BAC-WT - Bank of America Warrants

[hyten1]

i also bought some puts, but only a little

[Parsad]

Well, I am preparing mentally for another disappointing quarter from BAC and to sell if that is the case. Like I said before it is their last chance for me. I have had enough of their few pennies EPS each quarter and of all their excuses.

 

On the other hand, if they finally get their act together and start to deliver earnings and decent ROA like all other big banks then I will be happier.

 

Cardboard

 

After the whole initial raising the dividend debacle, have they not executed on pretty much everything they said they would...settle litigation, runoff bad loans, decrease mortgage servicing, cut expenses, try and build revenue across a condensed business profile, buy back preferreds, buy back shares (hopefully they bought a lot in 2nd quarter) and build Tier 1 Capital to one of the highest standards in the industry. 

 

There was a crap-load that was wrong with BAC, and in two and half years, the company went from potential insolvency to industry stalwart.  They said that most of the earnings won't appear until 2014, so it's hard for me to say that they haven't done what they said they would.  Investor's who were patient have been rewarded handsomely...there are more rewards yet to come!  I say they hit $17-18 by Christmas!  ;D  Cheers!

[Uccmal]

Well, I am preparing mentally for another disappointing quarter from BAC and to sell if that is the case. Like I said before it is their last chance for me. I have had enough of their few pennies EPS each quarter and of all their excuses.

 

On the other hand, if they finally get their act together and start to deliver earnings and decent ROA like all other big banks then I will be happier.

 

Cardboard

 

 

 

After the whole initial raising the dividend debacle, have they not executed on pretty much everything they said they would...settle litigation, runoff bad loans, decrease mortgage servicing, cut expenses, try and build revenue across a condensed business profile, buy back preferreds, buy back shares (hopefully they bought a lot in 2nd quarter) and build Tier 1 Capital to one of the highest standards in the industry. 

 

There was a crap-load that was wrong with BAC, and in two and half years, the company went from potential insolvency to industry stalwart.  They said that most of the earnings won't appear until 2014, so it's hard for me to say that they haven't done what they said they would.  Investor's who were patient have been rewarded handsomely...there are more rewards yet to come!  I say they hit $17-18 by Christmas!  ;D  Cheers!

 

I figure I have made 300-350 k on BAC in the past year and a half.  Gotta protect the downside though...

[Cardboard]

"...so it's hard for me to say that they haven't done what they said they would."

 

They did. They simply did set low ball objectives and achieved them. Will I give them high fives for it? Nope. Would I give them bonuses for achieving subpar ROA as their board has agreed to? Nope.

 

Did I see something extraordinary from these guys? Nope. Did I see them get out of their comfort zone and try to beat their competitors? Nope. There is nothing phenomenal about building capital at a bank when you pay out nothing to shareholders (other than very recently) and get money for nothing from the Fed. These guys have a license to print money. It is just that it is painfully obvious that their competitors even including Citigroup are much better bankers than these guys.

 

Like I said, I will take a deep look at the numbers tomorrow and if I keep seeing no progress on the earnings front I will be out. I don't see the point of holding on to empty promises especially with the S&P at all time highs.

 

Cardboard

[mankap]

Most of the analysts are expecting 0.25 in earnings tomorrow.

They are seeing earnings of 1.70-1.75 in 2015.I think BAC will do atleast $2.00 in 2015.

My target is that BAC will hit $20.00 by end of 2014.

[Parsad]

"...so it's hard for me to say that they haven't done what they said they would."

 

They did. They simply did set low ball objectives and achieved them. Will I give them high fives for it? Nope. Would I give them bonuses for achieving subpar ROA as their board has agreed to? Nope.

 

Did I see something extraordinary from these guys? Nope. Did I see them get out of their comfort zone and try to beat their competitors? Nope. There is nothing phenomenal about building capital at a bank when you pay out nothing to shareholders (other than very recently) and get money for nothing from the Fed. These guys have a license to print money. It is just that it is painfully obvious that their competitors even including Citigroup are much better bankers than these guys.

 

Like I said, I will take a deep look at the numbers tomorrow and if I keep seeing no progress on the earnings front I will be out. I don't see the point of holding on to empty promises especially with the S&P at all time highs.

