tng Posted January 9, 2019 Share Posted January 9, 2019 I just exercised my warrants. They can only be exercised on a cashless basis. It kinda sucks for me that the price of BAC went down so much in December (but at least it recovered a bit). I don't have enough free cash to re-lever up to the same exposure I had before, so the volatility was driving me crazy the last month and I'm glad it's over - it should teach me a lesson about being levered long. I never intended to be levered long with such a short time frame, I held the warrants for over 7 years now, but the volatility just came at the end. Link to comment Share on other sites More sharing options...
AdjustedEarnings Posted January 9, 2019 Share Posted January 9, 2019 I just exercised my warrants. They can only be exercised on a cashless basis. It kinda sucks for me that the price of BAC went down so much in December (but at least it recovered a bit). I don't have enough free cash to re-lever up to the same exposure I had before, so the volatility was driving me crazy the last month and I'm glad it's over - it should teach me a lesson about being levered long. I never intended to be levered long with such a short time frame, I held the warrants for over 7 years now, but the volatility just came at the end. I understand your feeling. I've had them for 7 years + also. Purchased at $2.18 and they traded as high as $21 I believe. All warrants provide leverage when you're long the option. But in terms of the payoff, I don't know if it's as bad as you feel. If you use the cashless exercise formula, today you might get something like 0.55 BAC shares per warrant. At the highs, this number would've been close to 0.6, so a 9% "loss" in terms of the conversion. But if you had held your converted shares, you'd have had much of that loss as well. If you think BAC shares are worth a lot more, all you've got to do is hold them after exercise. I agree, it's better to have an extra 9% than not but the true upside as of now, will be in the BAC shares. The question of having leverage through the warrants on an ongoing basis is moot, since the expiration date was dictated by the terms, i.e. beyond our control. Link to comment Share on other sites More sharing options...
rogermunibond Posted January 9, 2019 Share Posted January 9, 2019 See everyone over at the BAC thread after January 16. Goodbye to a very profitable holding. Link to comment Share on other sites More sharing options...
John Hjorth Posted January 9, 2019 Share Posted January 9, 2019 See everyone over at the BAC thread after January 16. Goodbye to a very profitable holding. Roger, This is the BAC topic, actually. -In worst case, this could create the first ever marathon for a crowd of people suffering of directional confusion [Try mentally to picture it!] - It would be such a mess. -Not the case here - we all want to go North! Link to comment Share on other sites More sharing options...
stahleyp Posted January 9, 2019 Share Posted January 9, 2019 I've been selling these off throughout last year but still have a decent amount. I'd like to convert. Does anyone know the tax ramifications on the cashless exercise? I would assume the shares they sell to buy the common is taxable? Do the remaining shares just have a basis of the conversion amount but the gain is deferred? Link to comment Share on other sites More sharing options...
rogermunibond Posted January 9, 2019 Share Posted January 9, 2019 Right you are. In that case, Jan 16 will be just like Y2K. See you all - same Bat time same Bat channel. Link to comment Share on other sites More sharing options...
John Hjorth Posted January 9, 2019 Share Posted January 9, 2019 Right you are. In that case, Jan 16 will be just like Y2K. See you all - same Bat time same Bat channel. Roger, Agreed! [ : - ) ] - Interesting times with BAC indeed! Link to comment Share on other sites More sharing options...
AdjustedEarnings Posted January 13, 2019 Share Posted January 13, 2019 I've been selling these off throughout last year but still have a decent amount. I'd like to convert. Does anyone know the tax ramifications on the cashless exercise? I would assume the shares they sell to buy the common is taxable? Do the remaining shares just have a basis of the conversion amount but the gain is deferred? Carryover basis for stock and taxable on the cash portion. Link to comment Share on other sites More sharing options...
stahleyp Posted January 13, 2019 Share Posted January 13, 2019 That's what I was thinking. Thanks for the confirmation, Adjusted! Link to comment Share on other sites More sharing options...
bargainman Posted January 14, 2019 Share Posted January 14, 2019 Just a heads up for anyone holding the A warrants- this is from the BAC investor relations page The NYSE has notified the Company that it will suspend trading in the Warrants after the close of trading on January 11, 2019 so that trades can be settled by January 16, 2019. The Warrants do not exercise automatically upon expiration. Any Warrants not exercised prior to the expiration time on January 16, 2019 will expire and be canceled, and the holder will not receive any shares of the Company’s common stock for its unexercised Warrants. Oh boy I just read this. Does this mean my only option is to exercise and then sell stock if I want? Does anyone know the final adjusted strike price for the warrant? Link to comment Share on other sites More sharing options...
Alekbaylee Posted January 14, 2019 Share Posted January 14, 2019 Yup. $12.544 http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-warrantinfo#fbid=WkHoUKs9MPo Link to comment Share on other sites More sharing options...
bargainman Posted January 15, 2019 Share Posted January 15, 2019 Thanks! Just exercised cashless only option, boo for taxation... oh well At least one part was in my 401k account. Phew, almost missed that! I've added calendar reminders for my other out of band warrant/option expirations! Now I just need to roll/close or exercise all my Jan '19 former leaps that are expiring on friday! :-) Link to comment Share on other sites More sharing options...
benchmark Posted January 15, 2019 Share Posted January 15, 2019 Yup. $12.544 http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-warrantinfo#fbid=WkHoUKs9MPo My TDameritrade told me that BAC has instructed them to convert at $12.713, which is different from BAC's website, does anyone else has the same problem? Link to comment Share on other sites More sharing options...
gfp Posted January 16, 2019 Share Posted January 16, 2019 Is there another thread for BAC I'm supposed to be using from now on? Either way, here are are the excellent results: https://mms.businesswire.com/media/20190116005355/en/700923/1/Q4_2018_Bank_of_America_Financial_Results_Press_Release.pdf?download=1 Link to comment Share on other sites More sharing options...
