BAC-WT - Bank of America Warrants

[Ross812]

[ERICOPOLY]

Eric, at what price do you think you'll buy more BAC or take off the hedges?

 

Decided to go 30% unhedged long BAC common late today.  Not the best price of the week, but it accomplishes what my original goal was which is to make a best effort to eliminate the taxable short term capital gain this year.

 

I decided to write 2015 covered puts.  I kept the January 2014 $12 strike put and wrote January 2015 $12 strike put.

 

Later this year I can purchase 2016 puts in November (to replace the 2014 puts) and then dump the 2014 puts at the end of December.

 

Now, if things go as I expect the stock will be over $12 towards the end of December when I dump the 2014 puts.  Thus I will get my tax loss for 2013.

 

My tax bill for 2013 would otherwise be roughly 10% of the current value of the account!  I mean, this is well worth doing even if it sounds like I'm trying too hard to reduce my taxes.

 

 

[wescobrk]

Anyone have any concerns about AIG winning the ability to have their case tried in state court instead of federal what BAC preferred?

[wescobrk]

Now, if things go as I expect the stock will be over $12 towards the end of December when I dump the 2014 puts"

 

I think the board will fire Moynihan if the stock isn't at least tbv by year end.

He's on borrowed time as it as after all that talk of unloading the backpack and then 4 weeks later he talks about all the work ahead of him.

[Cardboard]

"Miles better in Canada.  Oh my gosh!

 

You guys pay 25% on a short term capital gain, right?  I mean, the tax treatment is the same for all capital gains -- there is no "short" or "long" term."

 

We pay income tax on 50% of the capital gain or the inclusion rate. That is why the maximum is about 25% in the highest taxed provinces. In Alberta, you are looking at 50% of 39% or 19.5%. Ontario and Quebec are pretty close to the 25% at the highest income tax bracket.

 

There is no short term or long term difference however, if you trade a lot, use margin, are very knowledgeable and spend a lot of time hunting investments, buy mainly securities not earning any dividends, they may call you a "trader" or being engaged in a business of dealing in securities. Then your gains become business income and you could be taxed at 50%! That is the part that I really don't like since if you are successful with your investments or know what you are doing, there is always that gray zone. I think there is the same in the U.S., but I am not sure.

 

Cardboard 

[Uccmal]

Thanks for the charts Ross!

 

 

"Miles better in Canada.  Oh my gosh!

 

There is no short term or long term difference however, if you trade a lot, use margin, are very knowledgeable and spend a lot of time hunting investments, buy mainly securities not earning any dividends, they may call you a "trader" or being engaged in a business of dealing in securities. Then your gains become business income and you could be taxed at 50%! That is the part that I really don't like since if you are successful with your investments or know what you are doing, there is always that gray zone. I think there is the same in the U.S., but I am not sure.

 

Cardboard 

 

This worries me some... but I am figuring that during a rising market loads of people will be trading far more than I do.  It is only my success that makes me stand out. 

 

When I started investing the rate was 75% percent of your marginal tax rate.  With actions in the US to raise taxes, I could see us returning to this regimen here.

 

Time to move to New Hampshire.  The most beautiful state in the East!  I have hiked the presidentials a few times.

[ERICOPOLY]

Eric, at what price do you think you'll buy more BAC or take off the hedges?

 

Decided to go 30% unhedged long BAC common late today.  Not the best price of the week, but it accomplishes what my original goal was which is to make a best effort to eliminate the taxable short term capital gain this year.

 

I decided to write 2015 covered puts.  I kept the January 2014 $12 strike put and wrote January 2015 $12 strike put.

 

Later this year I can purchase 2016 puts in November (to replace the 2014 puts) and then dump the 2014 puts at the end of December.

 

Now, if things go as I expect the stock will be over $12 towards the end of December when I dump the 2014 puts.  Thus I will get my tax loss for 2013.

 

My tax bill for 2013 would otherwise be roughly 10% of the current value of the account!  I mean, this is well worth doing even if it sounds like I'm trying too hard to reduce my taxes.