 

Cardboard

 

You are a hard man to please Cardboard!  ;D 

 

Just remember one thing...it was those better bankers that created the mess the world found themselves in during 2008.  I would much rather every bank be run by some rational, no-nonsense executive who doesn't want to get fancy, and just keep his nose clean, balance sheet strong, and shoot for the low hanging fruit, rather than try to be a superstar. 

 

Banking is one of the few businesses where being a "superstar" is the wrong type of personality trait for the business!  Cheers!

[mbharadwaj]

Bank of America Reports Second-Quarter 2013 Net Income of $4.0 Billion, or $0.32 per Diluted Share on Revenue of $22.9 Billion

 

http://finance.yahoo.com/news/bank-america-reports-second-quarter-110000446.html

[actuary]

Still disappointed by the pace of buybacks

 

"The company previously announced that it was authorized to repurchase up to $5.0 billion of common stock and redeem approximately $5.5 billion in preferred stock. As of June 30, 2013, approximately 80 million common shares had been repurchased for approximately $1.0 billion at an average price of $12.59 per share, and approximately $5.5 billion of preferred stock, consisting of Series H, 6, 7 and 8, had been redeemed.

 

Tangible book value per share was $13.32 at June 30, 2013, compared to $13.36 at March 31, 2013 and $13.22 at June 30, 2012. Book value per share was $20.18 at June 30, 2013, compared to $20.19 at March 31, 2013 and $20.16 at June 30, 2012."

 

 

[berkshiremystery]

Sitting calm with my ass,... with no changes to my 100000 notional BAC units (common, 2015 leaps @ $15, and some warrants).

 

I'm fully satisfied,... enough said and nothing to add.

[wescobrk]

Only 1 billion buyback? Are you freaking kidding me? Moynihan likes to buyback at 14 instead of 12? Wtf?

[Uccmal]

Buybacks disappointing but I didn't expect much.  Need to see the dividend up to 0.20 per Q at least and forget buybacks. 

 

Otherwise, not bad. 

 

Still have a 2.6 billion loss estimate unreserved.  Nothing unmanageable. 

 

Will sit tight mostly.

[wescobrk]

I like the progress on las which is the most important and it looks like the cost cuts were moved up from mid 2015 to end of 2014, which means we should probably see 20 bucks by march of next year, but I can't for the life of me why he didn't complete the buyback in April alone?

I know it's a minor issue but it still pisses me off.

Other than that, he's doing a good job.

[wescobrk]

He's doing about 300 million a month average in buybacks.

I guess he'll finally do the other 4 billion by march of next year at 20 bucks.

Jeez, bring on the dividends. I'll do my own damn buybacks.

[jay21]

On the buybacks:  I wonder what the banks tell the regulators and what the regulators tell the banks regarding buybacks.  I assume the the regulators do not want the banks to complete their buyback programs within one month of approval, but I am wondering how explicit it is (e.g. do the regulators tell the banks what pace they can buyback, is it an unwritten rule that banks will buyback somewhat evenly, or do the banks have total discretion).

[wescobrk]

I considered that too but why did they say they were approved for a 5 billion buyback starting in April?

If the regulators only approved less than 10% of the 5 billion on the first month, wouldn't they have to disclose the pace is heavily regulated by regulators?

I think Moynihan is just completely inept on this issue but has done a great job otherwise.

[Cardboard]

Some simple arithmetic or just annualizing Q2 adjusted EPS:

 

BAC: $0.32 x 4 = $1.28 EPS a year or a P/E of 11.0 times

C: $1.25 x 4 = $5 or P/E of 10.4 times

JPM: $1.60 x 4 = $6.40 or P/E of 8.6 times

WFC: $0.98 x 4 = $3.92 or P/E of 11.0 times

 

Bottom line IMO is that BAC needed to deliver earnings in that range to just maintain its current share price. Now of course, they still have low hanging fruits by cutting cost which the others don't which should help earnings grow faster than the group. However, looking at the P/E's, it seems that the Street has already priced in some improvements.

 

If we expect earnings to grow to $2 in a 2 year time frame, which I think is a stretch, and P/E's for banks remain in the current range, $20 is about all one should expect for the stock. If you argue that P/E's will move closer to 15 times, then I think that you need to take a serious look at JPM in terms of where to deploy your capital since they are already delivering big earnings.

