meiroy Posted October 2, 2015 Share Posted October 2, 2015 warrants are still very expensive ! i think the cost of leverage is about 11% or so ! i'm just sitting here, enjoying the show lol seems like the market is thinking if there's no rate change; BAC profitability will be low Gary I'm betting their profitability will be low because they suck as a company and they still have pre-2008 issues to deal with. Having said that, TBV is ridiculous so I bought some LEAPs today. Link to comment Share on other sites More sharing options...
Hoodlum Posted October 2, 2015 Share Posted October 2, 2015 I picked up some common today. I'll do some LEAPs if it goes lower. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 2, 2015 Share Posted October 2, 2015 Re-opened a small position in LEAPs. Link to comment Share on other sites More sharing options...
redskin Posted October 2, 2015 Share Posted October 2, 2015 warrants are still very expensive ! i think the cost of leverage is about 11% or so ! i'm just sitting here, enjoying the show lol seems like the market is thinking if there's no rate change; BAC profitability will be low Gary What is considered 'low profitability'? I'm buying. Even with unsatisfactory results the stock is cheap. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted October 2, 2015 Share Posted October 2, 2015 I don't fault you guys for buying. I don't own BofA, but I do own SAN which is also down significantly for the year. In the event of a deflationary environment, bank earnings will likely be "lower for longer" right alongside bond yields. That isn't stopping me from buying SAN and it shouldn't stop you from buying BofA, but maybe it should be a consideration when you're considering how much you're buying at this present moment. My purchases of SAN, and subsidiaries, is considerably smaller than it would be if I wasn't concerned about sustained deflation even though SAN currently trades at 8x depressed earnings with a large portion of profits coming from long-term growth centers. Link to comment Share on other sites More sharing options...
redskin Posted October 2, 2015 Share Posted October 2, 2015 Even if they only make $12 billion annually they are currently trading at about 14X earnings. 7% earnings yield better than most investments now. They earned $5.3B last quarter. Lots of upside if they start buying back $10-15B of stock next year. Link to comment Share on other sites More sharing options...
redskin Posted October 2, 2015 Share Posted October 2, 2015 I bought the Jan '17 17-20 call spread at 0.65. Link to comment Share on other sites More sharing options...
jay21 Posted October 2, 2015 Share Posted October 2, 2015 I don't fault you guys for buying. I don't own BofA, but I do own SAN which is also down significantly for the year. In the event of a deflationary environment, bank earnings will likely be "lower for longer" right alongside bond yields. That isn't stopping me from buying SAN and it shouldn't stop you from buying BofA, but maybe it should be a consideration when you're considering how much you're buying at this present moment. My purchases of SAN, and subsidiaries, is considerably smaller than it would be if I wasn't concerned about sustained deflation even though SAN currently trades at 8x depressed earnings with a large portion of profits coming from long-term growth centers. People still assign a meaningful probability to a significant deflationary period? Stagnation for longer but not deflation imo. Link to comment Share on other sites More sharing options...
drzola Posted October 2, 2015 Share Posted October 2, 2015 Doubled up on Bac 2017 13 calls that I thougfht I had a ridicously low standing offer in on EEk! Link to comment Share on other sites More sharing options...
Uccmal Posted October 8, 2015 Share Posted October 8, 2015 I have been deLeaping, if you will, over the last while. In other words, I am not making money on Leaps, and the risk of permanent loss has become too high in my mind. The decay rate is slightly faster than the price appreciation. Given the warnings from BAC about trading profits, and the continued low NIM, I am not expecting much bump from the coming earnings either. The long term, a couple of years out, looks fine, but the medium term, not so much. I continue to have a substantial common holding in BAC that I will hold for the long term, likely, especially if they get the dividend up. Link to comment Share on other sites More sharing options...
