 per share (maybe we can get to $3?), is my main point.

 

They can get to $30 a share if they can manage 10% ROE over the period and pay out a 30% dividend along the way.  The other 70% of capital generation is assumed retained for growth or utilized to reduce the share count.

 

In other words, if the $20 book value grows at 7% per annum, we get to $30 in six years.

 

The first two years may seem like a long shot for 10% ROE, but there is the DTA which can boost capital generation.

 

But this is why I don't touch the B warrants with their $30 strike.  Too much needs to go smoothly in order for those to expire in the money. 

 

Alternatively, for more speculative money I'd rather go with the $10 strike 2015 calls for $2.65 (bought some yesterday).  I feel like less has to go smoothly for them to finish in the black, and when they expire I can take the money and plow it all into 2017s at perhaps $15 strike with twice as many calls (doubling the leverage).  Then it would be an 11x return at $30 (whenever we get there, which may be after 2018 warrants expire).

 

I have more faith in the $10 strikes being safe than a strike triple that figure.  Plus, if there is going to be an execution I'd rather it be a swift one.

 

It's a 10% position.

 

[enoch01]

I think where I differ from many here: I think BAC is a mediocre bank.

 

I draw a distinction between the business and it's management.

 

The "what-will-management-do-for-me" factor was very small / negative with prior management.  And while Moynihan has made plenty of right moves, he has yet to prove himself in riskier times (ie, loose lending environment).  But still, lots of banks dream of that deposit cost, right?

[PlanMaestro]

But still, lots of banks dream of that deposit cost, right?

 

Including JPM.

[sampr01]

Eric

 

10% of BAC allotment or portfolio?.

 

Thanks

Well, I guess I was talking about what earnings would be possible with current TE, but I don't expect them until 2015-2016, so I agree there.  From that point, the question is how much we can expect earnings to increase by the end of 2018.  It isn't too difficult to get over $30 a share on dividend basis if earnings are in the high $2 per share (maybe we can get to $3?), is my main point.

 

They can get to $30 a share if they can manage 10% ROE over the period and pay out a 30% dividend along the way.  The other 70% of capital generation is assumed retained for growth or utilized to reduce the share count.

 

In other words, if the $20 book value grows at 7% per annum, we get to $30 in six years.

 

The first two years may seem like a long shot for 10% ROE, but there is the DTA which can boost capital generation.

 

But this is why I don't touch the B warrants with their $30 strike.  Too much needs to go smoothly in order for those to expire in the money. 

 

Alternatively, for more speculative money I'd rather go with the $10 strike 2015 calls for $2.65 (bought some yesterday).  I feel like less has to go smoothly for them to finish in the black, and when they expire I can take the money and plow it all into 2017s at perhaps $15 strike with twice as many calls (doubling the leverage).  Then it would be an 11x return at $30 (whenever we get there, which may be after 2018 warrants expire).

 

I have more faith in the $10 strikes being safe than a strike triple that figure.  Plus, if there is going to be an execution I'd rather it be a swift one.

 

It's a 10% position.

[txlaw]

I think where I differ from many here: I think BAC is a mediocre bank.  A mediocre bank of BAC's size can probably earn $2/share.  That's pretty much inline with BAC's investor day presentation outlining their "normalized earnings" which they put at about $37Bn pre-tax, which at a 33% tax rate works out to a little above $2/share after-tax. 

 

I view JPM as a good bank.  JPM's normalized earnings are around $27.5Bn.  But JPM has been investing in growth while BAC has been cleaning up their old mess.  JPM is both a bigger bank, and a better run bank.  I don't view BAC as earning more than JPM, which is what your upper $2 estimate implies. 

 

The only real way I think BAC could push up their earnings is to really cut back on their share count.  But, to my continuing disappointment, they have done poorly.  When they gave away warrants to Buffett at $7, and when they issued bonuses in equity also in the single digits, they have really been wasting shareholder value. 

 

I think my view is kind of close to Tom Brown's which is that he's just anticipating for them to return to mediocrity.  That should get BAC stock into the high teens or low $20's, which is a pretty awesome return.  But at least for me, I would probably be a seller at around $20. 

