BAC-WT - Bank of America Warrants

[tombgrt]

Wescobrk: If you can find out how you can unsubscribe from their mailings, let me know! Doesn't seem to work for me. What a pain.

[TwoCitiesCapital]

Is it just me or is the seeking alpha articles on Bank of America in fantasy land? These are very poorly written articles. I guess they take anyone.

I see people writing up that it is worth $21 but they have no supporting evidence besides that is book value and they believe it should trade at book.

 

There is even one written this morning that it is currently at tangible book value. Huh? TBV is in the mid 14's not at $15.70.

I need to delete my seeking alpha account.

 

They do take anyone. Some articles are crap. Some are good. Plenty of in-between. You've just gotta pick your authors and stick with them. I ignore 99% of SA and generally only read articles by a handful of authors or when it seems to be a well thought out piece on a stock in my portfolio.

[Pelagic]

Wescobrk: If you can find out how you can unsubscribe from their mailings, let me know! Doesn't seem to work for me. What a pain.

 

Try unchecking BAC in the alerts column on your seeking alpha home page. Sometimes the email alerts are nice but with a stock like BAC or AAPL you essentially need an email account dedicated to just them.

[Viking]

there are still too many moving parts (unknowns) to be able to value the big banks properly; the big one is just how much capital they are going to need to hold. I liked the JPM investor day presentations; JPM essentially said they will adjust the business over time (to whatever the regulations finally end up being) to ensure they hit their financial return targets.

 

In the short term, the big banks will likely trade at cheap valuations. As more information becomes available and investors come to understand how the banks will adjust under the new rules my expectation is bank stocks will have a nice increase.

 

In BAC's case, we also have not had a year of decent earnings since the crisis hit; until this happens the the stock will likely trade at a discount to peers. I am hopeful that BAC starts to deliver some decent quarterly numbers. I am also hoping that they communicate what their plan is moving forward and what they feel the bank can earn in a 'normalized' environment, similar to what JPM did recently.

 

Looking out 2 or 3 years I do think the big banks will be one of the top performing categories. Patience will likely be the key.

[redskin]

What will the Commercial Real Estate Services (CRES) segment earn in a normalized environment?  CRES lost $400m last quarter.  Unpaid balances from the Legacy mortgage serviced portfolio continues to runoff (Declined from $467B in 2012 to $148 at end of 2014).  There is currently $23B of capital allocated to the segment.  What will this segment earn when the legacy assets are gone?

[kab60]

Is it just me or is the seeking alpha articles on Bank of America in fantasy land? These are very poorly written articles. I guess they take anyone.

I see people writing up that it is worth $21 but they have no supporting evidence besides that is book value and they believe it should trade at book.

 

There is even one written this morning that it is currently at tangible book value. Huh? TBV is in the mid 14's not at $15.70.

I need to delete my seeking alpha account.

 

They do take anyone. Some articles are crap. Some are good. Plenty of in-between. You've just gotta pick your authors and stick with them. I ignore 99% of SA and generally only read articles by a handful of authors or when it seems to be a well thought out piece on a stock in my portfolio.

Care to share your favorites? I could use some more inspiration. Thanks.

[abcd]

Care to share your favorites? I could use some more inspiration. Thanks.

 

There was some discussion on this some time ago.

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/seeking-alpha/

[Guest Schwab711]

Did folks on this board pick BAC over C because of Bufett? I don't know how any average joe could value any of the major banks. The range is too large to be useful. I do own a decent stake in C.

[HJ]

Did folks on this board pick BAC over C because of Bufett? I don't know how any average joe could value any of the major banks. The range is too large to be useful. I do own a decent stake in C.

 

I don't own either.  But if I had to chose one, it would be BAC.  Just as people complain that these entities are huge and complex to really get a handle on, Citi further complicates it by being in totally disparate geography.  When Vikram Pandit was running the place, he was going to make this an "emerging market bank".  Of course you soon had the Chinese copper warehouse scandal (swept under the rug), to be followed by Banamex scandal (too big and too close to CCAR to be swept under the rug).  And now they are trying to get out of a bunch of geography, Turkey, Romania, etc.  It wouldn't surprise me if they get picked off by the local sharks in the process, but then again, those never mattered in size to start with, which is why they would rather get out and move on.   

 

While by all accounts, Michael Corbat and Michael O'Neal are very capable people, how anything this sprawling can be well managed is beyond my comprehension.  In theory, you manage it ala Buffet manages Berkshire, you find the right people to delegate.  But neither of these guys bought these operations, have very little relationship with the local leaderships or the local business culture, it simply can't be a well managed place despite competent leadership. 

 

While BofA is also complex, I think by now, most of the problems among their many different lines of businesses are reasonably understood, and they do still have a meaningful domestic deposit base relative to their book of business to work from.    So if I had to pick one, BAC would be my choice.