tylerdurden Posted October 8, 2015 Share Posted October 8, 2015 I have been deLeaping, if you will, over the last while. In other words, I am not making money on Leaps, and the risk of permanent loss has become too high in my mind. The decay rate is slightly faster than the price appreciation. Given the warnings from BAC about trading profits, and the continued low NIM, I am not expecting much bump from the coming earnings either. The long term, a couple of years out, looks fine, but the medium term, not so much. I continue to have a substantial common holding in BAC that I will hold for the long term, likely, especially if they get the dividend up. That's right. My expectations are definitely low for this quarter as well but having said that if they show better than expected improvement in terms of expense cuts, that can change the outlook somewhat. An early achievement of the $0.8B LAS expense target could also be positive. (I assume they'll have to come up with an updated target for year end or will confirm the $0.5B 16YE target for LAS) Anyways, not much positives at the moment but if no interest rate increase anytime soon, Moynihan will have start delivering on the expense cut promises. Recent downsizing news for the investment banking unit was encouraging on that front. Link to comment Share on other sites More sharing options...
racemize Posted October 8, 2015 Share Posted October 8, 2015 I have been deLeaping, if you will, over the last while. In other words, I am not making money on Leaps, and the risk of permanent loss has become too high in my mind. The decay rate is slightly faster than the price appreciation. Given the warnings from BAC about trading profits, and the continued low NIM, I am not expecting much bump from the coming earnings either. The long term, a couple of years out, looks fine, but the medium term, not so much. I continue to have a substantial common holding in BAC that I will hold for the long term, likely, especially if they get the dividend up. Interesting. I initiated LEAPs (in my IRA) for the first time in a long time when it got down near tangible a few weeks back. I was thinking that a rate rise in the next year would have good impact and that generally BAC hasn't been staying at TBV very often over the last few years, so the leverage seemed to make sense to me. It's not a huge amount of my net worth anyway though... Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 8, 2015 Share Posted October 8, 2015 Well, the rate disappointment is now baked into the stock price anyways. A $2.00 drop from summer's levels has discounted 50 cents of annual earnings disappointment for the next four years. So if the market was pricing in 10x an annual rate of $1.80 during the summer, it now seems to be saying that it will only be $1.30 for the next four years before climbing to $1.80. The risks to shareholders from low rates do seem to be getting fewer. Doesn't mean the stock will recover anytime soon though. Link to comment Share on other sites More sharing options...
benchmark Posted October 8, 2015 Share Posted October 8, 2015 I have been deLeaping, if you will, over the last while. In other words, I am not making money on Leaps, and the risk of permanent loss has become too high in my mind. The decay rate is slightly faster than the price appreciation. Given the warnings from BAC about trading profits, and the continued low NIM, I am not expecting much bump from the coming earnings either. The long term, a couple of years out, looks fine, but the medium term, not so much. I continue to have a substantial common holding in BAC that I will hold for the long term, likely, especially if they get the dividend up. I'm worried about this as well, but I haven't de-leaped yet. The market seems to have anticipated a bad quarter already, as evidenced on the drop of close of $3 in share price -- but it might have over-reacted it I think. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 13, 2015 Share Posted October 13, 2015 So now Mike Mayo says BAC is worth somewhere between $20.60 and $25.80: We estimate that the sum-of-the-parts is worth one-third to two-thirds more than the current valuations at Citigroup, JPMorgan Chase, and Bank of America. http://www.cnbc.com/2015/10/12/why-hillary-clinton-should-stop-bashing-banks-commentary.html?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=103070375 Link to comment Share on other sites More sharing options...
meiroy Posted October 13, 2015 Share Posted October 13, 2015 I still think they will raise rates by year's end. BAC at close to TBV, with this free option is definitely worth it, lousy quarter or not. Link to comment Share on other sites More sharing options...
Uccmal Posted October 13, 2015 Share Posted October 13, 2015 The 2018 Leaps should be out in 4 weeks or so. If the stock is here or below I will likely reconsider at that time. Just small positions. Link to comment Share on other sites More sharing options...
Uccmal Posted October 13, 2015 Share Posted October 13, 2015 So now Mike Mayo says BAC is worth somewhere between $20.60 and $25.80: We estimate that the sum-of-the-parts is worth one-third to two-thirds more than the current valuations at Citigroup, JPMorgan Chase, and Bank of America. http://www.cnbc.com/2015/10/12/why-hillary-clinton-should-stop-bashing-banks-commentary.html?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=103070375 This guy is all over the map but he manages to keep himself in the news pretty nicely. What a friggin' job. Link to comment Share on other sites More sharing options...