 

$20 in 2 years is a 19% compounded return. Pretty good, but nothing out of this world considering that it is banking on a very large EPS improvement in an uncertain economic environment. I will hang on for a little longer, but if the stock approaches $15 - $16 and I see better opportunities, it will be worthwhile to sell, pay taxes and reinvest at higher rates.

 

Cardboard

[blainehodder]

Some simple arithmetic or just annualizing Q2 adjusted EPS:

 

BAC: $0.32 x 4 = $1.28 EPS a year or a P/E of 11.0 times

C: $1.25 x 4 = $5 or P/E of 10.4 times

JPM: $1.60 x 4 = $6.40 or P/E of 8.6 times

WFC: $0.98 x 4 = $3.92 or P/E of 11.0 times

 

Bottom line IMO is that BAC needed to deliver earnings in that range to just maintain its current share price. Now of course, they still have low hanging fruits by cutting cost which the others don't which should help earnings grow faster than the group. However, looking at the P/E's, it seems that the Street has already priced in some improvements.

 

If we expect earnings to grow to $2 in a 2 year time frame, which I think is a stretch, and P/E's for banks remain in the current range, $20 is about all one should expect for the stock. If you argue that P/E's will move closer to 15 times, then I think that you need to take a serious look at JPM in terms of where to deploy your capital since they are already delivering big earnings.

 

$20 in 2 years is a 19% compounded return. Pretty good, but nothing out of this world considering that it is banking on a very large EPS improvement in an uncertain economic environment. I will hang on for a little longer, but if the stock approaches $15 - $16 and I see better opportunities, it will be worthwhile to sell, pay taxes and reinvest at higher rates.

 

Cardboard

 

Always good to do the napkin math... but if you project BAC earning 2 bucks a share in 2 years time, doesn't the 20% compound earnings growth justify a higher multiple now? 

 

JPM certainly appears cheap as well, but are they as likely to grow as fast?

[nkp007]

Some simple arithmetic or just annualizing Q2 adjusted EPS:

 

BAC: $0.32 x 4 = $1.28 EPS a year or a P/E of 11.0 times

C: $1.25 x 4 = $5 or P/E of 10.4 times

JPM: $1.60 x 4 = $6.40 or P/E of 8.6 times

WFC: $0.98 x 4 = $3.92 or P/E of 11.0 times

 

Bottom line IMO is that BAC needed to deliver earnings in that range to just maintain its current share price. Now of course, they still have low hanging fruits by cutting cost which the others don't which should help earnings grow faster than the group. However, looking at the P/E's, it seems that the Street has already priced in some improvements.

 

If we expect earnings to grow to $2 in a 2 year time frame, which I think is a stretch, and P/E's for banks remain in the current range, $20 is about all one should expect for the stock. If you argue that P/E's will move closer to 15 times, then I think that you need to take a serious look at JPM in terms of where to deploy your capital since they are already delivering big earnings.

 

$20 in 2 years is a 19% compounded return. Pretty good, but nothing out of this world considering that it is banking on a very large EPS improvement in an uncertain economic environment. I will hang on for a little longer, but if the stock approaches $15 - $16 and I see better opportunities, it will be worthwhile to sell, pay taxes and reinvest at higher rates.

 

Cardboard

 

Always good to do the napkin math... but if you project BAC earning 2 bucks a share in 2 years time, doesn't the 20% compound earnings growth justify a higher multiple now?

 

Not to mention the unrealized gain you'll hold contains an interest-free loan from the u.s. government.

 

If you sell, your buying power is diminished unless you find a super-cheap opportunity since this is still cheap.

[Guest Dazel]

 

The market still sees BAC with lawsuit risk....the others do not have it.

 

However, the other banks are already hitting it out of the park. BAC has underperformed and if they remove the lawsuit risk they should trade at 15 times...the market has not accepted the they can produce and the lawsuit risk is gone.

 

When that happens you will see $20...however, the two risks above are real so what is the opportunity cost of being wrong?

 

If the U.S were to slow down and the lawsuits get kicked down the road...BAC will get hit much more then everyone else...we have seen this...it was an $18 stock in 2011. Pretty fairly priced right now considering.