John Hjorth Posted January 16, 2019 Share Posted January 16, 2019 Yes, gfp, Excellent results for 2018 indeed. I've been in a state of bliss today because of it. And strong positive market reaction to the reported figures, too. No signs of real and/or material weaknesses or problems anywhere, despite all the noise all around us. BAC is just doing its thing every day. - - - o 0 o - - - I remember some time ago, Viking was using 35 as a reasonable average market price for the 2018-2019 CCAR cycle for buybacks - we are still at 28-29 after the market reaction today, after having been materially lower recently. - - - o 0 o - - - There is much more juice in this sucker for us, if things in the US does not start to break. Link to comment Share on other sites More sharing options...
gfp Posted January 16, 2019 Share Posted January 16, 2019 Looks like outstanding share count is 9.67 Billion at 12/31, we'll see something more up to date when the 10Q is filed shortly. Seems Warren is done buying at his even 900million shares, since repurchases will take it close enough to 10% in due course. 9.3% at year-end. It will be really interesting to see the updated share totals for Berkshire's holdings on JPM, USB and GS. If he liked 'em in Q3, he must have been pretty happy in Q4 (BAC aside) Link to comment Share on other sites More sharing options...
Viking Posted January 16, 2019 Share Posted January 16, 2019 Looks like outstanding share count is 9.67 Billion at 12/31, we'll see something more up to date when the 10Q is filed shortly. Seems Warren is done buying at his even 900million shares, since repurchases will take it close enough to 10% in due course. 9.3% at year-end. It will be really interesting to see the updated share totals for Berkshire's holdings on JPM, USB and GS. If he liked 'em in Q3, he must have been pretty happy in Q4 (BAC aside) Yes, great results. Moynihan has done a pretty amazing job positioning the bank. BRK owns close to 10% of BAC. Interesting that BRK has not moved much over the past 10 days given how much the banks stocks have moved (and this sector is his largest holding). Nice opportunity i think :-) Link to comment Share on other sites More sharing options...
John Hjorth Posted January 16, 2019 Share Posted January 16, 2019 gfp, With regard to the right place to post, I just did a search in the Investment Ideas forum, and there is no separate topic for the BAC common [as such]. So I suppose this is the right place to post about BAC in general. We [at least I do] also post comparative considerations here about the Big Four US banks, because the topic for BAC has the best traction among those four banks. [bAC is a CoBF darling, somehow.] Perhaps we should ask Sanjeev to change the topic title [Here : Drop "-WT" & "Warrants" in topic title] ? Link to comment Share on other sites More sharing options...
Jurgis Posted January 16, 2019 Share Posted January 16, 2019 I was considering moving my BAC position to BRK before current runup. I'm considering it now even more. It is tough to estimate future relative performance though. Link to comment Share on other sites More sharing options...
John Hjorth Posted January 27, 2019 Share Posted January 27, 2019 Attached is a calculated 2017 - 2018 survey of earnings and other key metrics for the Big Four US banks.Big_Four_US_Banks_-_Earnings_and_key_metrics_2018_and_2017_-_20190127.pdf Link to comment Share on other sites More sharing options...
gfp Posted January 27, 2019 Share Posted January 27, 2019 Nice summary John, thanks Attached is a calculated 2017 - 2018 survey of earnings and other key metrics for the Big Four US banks. Link to comment Share on other sites More sharing options...
Foreign Tuffett Posted January 28, 2019 Share Posted January 28, 2019 Attached is a calculated 2017 - 2018 survey of earnings and other key metrics for the Big Four US banks. Thank you for making and sharing this John. Link to comment Share on other sites More sharing options...
John Hjorth Posted January 28, 2019 Share Posted January 28, 2019 You're welcome, gents [ : - ) ], I was in need for an update on Joel's [racemize's] essay about the banks, and I did choose to share it, too - the least I could do to appreciate what other CoBF members share with me on here. Personally, I use a basket approach for these banks [moderate positions in three of them, the basket as a whole my second largest position, next to Berkshire]. I was surprised to see that LTM calculated P/Es at recent prices are basically identical for JPM, BAC & WFC. C and BAC prices has moved upwards much more than for JPM and WFC since the Christmas bottom. Striking to see that this banking oligopoly has generated pre tax earnings of USD 127 B in 2018, up 11% compared to 2017! [ : - ) ] [$-signs in my pupils!] Link to comment Share on other sites More sharing options...
shalab Posted January 28, 2019 Share Posted January 28, 2019 Yes, excellent compile, thanks John Hjorth! From a valuation stand point - a pre-tax P/E of 10 would value this basket at 1270 trillion. However, the market cap of the top four is today at 1004 trillion. Looks like there are still bargains to be had! You're welcome, gents [ : - ) ], I was in need for an update on Joel's [racemize's] essay about the banks, and I did choose to share it, too - the least I could do to appreciate what other CoBF members share with me on here. Personally, I use a basket approach for these banks [moderate positions in three of them, the basket as a whole my second largest position, next to Berkshire]. I was surprised to see that LTM calculated P/Es at recent prices are basically identical for JPM, BAC & WFC. C and BAC prices has moved upwards much more than for JPM and WFC since the Christmas bottom. Striking to see that this banking oligopoly has generated pre tax earnings of USD 127 B in 2018, up 11% compared to 2017! [ : - ) ] [$-signs in my pupils!] Link to comment Share on other sites More sharing options...
OracleofCarolina Posted February 7, 2019 Share Posted February 7, 2019 https://www.sec.gov/Archives/edgar/data/70858/000007085819000006/bac-exhibit9912719.htm good news! Link to comment Share on other sites More sharing options...
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