Guest Grey512 Posted October 13, 2015 Share Posted October 13, 2015 I still think they will raise rates by year's end. BAC at close to TBV, with this free option is definitely worth it, lousy quarter or not. Instead of earnings 'tomorrow', why not get some earnings 'today' and just buy JPM (stock or warrants) or even GS? I think it is reasonable to posit that none of these three banks will be put into run-off in the next few years so the TBV discounts are not as relevant as proven ability to generate owner earnings. Besides - staff morale at BAC (and C, for that matter) is woeful. JPM and GS have better culture, better morale, and significantly sharper, stronger leaders. Both JPM and GS are currently available at 10-11x trailing earnings. Link to comment Share on other sites More sharing options...
meiroy Posted October 13, 2015 Share Posted October 13, 2015 I still think they will raise rates by year's end. BAC at close to TBV, with this free option is definitely worth it, lousy quarter or not. Instead of earnings 'tomorrow', why not get some earnings 'today' and just buy JPM (stock or warrants) or even GS? I think it is reasonable to posit that none of these three banks will be put into run-off in the next few years so the TBV discounts are not as relevant as proven ability to generate owner earnings. Besides - staff morale at BAC (and C, for that matter) is woeful. JPM and GS have better culture, better morale, and significantly sharper, stronger leaders. Both JPM and GS are currently available at 10-11x trailing earnings. I own both. GS got really, really cheap lately... but this is the BAC thread :) Link to comment Share on other sites More sharing options...
Uccmal Posted October 13, 2015 Share Posted October 13, 2015 I still think they will raise rates by year's end. BAC at close to TBV, with this free option is definitely worth it, lousy quarter or not. Instead of earnings 'tomorrow', why not get some earnings 'today' and just buy JPM (stock or warrants) or even GS? I think it is reasonable to posit that none of these three banks will be put into run-off in the next few years so the TBV discounts are not as relevant as proven ability to generate owner earnings. Besides - staff morale at BAC (and C, for that matter) is woeful. JPM and GS have better culture, better morale, and significantly sharper, stronger leaders. Both JPM and GS are currently available at 10-11x trailing earnings. I own both. GS got really, really cheap lately... but this is the BAC thread :) In no particular order I hold JPM, WFC, BAC, RY, BMO so we have that covered. Link to comment Share on other sites More sharing options...
meiroy Posted October 14, 2015 Share Posted October 14, 2015 http://www.calculatedriskblog.com/2015/10/fed-governor-daniel-tarullo-i-wouldnt.html "This is the second Fed Governor in two days to argue it is appropriate to wait until next year, see Tim Duy's Brainard Drops A Policy Bomb The Fed governors almost always vote with the Fed Chair, so this either suggests a sharp disagreement, or Fed Chair Janet Yellen is changing her mind. Either is a significant story. " Link to comment Share on other sites More sharing options...
Spekulatius Posted October 14, 2015 Share Posted October 14, 2015 I still think they will raise rates by year's end. BAC at close to TBV, with this free option is definitely worth it, lousy quarter or not. Instead of earnings 'tomorrow', why not get some earnings 'today' and just buy JPM (stock or warrants) or even GS? I think it is reasonable to posit that none of these three banks will be put into run-off in the next few years so the TBV discounts are not as relevant as proven ability to generate owner earnings. Besides - staff morale at BAC (and C, for that matter) is woeful. JPM and GS have better culture, better morale, and significantly sharper, stronger leaders. Both JPM and GS are currently available at 10-11x trailing earnings. I agree. JPM and GS trade at the same PE than BAC, but are much better managed. GS trades at 1.1x tangible book vs BAC 1.0x and I don't feel that such a small valuation difference in one matrix is worth owning a bank with mediocre (at best) management. Link to comment Share on other sites More sharing options...
jay21 Posted October 14, 2015 Share Posted October 14, 2015 1 - GS's business has way more challenges than BAC right now. Normalized I would expect higher ROTE on BAC. 2 - What was someone's point about current earnings? Another decent print today that has room for improvement. Link to comment Share on other sites More sharing options...
Uccmal Posted October 14, 2015 Share Posted October 14, 2015 2 - What was someone's point about current earnings? Another decent print today that has room for improvement. Indeed, BAC is getting there. Management IMO, is better than JPM - fewer scandals. Link to comment Share on other sites More sharing options...
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