BAC-WT - Bank of America Warrants

[Sunrider]

@Eric

 

I'm curious if you've done anything with your puts and whether you've started selling calls (e.g. at $20)? I've been hedging part of my position with way out of the money puts to the end of this year but the one thing I found quite disturbing is the high cost of the trade in terms of fees (compared to the money invested). Buying a 200 or 300 puts that only cost 10 - 20c easily incurs fees as high as 3 - 7% of the trade. I'm with IB so I always thought they were as cheap as it gets but I thought I'd see what your experience is in this regard?

 

Thanks - C.

 

It's a high percentage of the put cost, but I'm expecting to lose the entire dollar amount invested in the puts anyhow.  Same as I expect to lose all of the interest I pay on a home mortgage or student loan.  So once you figure that you're going to lose it anyhow, losing a bit more doesn't seem to out of phase with the strategy.

 

thanks - Are you using IB? If so, are you using unbundled or the "normal" pricing - just wondering if one works out cheaper than the other for large volume trades (although if I read their site correctly then large volume here would be 10s of millions of options traded).

 

C.

[portfoolio]

For the record, Dick Bove's whole thesis about why Q2 bank earnings were going to be "sloppy" was because the economy supposedly did poorly in Q2. Now we have the bank earnings, which were great, and we have Q2 preliminary GDP growth, which was quite respectable. What does that tell us about Dick Bove's skills at prognostication? There was no factual underpinning to his claims, after all. That's the thing about these "analysts" who are famous primarily for showing up on CNBC. They have no facts to back up their arguments, just lots of bluster and claims of "inside" knowledge. I'll take a *real* analyst like Betsy Graseck any day even if CNBC hasn't yet declared her a go-to "expert on the banking sector".

[ERICOPOLY]

@Eric

 

I'm curious if you've done anything with your puts and whether you've started selling calls (e.g. at $20)? I've been hedging part of my position with way out of the money puts to the end of this year but the one thing I found quite disturbing is the high cost of the trade in terms of fees (compared to the money invested). Buying a 200 or 300 puts that only cost 10 - 20c easily incurs fees as high as 3 - 7% of the trade. I'm with IB so I always thought they were as cheap as it gets but I thought I'd see what your experience is in this regard?

 

Thanks - C.

 

It's a high percentage of the put cost, but I'm expecting to lose the entire dollar amount invested in the puts anyhow.  Same as I expect to lose all of the interest I pay on a home mortgage or student loan.  So once you figure that you're going to lose it anyhow, losing a bit more doesn't seem to out of phase with the strategy.

 

thanks - Are you using IB? If so, are you using unbundled or the "normal" pricing - just wondering if one works out cheaper than the other for large volume trades (although if I read their site correctly then large volume here would be 10s of millions of options traded).

 

C.

 

Yes I am using IB.  I never looked into the different pricing models -- just using whatever the default is.  Maybe I should see what "unbundled" is.

[fareastwarriors]

BofA to Revamp Merrill Fees

 

The planned fee changes have upset some of Merrill's 14,000-plus advisers .

 

http://online.wsj.com/article/SB10001424127887323681904578640322042802396.html?mod=WSJ_hps_MIDDLENexttoWhatsNewsForth

 

...

Like many of its rivals, Merrill has been encouraging the use of managed accounts over traditional brokerage accounts, in part because revenue from flat fees is steadier than that from commissions on transactions.

 

The main increases will be felt by clients with money in a platform known as Merrill Lynch Personal Advisor, or MLPA, which has some $152 billion under management, or almost a third of all client money on managed platforms.

 

The current fee schedule for MLPA's equities section sets a minimum fee of 1% for clients whose accounts hold up to $1 million and 0.65% for accounts of $1 million to $2 million.

 

Under the new schedule, which uses a more precise scale, the minimum will be 1.6% for accounts up to $250,000, 1.4% for $250,000 to $500,000 and 1.3% for $500,000 to $1 million. For $1 million to $2 million accounts, the minimum is 1%.

 

For example, a client with a $400,000 account, and all of it in equities on the MLPA platform, would see his or her minimum fee rise from $4,000 to $5,600 yearly. The fee for a client with $1.5 million in such an account would rise from $9,750 to $15,000 yearly.