 

Well, I guess I was talking about what earnings would be possible with current TE, but I don't expect them until 2015-2016, so I agree there.  From that point, the question is how much we can expect earnings to increase by the end of 2018.  It isn't too difficult to get over $30 a share on dividend basis if earnings are in the high $2 per share (maybe we can get to $3?), is my main point.

 

I think it's smart to be conservative and assume a return to mediocrity.  However, the a potential upside not factored by a lot of folks is that Moynihan makes BAC more like WFC than WFC, as Bruce B would say.

 

We will know more about the probabilities of that occurring as the years go by.  There's no need to make any calls on whether or not we will be selling at low $20s yet. 

[enoch01]

But still, lots of banks dream of that deposit cost, right?

 

Including JPM.

 

Yeah, exactly.  That's one thing Mr. Dimon can't gloat over, and he knows it.

[racemize]

I think it's smart to be conservative and assume a return to mediocrity.  However, the a potential upside not factored by a lot of folks is that Moynihan makes BAC more like WFC than WFC, as Bruce B would say.

 

We will know more about the probabilities of that occurring as the years go by.  There's no need to make any calls on whether or not we will be selling at low $20s yet.

 

Well I'm thinking about it because I picked up some B warrants, but I'm probably being overly aggressive.  ;) 

 

Money wise, it is a small position relative to my common and A warrants though.

 

 

[ERICOPOLY]

Eric

 

10% of BAC allotment or portfolio?.

 

Thanks

Well, I guess I was talking about what earnings would be possible with current TE, but I don't expect them until 2015-2016, so I agree there.  From that point, the question is how much we can expect earnings to increase by the end of 2018.  It isn't too difficult to get over $30 a share on dividend basis if earnings are in the high $2 per share (maybe we can get to $3?), is my main point.

 

They can get to $30 a share if they can manage 10% ROE over the period and pay out a 30% dividend along the way.  The other 70% of capital generation is assumed retained for growth or utilized to reduce the share count.

 

In other words, if the $20 book value grows at 7% per annum, we get to $30 in six years.

 

The first two years may seem like a long shot for 10% ROE, but there is the DTA which can boost capital generation.

 

But this is why I don't touch the B warrants with their $30 strike.  Too much needs to go smoothly in order for those to expire in the money. 

 

Alternatively, for more speculative money I'd rather go with the $10 strike 2015 calls for $2.65 (bought some yesterday).  I feel like less has to go smoothly for them to finish in the black, and when they expire I can take the money and plow it all into 2017s at perhaps $15 strike with twice as many calls (doubling the leverage).  Then it would be an 11x return at $30 (whenever we get there, which may be after 2018 warrants expire).

 

I have more faith in the $10 strikes being safe than a strike triple that figure.  Plus, if there is going to be an execution I'd rather it be a swift one.

 

It's a 10% position.

 

10% of my net worth is in the $10 strike 2015 calls.  Perhaps this 10% allotment makes my net worth double in six years.  It seems reasonable that it will.

 

[sampr01]

Thanks Eric.

 

I have 2014 $10 options from early last year, and now added 2015 $10 and 12 calls, and planing on rolling 2014 to 2015.. Mine net worth is peanuts compared to yours and others..75% of portfolio on BAC..Thanks for clarification.

Eric

 

10% of BAC allotment or portfolio?.

 

Thanks

Well, I guess I was talking about what earnings would be possible with current TE, but I don't expect them until 2015-2016, so I agree there.  From that point, the question is how much we can expect earnings to increase by the end of 2018.  It isn't too difficult to get over $30 a share on dividend basis if earnings are in the high $2 per share (maybe we can get to $3?), is my main point.

 

They can get to $30 a share if they can manage 10% ROE over the period and pay out a 30% dividend along the way.  The other 70% of capital generation is assumed retained for growth or utilized to reduce the share count.

 

In other words, if the $20 book value grows at 7% per annum, we get to $30 in six years.