 

 

Next step, I might purchase $10 2015 puts.

 

That would leave me with:

common stock asset

2014 $12 put  asset at $1.14 average cost

2015 $10 put asset  at $1.14 average cost (that's the current "ask" price)

2015 $12 put  liability at $2.05 average cost

 

There should be 3 cents of dividend paid on the common before the end of the year.

 

So, only 20 cents total cost to be 100% hedged at-the-money for the rest of the year  ;) 

 

Yet retaining all of the upside!  :)

 

And a possible huge tax loss for 2013 to offset those short term capital gains from selling the warrants.  :)

 

 

[MYDemaray]

Looks like I jumped the gun on that Countrywide settlement.  Issued this retraction: http://seekingalpha.com/article/1359241-not-so-fast-with-the-countrywide-settlement

 

[muscleman]

http://seekingalpha.com/article/1359241-not-so-fast-with-the-countrywide-settlement

[BRK7]

Director David Yost continues to buy common shares.  Here's his ownership history, based on a quick review of SEC form 4 filings:

 

Date          Shares        Total Shares      Price        Type

9/1/12      14,153        14,153                $7.99      Award

11/7/12    10,000        24,153                $9.48      Purchase

1/24/13    20,000        44,153                $11.53    Purchase

4/18/13    20,000        64,153                $11.51    Purchase

 

Yost has been an Independent Director of Bank of America Corporation since August 23, 2012.  He is a Member of Audit Committee and Member of Compensation & Benefits Committee.

[wescobrk]

It's looks like an analyst upgraded BAC to 16 a share from 13.

 

She talks about expense reduction and litigation risk mostly gone by the end of the year. I'm not sure how this is news since it's been out there for at least 12 months from management but I guess the street is starting to believe them.

 

Maybe this damn thing will hit tbv within 3 months. Nice profit, or I should say additional profit, for the board.

 

"You don't get a lot of second chances in life and so we are taking advantage of this one," Graseck wrote, according to TheStreet.com. "[bank of America] is about to deliver on a significant expense reduction over the next several quarters, which should fall to the bottom line and boost EPS. Also, we expect [the bank] will be largely through significant litigation risk by [the end of] 2013."

[valuecfa]

Looks like I jumped the gun on that Countrywide settlement.  Issued this retraction: http://seekingalpha.com/article/1359241-not-so-fast-with-the-countrywide-settlement

 

Despite the retraction, Mark Palmer decided to pick on you today:

 

In the absence of legitimate catalysts, and with many analysts having little to provide their portfolio managers by way of updates, MBIA shares have shown a recent tendency to react to anything vaguely resembling new insight on the situation.

 

The latest such episode occurred last Friday, when an article appeared on the investor website Seeking Alpha suggesting that when BAC two days prior had announced a $500mm class-action settlement between Countrywide and investors in 429 RMBS offerings, it had significantly limited the downside it would face were it to lose the Article 77 proceeding challenging its $8.5bn settlement with investors in 530 Countrywide mortgage trusts.

 

Read more: http://www.btigresearch.com/2013/04/23/mbia-hubbub-over-nonexistent-limits-on-bofas-countrywide-liabilities-latest-episode-in-silly-season/#ixzz2RJDbPZ4C

 

Can't believe he took the time to post on this.

 

[MYDemaray]

Looks like I jumped the gun on that Countrywide settlement.  Issued this retraction: http://seekingalpha.com/article/1359241-not-so-fast-with-the-countrywide-settlement

 

Despite the retraction, Mark Palmer decided to pick on you today:

 

In the absence of legitimate catalysts, and with many analysts having little to provide their portfolio managers by way of updates, MBIA shares have shown a recent tendency to react to anything vaguely resembling new insight on the situation.

 

The latest such episode occurred last Friday, when an article appeared on the investor website Seeking Alpha suggesting that when BAC two days prior had announced a $500mm class-action settlement between Countrywide and investors in 429 RMBS offerings, it had significantly limited the downside it would face were it to lose the Article 77 proceeding challenging its $8.5bn settlement with investors in 530 Countrywide mortgage trusts.