 

Dazel.

[Cardboard]

"Always good to do the napkin math... but if you project BAC earning 2 bucks a share in 2 years time, doesn't the 20% compound earnings growth justify a higher multiple now? 

 

JPM certainly appears cheap as well, but are they as likely to grow as fast?"

 

The market prices forward growth. Once BAC has achieved its cost cutting and gotten the earnings benefit, it should be growing EPS at whatever rate large banks are growing. I have a really hard time envisioning why it should trade at a higher P/E at that time than the other big U.S. banks.

 

My point overall is very simple. We are well past the point where you could buy BAC for a double, triple or maybe more. One reason why I am disenchanted is that the share count is doing absolutely terrible and reduces the long term upside potential. There is the share compensation program which I find out of line, the deal with Buffett which was dumb and a complete lack of share buyback. There is nothing being done to stop that dilution monster.

 

Originally, I thought that BAC could possibly achieve $3 in EPS by 2016. Currently, I cannot come up with a reasonable scenario showing how they get there that fast. Since time is money and investments are competing for you hard earned dollars, I think it is wise to take a look at what else is available in the grocery store.

 

Cardboard

[nkp007]

Some disconcerting news...

 

http://www.cnbc.com/id/100893048

 

Jim Cramer now loves Bank of America.

 

I didn't pay attention to this fool when he said not to buy it and I sure as hell am not gonna use him as a sell indicator either. But it's interesting to see the consensus shift.

[TwoCitiesCapital]

Some simple arithmetic or just annualizing Q2 adjusted EPS:

 

BAC: $0.32 x 4 = $1.28 EPS a year or a P/E of 11.0 times

C: $1.25 x 4 = $5 or P/E of 10.4 times

JPM: $1.60 x 4 = $6.40 or P/E of 8.6 times

WFC: $0.98 x 4 = $3.92 or P/E of 11.0 times

 

Bottom line IMO is that BAC needed to deliver earnings in that range to just maintain its current share price. Now of course, they still have low hanging fruits by cutting cost which the others don't which should help earnings grow faster than the group. However, looking at the P/E's, it seems that the Street has already priced in some improvements.

 

If we expect earnings to grow to $2 in a 2 year time frame, which I think is a stretch, and P/E's for banks remain in the current range, $20 is about all one should expect for the stock. If you argue that P/E's will move closer to 15 times, then I think that you need to take a serious look at JPM in terms of where to deploy your capital since they are already delivering big earnings.

 

$20 in 2 years is a 19% compounded return. Pretty good, but nothing out of this world considering that it is banking on a very large EPS improvement in an uncertain economic environment. I will hang on for a little longer, but if the stock approaches $15 - $16 and I see better opportunities, it will be worthwhile to sell, pay taxes and reinvest at higher rates.

 

Cardboard

 

Always good to do the napkin math... but if you project BAC earning 2 bucks a share in 2 years time, doesn't the 20% compound earnings growth justify a higher multiple now?

 

Not to mention the unrealized gain you'll hold contains an interest-free loan from the u.s. government.

 

If you sell, your buying power is diminished unless you find a super-cheap opportunity since this is still cheap.

 

I've never understood this reasoning:

 

If he sells now, his equation for future returns is:

P (1-T)(1+r)^x

This reflects the principal being reduced and then compounded.  Selling later produces

P (1+r)^x (1-T)

Which reflects the full principal compounding and reduced by future taxes. 

 

Since multiplication is commutative, it doesn't matter when you pay taxes as long as r, x, and T are all held equal. The question should then be will you pay higher taxes now or later and that should be the only determination necessary as long as taxes due are paid out of principal and earnings.  Am I wrong?

[fareastwarriors]

BofA Sustains Equity Hit on Mortgage-Bond Value Decline

 

 

http://www.bloomberg.com/news/2013-07-17/bofa-sustains-equity-hit-on-mortgage-bond-value-decline.html

[Mikenhe]

Some disconcerting news...

 

http://www.cnbc.com/id/100893048

 

Jim Cramer now loves Bank of America.

 

I didn't pay attention to this fool when he said not to buy it and I sure as hell am not gonna use him as a sell indicator either. But it's interesting to see the consensus shift.