[kab60]

Results out: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=2035172#fbid=wn2FsQUnJe2

[Andy Dufresne]

BAC Q1 results out, EPS of 0.27 $/share slightly under consensus

 

http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=quarterlyearnings#fbid=CK_IG0Cw7TK

[FCharlie]

I know everyone hates this company but they are now buying back stock at 38% below book value. As they earn a dollar they grow book value by more than a dollar, and every dollar of stock they repurchase grows book value per share even faster. BAC could go up 40% in the next year and still be buying back stock below book value.

 

 

[prevalou]

tangible book value/share=14.79$

[karthikpm]

I know everyone hates this company but they are now buying back stock at 38% below book value. As they earn a dollar they grow book value by more than a dollar, and every dollar of stock they repurchase grows book value per share even faster. BAC could go up 40% in the next year and still be buying back stock below book value.

 

Is that not exactly what one would want?

[benchmark]

Results out: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=2035172#fbid=wn2FsQUnJe2

 

One thing that I noticed is that lost provision and non-interests expense have both gone up, which seems to indicate that they are not tight on expense control (bad), and maybe they are making more risker bet (lost provision)?

[FCharlie]

Results out: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=2035172#fbid=wn2FsQUnJe2

 

One thing that I noticed is that lost provision and non-interests expense have both gone up, which seems to indicate that they are not tight on expense control (bad), and maybe they are making more risker bet (lost provision)?

 

Noninterest expense went up vs. last quarter but was down vs. last year.

 

The loss provision went up vs. last quarter, but it also was down from last year. And at $219 million last quarter, that was the lowest I can recall it being at any point in the past decade, so it's not surprising it went up.

[FCharlie]

Here is something that is fascinating.

 

These are the number of 60+ days delinquent first mortgage loans within Legacy Assets & Servicing:

 

Q1 2011 :  1,300,000

Q2 2011 :  1,280,000

Q3 2011 :  1,230,000

Q4 2011 :  1,160,000

Q1 2012 :  1,090,000

Q2 2012 :  1,060,000

Q3 2012 :  936,000

Q4 2012 :  773,000

Q1 2013 :  667,000

Q2 2013 :  492,000

Q3 2013 :  398,000

Q4 2013 :  325,000

Q1 2014 :  277,000

Q2 2014 :  263,000

Q3 2014 :  221,000

Q4 2014 :  189,000

Q1 2015 :  153,000

 

[benchmark]

Results out: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=2035172#fbid=wn2FsQUnJe2

 

One thing that I noticed is that lost provision and non-interests expense have both gone up, which seems to indicate that they are not tight on expense control (bad), and maybe they are making more risker bet (lost provision)?

 

Noninterest expense went up vs. last quarter but was down vs. last year.

 

The loss provision went up vs. last quarter, but it also was down from last year. And at $219 million last quarter, that was the lowest I can recall it being at any point in the past decade, so it's not surprising it went up.

 

Yes, I was referring to the changes comparing to last quarter, and I don't know how to explain the differences -- JPM didn't seem to have this problem as much.

[benchmark]

Here is something that is fascinating.

 

These are the number of 60+ days delinquent first mortgage loans within Legacy Assets & Servicing:

 

Q1 2011 :  1,300,000

Q2 2011 :  1,280,000

Q3 2011 :  1,230,000

Q4 2011 :  1,160,000

Q1 2012 :  1,090,000

Q2 2012 :  1,060,000

Q3 2012 :  936,000

Q4 2012 :  773,000

Q1 2013 :  667,000

Q2 2013 :  492,000

Q3 2013 :  398,000

Q4 2013 :  325,000

Q1 2014 :  277,000

Q2 2014 :  263,000

Q3 2014 :  221,000

Q4 2014 :  189,000

Q1 2015 :  153,000

That's what you would expect, why is this surprising?

[FCharlie]

Not surprising, just fascinating considering that everything that most of us predicted has happened and still the market trades this stock at a gigantic discount to book value.

 

I remember in 2009 when the loan loss provision was $13 Billion per quarter. Today it is less than $1 Billion per quarter.

 

The old loans are mostly gone, litigation is mostly gone, the dividend has moved in the right direction, the company has a $4 billion buyback in place, but even today we can buy at nearly a 40% discount to book value.

[rohitc99]

Not surprising, just fascinating considering that everything that most of us predicted has happened and still the market trades this stock at a gigantic discount to book value.

 

I remember in 2009 when the loan loss provision was $13 Billion per quarter. Today it is less than $1 Billion per quarter.

 

The old loans are mostly gone, litigation is mostly gone, the dividend has moved in the right direction, the company has a $4 billion buyback in place, but even today we can buy at nearly a 40% discount to book value.

 

but isnt that because the company continues to earn 6-7% on equity versus a well fargo earns almost 11%. so as eric said sometime back, maybe this will not reach book till the ROE improves

[FCharlie]

Not surprising, just fascinating considering that everything that most of us predicted has happened and still the market trades this stock at a gigantic discount to book value.