 

Read more: http://www.btigresearch.com/2013/04/23/mbia-hubbub-over-nonexistent-limits-on-bofas-countrywide-liabilities-latest-episode-in-silly-season/#ixzz2RJDbPZ4C

 

Can't believe he took the time to post on this.

 

:-).  Always fun to wake up to someone publicly highlighting your mistakes.

[Rabbitisrich]

That was a speculative element of the article anyway. It was a clear explanation of a previous attempt to pass the 25% hurdle. The Whalen and Mayo articles skipped that issue.

[redskin]

http://money.cnn.com/2013/04/11/news/companies/moynihan-bank-america.pr.fortune/index.html?pw_log=in

 

I'm not sure if this was posted.

[PlanMaestro]

That was a speculative element of the article anyway. It was a clear explanation of a previous attempt to pass the 25% hurdle. The Whalen and Mayo articles skipped that issue.

 

Actually, at first I thought Michael was pointing that the latest settlement signaled that most MBS-holders were trying to get pass the legal battles. And considering the overlap between both cases, that it was difficult to achieve the 25% thresholds. The lead was buried.

 

[value-is-what-you-get]

I decided to write 2015 covered puts.  I kept the January 2014 $12 strike put and wrote January 2015 $12 strike put.

 

I understand a covered put to be written against a short stock position?

 

Or are you deeming the other long puts to be your short position?

[bookie71]

Thought you folks might be interested in this

http://www.clarkhoward.com/videos/clark-howard/personal-finance-credit/give-bank-of-america-the-heave-ho/vxyG4/

[Liberty]

Thought you folks might be interested in this

http://www.clarkhoward.com/videos/clark-howard/personal-finance-credit/give-bank-of-america-the-heave-ho/vxyG4/

 

I wonder how many of those complaints have to do with Countrywide mortgages. I can imagine how the millions of people who had troubles with those are not saying the nicest things in bank satisfaction surveys.

[bookie71]

A lot are about credit cards, savings and checking.  They were tops before Countrywide.

[fareastwarriors]

Thought you folks might be interested in this

http://www.clarkhoward.com/videos/clark-howard/personal-finance-credit/give-bank-of-america-the-heave-ho/vxyG4/

 

I wonder how many of those complaints have to do with Countrywide mortgages. I can imagine how the millions of people who had troubles with those are not saying the nicest things in bank satisfaction surveys.

 

 

BofA is known for terrible service. People use them for the convenience.

but it just hearsay. I never have trouble with them.

[PlanMaestro]

I wonder how many of those complaints have to do with Countrywide mortgages. I can imagine how the millions of people who had troubles with those are not saying the nicest things in bank satisfaction surveys.

 

BofA is known for terrible service. People use them for the convenience.

but it just hearsay. I never have trouble with them.

 

According to a customer satisfaction survey that I have, Bank of America has the worst results of all the large banks, except for RBS Citizens, across all regions. It must be pointed out that ALL large banks have very bad results … and all have improved the last 3 years from even worst results. You might be cynical and actually think that 2008 has a lot to do with it.

 

BofA's main problem is by far FEES. Surprisingly, Bank of America's service is a key driver of satisfaction having better results than Wells Fargo, Citi or JP Morgan.

 

 

[rkbabang]

BofA's main problem is by far FEES. Surprisingly, Bank of America's service is a key driver of satisfaction having better results than Wells Fargo, Citi or JP Morgan.

 

Absolutely.  I was a Baybank customer who eventually ended up with a Bank of America account (IIRC it was Baybank -> Bank of Boston -> BankBoston -> FleetBoston -> Fleet -> Bank of America).  I never had any problems with the service at any time along the way, what got me to change to a local credit union two years ago was just being fed up with all of the fees.

 

[PlanMaestro]

what got me to change to a local credit union two years ago was just being fed up with all of the fees.

 

In this customer satisfaction survey, credit unions trounce everyone especially on fees and rates.

[PlanMaestro]

If you haven't read the latest Fortune, run don't walk.