 

 

as per normal  - when he likes it its time to think of selling. when he loves it then get rid of all of it!!!

[jay21]

Fitch: Bank of America's 2Q13 Earnings Helped by Reserve Releases

 

(The following statement was released by the rating agency) NEW YORK, July 17 (Fitch) Bank of America (BAC) reported improving results in the second quarter of 2013 (2Q13), according to Fitch Ratings. BAC's stated net income was $4.01 billion, up from $1.48 billion in the sequential quarter and $2.46 billion in the year-ago quarter. However, 2Q13 earnings benefited from a reserve release of $0.9 billion due to improving asset quality trends as well as higher home prices during the quarter. Similarly, Fitch calculated that pre-tax profits, which exclude DVA adjustments and other various gains/charges, increased to $5.0 billion in 2Q13, up from $2.2 billion in the sequential quarter and $2.8 billion in the year-ago quarter. This quarter's results equated to a Fitch calculated 0.94% adjusted return on assets (ROA), which is a fairly clean quarter for BAC and potentially indicative of future core earnings power. The $0.9 billion reserve release added 17 basis points to the Fitch calculated ROA, which is a significant boost to earnings. Additionally, should current trends in asset quality run-rates and broad home price appreciation continue over the next several months, further reserve releases are likely over the near term. Despite this reserve release, BAC's core adjusted ROA still improved substantially in 2Q13, but it remains well below the average of the top U.S. banks that have reported to date. Fitch expects BAC's level of operating performance to lag that of its peers over the near- to intermediate-term time, but the gap continues to close. BAC's revenue was largely stable as a modest decline in net interest revenue was offset by strong performance in wealth and investment management amid higher equity markets and still reasonably strong mortgage banking income due to a preponderance of refinancings. Fitch would expect mortgage banking to decline over the course of the remainder of the year amid refinancing burnout, higher mortgage rates, as well as BAC's relatively smaller proportion of the purchase driven market for new mortgages. Fitch would also note that revenue benefited from $457 million of securities gains on the quarter. The bigger impact to BAC's improved earnings performance was on the expense side, as expenses declined $3.48 billion during the quarter, as the company's 'New BAC' initiative continues to drive savings. In 2Q13 this was driven by lower litigation costs as well as lower personnel some of which related to retirement eligible compensation costs and occupancy costs as BAC continues to rationalize its branch network. BAC's capital and liquidity positions continue to remain solid. BAC's Tier 1 common equity ratio improved to 10.83% in 2Q13, up from 10.49% in the sequential quarter, and under Basel 3 rules BAC's Tier 1 common ratio increased to 9.60% up from 9.52% in the sequential quarter. The impact that higher rates had on accumulated other comprehensive income (AOCI) during the quarter was more than offset by improvements in risk-weighted assets (RWA) from improved credit quality as well as the growth in earnings. On the liquidity front, BAC continues to benefit from strong deposit funding, which has in part allowed it to continue to reduce its long-term debt outstanding which declined to $262 billion in 2Q13, down from $280 billion in the sequential quarter. Additionally, BAC's global excess liquidity remains strong, with its 'time to required funding' for the unsecured obligations of the holding company and obligations of BAC and Merrill Lynch & Co at 32 months, comfortably above the Fitch viewed standard 24 month coverage metric. 2Q13 was relatively quiet on the litigation/settlement front for BAC, which is due in large part to significant efforts made earlier in the year to reduce litigation issues. However, the company is still working to get court approval for its $8.5 billion Bank of New York Mellon as Trustee settlement related to private label residential mortgage backed securitizations for representation and warranty claims. Fitch believes that if the settlement is not approved and then over time the potential liability for this issue increased such that BAC was forced to increase reserves, the increased liability would be absorbable within the context of the firm's improving earnings and strong capital ratios, despite the significant risk from this issue. This view incorporates the assumption that the duration of the ultimate resolution would likely extend out for some time, allowing BAC to further build its capital and reserves for these exposures.

 

http://www.reuters.com/article/2013/07/17/fitch-bank-of-americas-2q13-earnings-hel-idUSFit66407220130717?feedType=RSS&feedName=financialsSector&rpc=43