CorpRaider Posted November 9, 2016 Share Posted November 9, 2016 Yeah, looking good. No longer looking like super-regulated utility from now to infinity. Then again, there is probably a chance he says something insane prior to fed hike, causes crash and hikes are off table for another 2 years. Link to comment Share on other sites More sharing options...
TheAiGuy Posted November 10, 2016 Share Posted November 10, 2016 Lots to like about financials right now: 1.) US 10 year bond is up 22 basis points and is now over 2%; it was 1.4% a few months ago 2.) good bye Elizabeth Warren 3.) financial regulators appointed by Trump will likely be much more supportive of the big banks 4.) likelihood of new anti big bank laws getting passed is very low 5.) likelihood of Dodd Frank getting watered down is medium to high (Trump said he wants to repeal it) The big banks are over capitalized. They are also very profitable. They are returning around 8% to shareholders (dividends plus stock buybacks). The political tone in Washington will likely shift in the coming months and become more pro bank (from rabid anti bank). Weave it all together and I see earnings growth, much lower share count and multiple expansion. This usually results in much higher stock prices. And if the fed raises in Dec this will be icing on the cake for bank investors, PS: and, yes, the past 12 months have been very hard for investors in bank stocks (felt like I was living the movie Groundhog Day). I think you are putting forth that which you would like to happen. Regardless, what do you think the risk reward is here? Banks were clearly undervalued earlier this year with no changes, whereas you're betting on a political outcome -- why aren't you worried that your political views color your judgment? 1) Yes, yield are up. 2) Warren isn't going any where. 3) Yes, probably 4) Yes, but this was already true without a complete Democratic sweep. 5) This isn't in his 100 day plan. It is probably a low priority. Link to comment Share on other sites More sharing options...
meiroy Posted November 10, 2016 Share Posted November 10, 2016 So, I sold all the calls when it got to 15. Together with most other bank options. Oh the pain. Think I'll have some chocolate ice cream now. With some whiskey. Maybe more than some. Link to comment Share on other sites More sharing options...
brendanb22 Posted November 10, 2016 Share Posted November 10, 2016 Maybe I spoke a bit too soon? Now I'm definitely selling a bit... Link to comment Share on other sites More sharing options...
TheAiGuy Posted November 10, 2016 Share Posted November 10, 2016 Ha, this is the first time I wish I had bought the warrents and not the common. Not really, but still Link to comment Share on other sites More sharing options...
meiroy Posted November 10, 2016 Share Posted November 10, 2016 The volume is absolutely insane. Who's buying this... Link to comment Share on other sites More sharing options...
TheAiGuy Posted November 10, 2016 Share Posted November 10, 2016 Stupid people? Link to comment Share on other sites More sharing options...
meiroy Posted November 10, 2016 Share Posted November 10, 2016 Stupid people? Druckenmiller? Definitely not in the stupid-camp. Link to comment Share on other sites More sharing options...
KCLarkin Posted November 10, 2016 Share Posted November 10, 2016 Druckenmiller? Definitely not in the stupid-camp. Source? Link to comment Share on other sites More sharing options...
meiroy Posted November 10, 2016 Share Posted November 10, 2016 Druckenmiller? Definitely not in the stupid-camp. Source? No idea if he's buying BAC, if he did than he probably did it before the rally, but he is back and he is happy happy happy. So. There's that. Link to comment Share on other sites More sharing options...
TheAiGuy Posted November 10, 2016 Share Posted November 10, 2016 Druckenmiller? Definitely not in the stupid-camp. Source? No idea if he's buying BAC, if he did than he probably did it before the rally, but he is back and he is happy happy happy. So. There's that. The question wasn't who bought it before the rally. Obviously that was a good move, the question was who's buying it now Link to comment Share on other sites More sharing options...