 

The first two years may seem like a long shot for 10% ROE, but there is the DTA which can boost capital generation.

 

But this is why I don't touch the B warrants with their $30 strike.  Too much needs to go smoothly in order for those to expire in the money. 

 

Alternatively, for more speculative money I'd rather go with the $10 strike 2015 calls for $2.65 (bought some yesterday).  I feel like less has to go smoothly for them to finish in the black, and when they expire I can take the money and plow it all into 2017s at perhaps $15 strike with twice as many calls (doubling the leverage).  Then it would be an 11x return at $30 (whenever we get there, which may be after 2018 warrants expire).

 

I have more faith in the $10 strikes being safe than a strike triple that figure.  Plus, if there is going to be an execution I'd rather it be a swift one.

 

It's a 10% position.

 

10% of my net worth is in the $10 strike 2015 calls.  Perhaps this 10% allotment makes my net worth double in six years.  It seems reasonable that it will.

[Mephistopheles]

Alternatively, for more speculative money I'd rather go with the $10 strike 2015 calls for $2.65 (bought some yesterday).  I feel like less has to go smoothly for them to finish in the black, and when they expire I can take the money and plow it all into 2017s at perhaps $15 strike with twice as many calls (doubling the leverage).  Then it would be an 11x return at $30 (whenever we get there, which may be after 2018 warrants expire).

 

I have more faith in the $10 strikes being safe than a strike triple that figure.  Plus, if there is going to be an execution I'd rather it be a swift one.

 

It's a 10% position.

 

 

Interesting strategy, Eric! Although, I am a bit confused about how this can potentially be a 11x return. Would you mind explaining?

[Uccmal]

I have been replenishing again this week.  About 10% more 2015 $12 calls in the 1.75 range.  So my bet is that BAC will exceed 13.70 within 23 months.  I figure it will surpass that sometime after the stress test results.

 

As to long term, who knows.  I often refer back to David Dreman's research in "Contrarian Investment Strategies.....".  In there he looks at performance for stocks with low prices, not just in the year following but 5 years later.  What he discovered was that companies that retrench and rebuild, and return to value often keep on out performing average stocks for years after the recovery. 

 

The expense reductions, business rationalization, and cultural improvements last a long time. 

 

Some examples of this recently: FFh, SSW, HD, and SBux, the last two I wish I had held.  I bought Sbux around $10 in 2009, and HD in the low 20s. 

 

I am not making the same mistake with BAC, WFC, JPM, and AIG.  I will hold them, likely in smaller amounts for years to reap the full benefits of their respective recoveries.  We will certainly know when they are starting to be overvalued.  I can see an easy doubling in all of them before over valuation sets in. 

[PlanMaestro]

From the just mentioned David Dreman's "Contrarian Investment Strategies.....". Fleet Book Value in 1990: $17.6 per share

 

http://farm9.staticflickr.com/8370/8514122257_27e13499ca.jpg

 

[brian Moynihan] originally joined Fleet Boston in April 1993 as deputy general counsel, after being recruited from Edwards & Angell by Fleet's then-CEO, Terrence Murray. From 1999 to April 2004, he served as executive vice president, managing Fleet's brokerage and wealth management division after 2000. (Wikipedia)

 

Mr. Moynihan served as Managing Director of Corporate Strategy and Development of FleetBoston Financial Corp. since 1994 and its Senior Vice President since 1998. He served as Fleet's eCatalyst from 2000 to 2001, responsible for driving the development and implementation of Fleet's Internet strategy. His responsibilities included oversight of all mergers & acquisitions, including the merger of Fleet Financial Group and BankBoston Corporation and Fleet's earlier acquisitions of Quick & Reilly, Columbia Management, Shawmut National Corporation, NatWest Bank's US Operations, Sanwa Business Credit and others. Mr. Moynihan joined Fleet Financial Group in April 1993 as Deputy General Counsel. (Bloomberg)

 

[ERICOPOLY]

Alternatively, for more speculative money I'd rather go with the $10 strike 2015 calls for $2.65 (bought some yesterday).  I feel like less has to go smoothly for them to finish in the black, and when they expire I can take the money and plow it all into 2017s at perhaps $15 strike with twice as many calls (doubling the leverage).  Then it would be an 11x return at $30 (whenever we get there, which may be after 2018 warrants expire).