 

Currently, minimum fees for the managed-account platforms are based solely on how much a client has in that particular account. Under the new single system, the unified fee will be calculated based on all of the client's holdings with Merrill Lynch, including managed accounts and brokerage accounts, as well as Bank of America deposits.

 

...

[blainehodder]

BofA to Revamp Merrill Fees

 

The planned fee changes have upset some of Merrill's 14,000-plus advisers .

 

http://online.wsj.com/article/SB10001424127887323681904578640322042802396.html?mod=WSJ_hps_MIDDLENexttoWhatsNewsForth

 

...

Like many of its rivals, Merrill has been encouraging the use of managed accounts over traditional brokerage accounts, in part because revenue from flat fees is steadier than that from commissions on transactions.

 

The main increases will be felt by clients with money in a platform known as Merrill Lynch Personal Advisor, or MLPA, which has some $152 billion under management, or almost a third of all client money on managed platforms.

 

The current fee schedule for MLPA's equities section sets a minimum fee of 1% for clients whose accounts hold up to $1 million and 0.65% for accounts of $1 million to $2 million.

 

Under the new schedule, which uses a more precise scale, the minimum will be 1.6% for accounts up to $250,000, 1.4% for $250,000 to $500,000 and 1.3% for $500,000 to $1 million. For $1 million to $2 million accounts, the minimum is 1%.

 

For example, a client with a $400,000 account, and all of it in equities on the MLPA platform, would see his or her minimum fee rise from $4,000 to $5,600 yearly. The fee for a client with $1.5 million in such an account would rise from $9,750 to $15,000 yearly.

 

Currently, minimum fees for the managed-account platforms are based solely on how much a client has in that particular account. Under the new single system, the unified fee will be calculated based on all of the client's holdings with Merrill Lynch, including managed accounts and brokerage accounts, as well as Bank of America deposits.

 

...

 

What a scam. I'd pull every dime immediately.  Then again, personally I would have thought the initial fees were way too high!

[Grenville]

Saw this on CNBC breaking news and found the following in their just released 10Q.

 

From CNBC:

 

"Bank of America says it has been informed by SEC, Justice Department that bank may face civil charges"

http://www.cnbc.com/id/100928561

 

From the 10Q:

Regulatory and Governmental Investigations

The Corporation has received a number of subpoenas and other requests for information from regulators and governmental authorities regarding MBS and other mortgage-related matters, including inquiries, investigations and potential proceedings related to a number of transactions involving the Corporation's underwriting and issuance of MBS and its participation in certain CDO offerings. These inquiries and investigations include, among others, an investigation by the SEC related to Merrill Lynch's risk control, valuation, structuring, marketing and purchase of CDOs, and investigations by the DOJ, the SEC and the New York State Attorney General (the NYAG) concerning the purchase, securitization and underwriting of mortgage loans and RMBS. The Corporation has provided documents and testimony, and continues to cooperate fully with these inquiries and investigations.

 

The Corporation has been advised by the staff of the DOJ that it intends to file civil charges against Bank of America entities arising from one or two jumbo prime securitizations. The staff of the SEC has advised that they intend to recommend civil charges concerning one of those securitizations. The staff of the NYAG has advised that they intend to recommend filing an action against Merrill Lynch arising from their RMBS investigation. In addition, the staff of the SEC has advised that it is considering recommending civil charges against Merrill Lynch arising from its CDO investigation. The Corporation has been in active discussions with senior staff of each government entity in connection with the respective investigations and to explain why the threatened civil charges are not appropriate.

[fareastwarriors]

U.S. May Move Against Bank Over Jumbo Loan Securities

 

http://dealbook.nytimes.com/2013/08/01/u-s-may-move-against-bank-over-jumbo-loan-securities/?_r=0

[fareastwarriors]

http://online.wsj.com/article/SB10001424127887323968704578652302136846358.html

 

BofA Sued by U.S. Over Mortgage Securities

 

The U.S. government filed civil charges Tuesday against Bank of America Corp., BAC -1.08%alleging the company defrauded investors by understating the risks associated with $850 million worth of mortgage-backed securities it sold in 2008.

 

The Department of Justice and the Securities and Exchange Commission filed parallel actions in federal court in North Carolina. The lawsuits had been expected since the company acknowledged in a regulatory filing last week that both the SEC and Justice Department were moving ahead in their investigations. The bank said then that the Justice Department intended to file civil charges.