KCLarkin Posted November 10, 2016 Share Posted November 10, 2016 No idea if he's buying BAC, if he did than he probably did it before the rally, but he is back and he is happy happy happy. So. There's that. I wasn't asking specifically about BAC. Just whether he has said anything about financials. On CNBC, it looks like he is tilting towards cyclicals and away from bonds and growth stocks. Link to comment Share on other sites More sharing options...
Uccmal Posted November 10, 2016 Share Posted November 10, 2016 Lots to like about financials right now: 1.) US 10 year bond is up 22 basis points and is now over 2%; it was 1.4% a few months ago 2.) good bye Elizabeth Warren 3.) financial regulators appointed by Trump will likely be much more supportive of the big banks 4.) likelihood of new anti big bank laws getting passed is very low 5.) likelihood of Dodd Frank getting watered down is medium to high (Trump said he wants to repeal it) The big banks are over capitalized. They are also very profitable. They are returning around 8% to shareholders (dividends plus stock buybacks). The political tone in Washington will likely shift in the coming months and become more pro bank (from rabid anti bank). Weave it all together and I see earnings growth, much lower share count and multiple expansion. This usually results in much higher stock prices. And if the fed raises in Dec this will be icing on the cake for bank investors, PS: and, yes, the past 12 months have been very hard for investors in bank stocks (felt like I was living the movie Groundhog Day). I think you are putting forth that which you would like to happen. Regardless, what do you think the risk reward is here? Banks were clearly undervalued earlier this year with no changes, whereas you're betting on a political outcome -- why aren't you worried that your political views color your judgment? 1) Yes, yield are up. 2) Warren isn't going any where. 3) Yes, probably 4) Yes, but this was already true without a complete Democratic sweep. 5) This isn't in his 100 day plan. It is probably a low priority. AI guy. You are right. My opinion is that a President Trump isn't going to give a damn about reducing regulations around banks. This rally is based on flimsy fundamentals and will reverse itself fast enough. Link to comment Share on other sites More sharing options...
Uccmal Posted November 10, 2016 Share Posted November 10, 2016 Druckenmiller? Definitely not in the stupid-camp. Source? No idea if he's buying BAC, if he did than he probably did it before the rally, but he is back and he is happy happy happy. So. There's that. The question wasn't who bought it before the rally. Obviously that was a good move, the question was who's buying it now Suckers? Link to comment Share on other sites More sharing options...
finetrader Posted November 10, 2016 Share Posted November 10, 2016 I'm starting to love Trump! Link to comment Share on other sites More sharing options...
rkbabang Posted November 10, 2016 Share Posted November 10, 2016 So, I sold all the calls when it got to 15. Together with most other bank options. Oh the pain. Think I'll have some chocolate ice cream now. With some whiskey. Maybe more than some. I was tempted to as well. I was holding Jan17 calls and getting nervous. I'm glad I waited. It looks like I sold at least a day too early, but to modify a popular quote it is better to sell at approximately the right time then the absolutely wrong time. Link to comment Share on other sites More sharing options...
drzola Posted November 10, 2016 Share Posted November 10, 2016 Yesterday I also sold out of ALL my Jan 2017 calls and bought back my puts written as well. I actually reduced 2/3 of common stock and 1/4 of my Jan 2018 calls to. Still hold all my warrants in registered CDN accts tho. I suspect I willl probably never ever experience what the last 3 USA presidency intererference ( i.e. TARP warrants etc etc ) in markets have created in banking of this magnitude? Whadda I know tho. It was fun while it lasted here. Cheers. Link to comment Share on other sites More sharing options...
KCLarkin Posted November 10, 2016 Share Posted November 10, 2016 I guess I'm not a real value investor. But why isn't this the right time to buy? Unlike some of the other rotations going on, this is not merely sentiment driven. The fundamentals have improved since Trump's election. Still looks cheap. So you get improved sentiment plus improved fundamentals and the instinct is to sell after a 10% move? Link to comment Share on other sites More sharing options...