 

I have more faith in the $10 strikes being safe than a strike triple that figure.  Plus, if there is going to be an execution I'd rather it be a swift one.

 

It's a 10% position.

 

 

Interesting strategy, Eric! Although, I am a bit confused about how this can potentially be a 11x return. Would you mind explaining?

 

Well, if the stock is at $20 in two years I'll have $10 per share in cash.  I can then pay $5 per share for the 2017 $15 strike calls.  Sure, maybe it costs a bit more than $5 for the $15 strike calls.  I was perhaps oversimplifying there.  Perhaps it would really cost you $6 for the $15s if the stock were at $20.  The higher the price goes by 2015, the more difficult it becomes to double the leverage.  But perhaps if things are looking that bright by then you could go with $17 strikes instead of $15 strikes.  Now if things aren't quite that bright and the stock is only at $16, I'm pretty sure you could pick up the $15s for no more than $3 apiece.

 

$10 is a 3.77x return on $2.65 outlay.  Then $15 is a 3x return on $5 outlay. 

 

3.77 x 3 = 11.31

 

 

 

 

 

 

 

 

[gokou3]

Alternatively, for more speculative money I'd rather go with the $10 strike 2015 calls for $2.65 (bought some yesterday).  I feel like less has to go smoothly for them to finish in the black, and when they expire I can take the money and plow it all into 2017s at perhaps $15 strike with twice as many calls (doubling the leverage).  Then it would be an 11x return at $30 (whenever we get there, which may be after 2018 warrants expire).

 

I have more faith in the $10 strikes being safe than a strike triple that figure.  Plus, if there is going to be an execution I'd rather it be a swift one.

 

It's a 10% position.

 

 

Interesting strategy, Eric! Although, I am a bit confused about how this can potentially be a 11x return. Would you mind explaining?

 

Well, if the stock is at $20 in two years I'll have $10 per share in cash.  I can then pay $5 per share for the 2017 $15 strike calls.  Sure, maybe it costs a bit more than $5 for the $15 strike calls.  I was perhaps oversimplifying there.  Perhaps it would really cost you $6 for the $15s if the stock were at $20.  The higher the price goes by 2015, the more difficult it becomes to double the leverage.  But perhaps if things are looking that bright by then you could go with $17 strikes instead of $15 strikes.  Now if things aren't quite that bright and the stock is only at $16, I'm pretty sure you could pick up the $15s for no more than $3 apiece.

 

$10 is a 3.77x return on $2.65 outlay.  Then $15 is a 3x return on $5 outlay. 

 

3.77 x 3 = 11.31

 

Thanks for the details.  That's along my line of thinking too.  I loaded up on the 2015 $10 calls last week (albeit at a higher price...) in anticipation of executing the same roll-up strategy.  I have actually recently done one roll-up for AIG, rolling from Jan. 2014 $22 calls to Jan. 2015 $35 calls with zero cash outlays and ending up with twice the number of option contracts (Greater leverage / risk, of course).

 

Adding my 2 cents to your post, I consider the downside of the $10 calls to be minimal.  I figure BAC will at least reach its current TBV ($13.3 as of Dec 2012) by Jan. 2015, which means I will at least break even (Tails i don't lose...).  That's ignoring that BAC will 1) likely grow TBV for the next 2 years, 2) The quarterly $2-3B LAS expense will have wounded down, 3) annual debt servicing cost would lower by another $2B or so, 4) new BAC phase 1 and 2 programs will have largely completed ($8B total annual savings?), and most importantly, 5) Parsad said BAC will reach TBV next month  ;D.  Offsetting all these will be litigation costs and perhaps lower NIM, which in my layman view, can't possibly negate all the positives listed here.

 

 

 

 

 

 

 

[Uccmal]

I did the same sort of thing with FFh.  I kept advancing out my leap dates in and around the stock price level each fall.