 

 

[fareastwarriors]

http://www.bloomberg.com/news/2013-08-06/feds-get-around-to-suing-bank-of-america.html

 

Feds Get Around to Suing Bank of America

 

[Liberty]

http://www.bloomberg.com/news/2013-08-07/bofa-put-toxic-debt-in-bond-as-staff-resisted-u-s-says.html

 

BofA Put Toxic Debt in Bond as Staff Resisted, U.S. Says

[MYDemaray]

Putting this in perspective, I read one article that said "losses could exceed $100M"....so, I haven't read the case, but is Justice seeking punitive damages, recovery for investors or simply a fine based on disclosures in offering docs?  In any case, this headline is receiving disproportionate airplay compared with the actual impact on the company.

[wescobrk]

Hopefully Moynihan bought more than his roughly 15 million per day from last quarter and actually bought back some real stock today, assuming tbv is about 13.50, the stock hit 1.06 tbv today.

 

People are talking about how cheap Bh is but I still think bac is still more attractive.

[fareastwarriors]

http://www.bloomberg.com/news/2013-08-08/do-bank-of-america-s-victims-think-they-got-taken-.html

 

 

Do Bank of America’s Victims Think They Got Taken?

 

[portfoolio]

Anyone have details on this? "$BAC and $BLK only financials on $MS 's list of Vintage Values (top 15 stock picks for July 2013 thru June 2014)"

[fareastwarriors]

http://www.cnbc.com/id/100959491

 

 

Citigroup, Bank of America will rally 100%: Dick Bove

 

 

:P

[enoch01]

http://www.cnbc.com/id/100959491

 

 

Citigroup, Bank of America will rally 100%: Dick Bove

 

 

:P

 

Welcome to 2012!

[ERICOPOLY]

http://www.cnbc.com/id/100959491

 

 

Citigroup, Bank of America will rally 100%: Dick Bove

 

 

:P

 

Welcome to 2012!

 

When did he reduce his BAC price target from $60?

 

[wescobrk]

Ha, I thought he just wrote they wouldn't earn much in q2.

[jeffmori7]

Bove predicted that both Citigroup and Bank of America "will at least get 100 percent higher than they are right now. … Now that's not going to happen in the next 12 months;it may not happen in the next 18 months, but it is going to happen."

 

What a prediction!

[nkp007]

http://www.cnbc.com/id/100959491

 

 

Citigroup, Bank of America will rally 100%: Dick Bove

 

 

:P

 

Welcome to 2012!

 

When did he reduce his BAC price target from $60?

 

LOL.

 

Don't worry. In about six months, his target will be back at $60. You gotta keep it exciting. It's provocative. It gets the people going.

[portfoolio]

The funny thing is that he is right (this week). I don't quite understand all the negativity on this board, all the stars are aligning. There's no reason in the world why BAC can't trade at 1.5x book value. I don't understand arguments to the contrary. I get that it has doubled, but that isn't a reason why it can't double again.

[mankap]

I think the premium that BAC gets over book depends upon economy,ROE and growth that BAC can show in loan volume.

If the economy is growing at 3%, there is growth in loans and ROE is 15%, BAC will trade at 50% premium.

[valueinvesting101]

http://www.cnbc.com/id/45355683

 

 

Dick Bove suggesting to buy banks in Nov 2011. I don't know what his track record is but targets are almost impossible give. I think his comments about time-frame also sound logical. No one can predict exactly when stock prices will recover but lot of board members do expect them to go up over period of next few years and hence prefer warrants over commons+option strategy.

 

Not to defend Dick Bove but his analysis did sound similar to lot of others manager held in high regards on this board such as Berkowitz. If we did went into cash in summer of 2011. I guess he does have some sense of what he is talking about. But then working on wall street does make you say things which you don't believe completely.

[Uccmal]

And again in 2012 - aside from a bizarre call one time, he seems pretty good at this. 

 

Timing is always an issue.  Incrementally, I am still waiting for $2.00 per share annualized - BV would satisfy me for now.  However, As we know investors are never really sated for long.....

[Luke 532]

BofA Plans to Dissolve Merrill Lynch to Simplify Company

http://www.bloomberg.com/news/2013-08-16/bofa-plans-to-dissolve-merrill-lynch-to-simplify-company.html