 

I remember in 2009 when the loan loss provision was $13 Billion per quarter. Today it is less than $1 Billion per quarter.

 

The old loans are mostly gone, litigation is mostly gone, the dividend has moved in the right direction, the company has a $4 billion buyback in place, but even today we can buy at nearly a 40% discount to book value.

 

but isnt that because the company continues to earn 6-7% on equity versus a well fargo earns almost 11%. so as eric said sometime back, maybe this will not reach book till the ROE improves

 

 

I think you are right. I think one of the reasons for the discount is because BAC continues to struggle with a goal of 10% ROE... However, I don't understand the logic of thinking that you can wait until we have a 10% ROE in order to buy the stock. By the time we have a 10% ROE I think book value and the stock price will be much higher.

[racemize]

Not surprising, just fascinating considering that everything that most of us predicted has happened and still the market trades this stock at a gigantic discount to book value.

 

I remember in 2009 when the loan loss provision was $13 Billion per quarter. Today it is less than $1 Billion per quarter.

 

The old loans are mostly gone, litigation is mostly gone, the dividend has moved in the right direction, the company has a $4 billion buyback in place, but even today we can buy at nearly a 40% discount to book value.

 

but isnt that because the company continues to earn 6-7% on equity versus a well fargo earns almost 11%. so as eric said sometime back, maybe this will not reach book till the ROE improves

 

 

I think you are right. I think one of the reasons for the discount is because BAC continues to struggle with a goal of 10% ROE... However, I don't understand the logic of thinking that you can wait until we have a 10% ROE in order to buy the stock. By the time we have a 10% ROE I think book value and the stock price will be much higher.

 

I think the question is not about buying it when it gets to 10%, but if and how long it will take to get to 10%.  Opportunity cost on this stock since it got to $13-15 has been pretty painful. 

[benchmark]

Not surprising, just fascinating considering that everything that most of us predicted has happened and still the market trades this stock at a gigantic discount to book value.

 

I remember in 2009 when the loan loss provision was $13 Billion per quarter. Today it is less than $1 Billion per quarter.

 

The old loans are mostly gone, litigation is mostly gone, the dividend has moved in the right direction, the company has a $4 billion buyback in place, but even today we can buy at nearly a 40% discount to book value.

 

but isnt that because the company continues to earn 6-7% on equity versus a well fargo earns almost 11%. so as eric said sometime back, maybe this will not reach book till the ROE improves

 

 

I think you are right. I think one of the reasons for the discount is because BAC continues to struggle with a goal of 10% ROE... However, I don't understand the logic of thinking that you can wait until we have a 10% ROE in order to buy the stock. By the time we have a 10% ROE I think book value and the stock price will be much higher.

 

I think the question is not about buying it when it gets to 10%, but if and how long it will take to get to 10%.  Opportunity cost on this stock since it got to $13-15 has been pretty painful.

+1, very painful :(

[rohitc99]

Not surprising, just fascinating considering that everything that most of us predicted has happened and still the market trades this stock at a gigantic discount to book value.

 

I remember in 2009 when the loan loss provision was $13 Billion per quarter. Today it is less than $1 Billion per quarter.

 

The old loans are mostly gone, litigation is mostly gone, the dividend has moved in the right direction, the company has a $4 billion buyback in place, but even today we can buy at nearly a 40% discount to book value.

 

but isnt that because the company continues to earn 6-7% on equity versus a well fargo earns almost 11%. so as eric said sometime back, maybe this will not reach book till the ROE improves

 

 

I think you are right. I think one of the reasons for the discount is because BAC continues to struggle with a goal of 10% ROE... However, I don't understand the logic of thinking that you can wait until we have a 10% ROE in order to buy the stock. By the time we have a 10% ROE I think book value and the stock price will be much higher.

 

I am digging through the numbers and comparing with WFC which does earn more than 10%. Its turning out to be interesting exercise and i am not done yet

 

for example - both have loans and leases which are very close - 878 bn for BAC versus 861 Bn for WFC.  Inspite of this WFC earned 8.9 Bn v/s 8.03 for BAC. So WFC gets higher yields. However overall interest income is exactly the same ..around 11.963 Bn

 

BAC has 1.3 Bn interest expense due to long term debt v/s .6 Bn for WFC.

 

BAC has personnel expenses of 9.6 Bn versus 7.8 Bn for WFC. ofcouse BAC will have higher expenses due to IB and bigger wealth management biz

 

So roughly higher long term debt and personnel expense seems to account for majority of the gap at the PTPP level. Also WFC can operate with much lower capital (lower risk ratios for assets ) ?

 

I can see debt expenses and risk assets drop, but employee productivity may be a long haul and may never happen. I dont see any easy path to 10% ROE