 

I have done the same with BAC. 

 

Generally, I dont wait on a huge position in Leaps once the new cycle comes out.  I will take a loss if necessary to get them out of my portfolio.  I have sold most of the 2014s.  I started by selling the higher strikes, and then moving onto the lower strikes.  It is perhaps not the most efficient tax wise but losing 100% of an investment (an expired Leap) versus paying 15% tax on gains (50% cap. gains tax on my tax rate of 30 %) seems a no brainer for me.  Too much can happen in a year or less to totally destroy option values.  JPM is a prime example for short term option holders, of what can happen.

 

Plan, Thanks for that chart.  Very informative.

 

I personally think Moynihan is as good as Dimon.  Moynihan knows he is a bad extemporaneous speaker, whereas Dimon is too pompous to realize the damage of his remarks.  Dimon's "I'm richer than you" remark, while funny, is also idiotic in a climate where bankers are not exactly loved.

[ERICOPOLY]

Adding my 2 cents to your post, I consider the downside of the $10 calls to be minimal.  I figure BAC will at least reach its current TBV ($13.3 as of Dec 2012) by Jan. 2015, which means I will at least break even (Tails i don't lose...).  That's ignoring that BAC will 1) likely grow TBV for the next 2 years, 2) The quarterly $2-3B LAS expense will have wounded down, 3) annual debt servicing cost would lower by another $2B or so, 4) new BAC phase 1 and 2 programs will have largely completed ($8B total annual savings?), and most importantly, 5) Parsad said BAC will reach TBV next month  ;D.  Offsetting all these will be litigation costs and perhaps lower NIM, which in my layman view, can't possibly negate all the positives listed here.

 

Yes, isn't it great?  Q4 2012 revealed that they are making $1.62 a share annualized right now (if you wash away those expenses that are planned to be runoff by 2015).  So that would be a $16 price on the stock at 10x earnings without giving any consideration to improvements in earnings and accumulated earnings over the period.

 

Moynihan has also been saying that he was unloading his backpack and is now going to outpace his competitors.  So to me it means he is now going after revenue and so that $1.62 a share (only 12% ROTE) is going to improve towards the 15% ROTE metric that he discussed in the webcast (back in November or December).

 

[onyx1]

For those who care, here is a plot of BAC vs. the B warrants.  I found it interesting that the warrant has at times varied by 35% or more for the same price of the common.  Based on this historical data set, the warrants are currently a little above trendline, not rich or cheap.  The .xls file is attached for those who want to update this in the future.  For consistency, the warrant price will need to be adjusted when BAC begins paying a dividend above $0.01.  Enjoy.

 

EDIT:  I has been pointed out to me that the chart is mislabeled.  Should correctly say A warrants, not B.  Sorry for any confusion!  Also, if someone wants to make an attempt to adjust for time decay and repost the plot would have more accuracy.

BAC_warrants_post.xlsx

[MYDemaray]

SEC defeated on time limits by Supreme Court which rules that clock runs from time of alleged offense, not discovery.  Seems like this is a good thing for BAC: http://online.wsj.com/article/SB10001424127887323478304578330142186905254.html?mod=ITP_moneyandinvesting_2

[xazp]

Good catch.  As I keep saying, if the $8.5Bn settlement is voted down, most of the potential plaintiffs will (by the same token) be out of the statute of limitations/repose. 

 

Note the ruling was unanimous. 

 

The dates in the supreme court case were the alleged fraud were 1999-2002, the fraud statute of limitations 5 years, so the lawsuit in 2008 was too late. 

 

Countrywide alleged fraud from 2002-2007, meaning that any lawsuit starting in 2012 or later is too late.  (For the easiest lawsuits, which involve the securities act, it was too late in 2010 already). 

 

SEC defeated on time limits by Supreme Court which rules that clock runs from time of alleged offense, not discovery.  Seems like this is a good thing for BAC: http://online.wsj.com/article/SB10001424127887323478304578330142186905254.html?mod=ITP_moneyandinvesting_2