TheAiGuy Posted November 10, 2016 Share Posted November 10, 2016 No, the instinct is to sell after the last 10% move in 2 days of a 60% from the February lows, after earnings have come back after not being there for years, and after a, what, tripling of the stock from 2011/2012? Easy money has been made, $18+ is more or less a fair price for the stock unless you think something about the company has changed. Sentiment can change quickly and is hard to predict -- it's not my game. reduced my position by 25% over yesterday and today. Link to comment Share on other sites More sharing options...
KCLarkin Posted November 10, 2016 Share Posted November 10, 2016 Easy money has been made, $18+ is more or less a fair price for the stock unless you think something about the company has changed. Sentiment can change quickly and is hard to predict -- it's not my game. $18 is certainly a fair price. And trimming a large position is certainly prudent. Especially if you own warrants. Link to comment Share on other sites More sharing options...
CorpRaider Posted November 10, 2016 Share Posted November 10, 2016 Mike Mayo says banks deserve to trade at premium to historic multiples (of p/b etc) given the winds of change, rates and the historic strength in the balance sheets and efficiency of the businesses. Link to comment Share on other sites More sharing options...
TheAiGuy Posted November 10, 2016 Share Posted November 10, 2016 Mike Mayo says banks deserve to trade at premium to historic multiples (of p/b etc) given the winds of change, rates and the historic strength in the balance sheets and efficiency of the businesses. Yeah, I want to sell when people start saying that Link to comment Share on other sites More sharing options...
vinod1 Posted November 10, 2016 Share Posted November 10, 2016 I have significantly reduced my BAC position today in all retirement accounts. Thumb sucking about taxable account due to tax consequences as the position was established during Feb lows this year and I would end up paying ST tax rates. Vinod Link to comment Share on other sites More sharing options...
Rasputin Posted November 10, 2016 Share Posted November 10, 2016 I converted my A warrants to shares. Holding on to every shares I got. I love them. They are on their journey to be lowest cost, lowest risk global universal bank. Just look at energy related charge offs the past year vs WFC or JPM. Their culture is now so risk averse. Btw if Trump goes through with his corporate tax reduction policy, if BAC can get its tax rate down from 30% to 20%, shareholder equity value goes up by 15% (shareholders share of the profit goes up from 70% to 80%). The increase in long end rate by 50 bps since end of Q3 2016 alone is worth $1 B in annual pretax income. If the fed goes through with 25 bps fed funds hike, that's another $0.75 B in annual pretax income. Check out Hensarling Financial CHOICE act. IF it passes, there will be an option for GSIB to avoid dodd-frank by having 10% SLR. BAC is already at 7.1% and this will continue to build up. BAC spends billions per year on dodd-frank, the option to avoid it could be appealing. Imagine not having to do annual stress test, living will etc. However, this will also lower barrier to entry. Link to comment Share on other sites More sharing options...
benchmark Posted November 10, 2016 Share Posted November 10, 2016 I converted my A warrants to shares. Holding on to every shares I got. I love them. They are on their journey to be lowest cost, lowest risk global universal bank. Just look at energy related charge offs the past year vs WFC or JPM. Their culture is now so risk averse. Btw if Trump goes through with his corporate tax reduction policy, if BAC can get its tax rate down from 30% to 20%, shareholder equity value goes up by 15% (shareholders share of the profit goes up from 70% to 80%). The increase in long end rate by 50 bps since end of Q3 2016 alone is worth $1 B in annual pretax income. If the fed goes through with 25 bps fed funds hike, that's another $0.75 B in annual pretax income. Check out Hensarling Financial CHOICE act. IF it passes, there will be an option for GSIB to avoid dodd-frank by having 10% SLR. BAC is already at 7.1% and this will continue to build up. BAC spends billions per year on dodd-frank, the option to avoid it could be appealing. Imagine not having to do annual stress test, living will etc. However, this will also lower barrier to entry. You sold warrant and bought shares at this price? Link to comment Share on other sites More sharing options...
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