BAC-WT - Bank of America Warrants

[TwoCitiesCapital]

For those who own this, are you getting nervous about the valuation?

 

Disclosure: I haven't owned BAC for several years. But here are my contradictory thoughts:

 

1. Momentum is real. It is generally better to hold past the point where value investors get nervous.

2. Banks (at least since 2008) give you ample opportunities to re-enter at attractive prices.

 

I agree with KCLarkin. Momentum is in favor of BAC and there's no real reason for it to stop here. There have been nine positive earnings revisions since January and I'm expecting even more positive earnings revisions in the future. I think the loan loss allowance is too high and reserves will need to be released. I wouldn't be surprised if today's price ends up being only about 12 times 2022 earnings. Hardly overvalued for where we are in the cycle.

 

Where are we at in the cycle?  Beginning, middle, or end?

[FCharlie]

For those who own this, are you getting nervous about the valuation?

 

Disclosure: I haven't owned BAC for several years. But here are my contradictory thoughts:

 

1. Momentum is real. It is generally better to hold past the point where value investors get nervous.

2. Banks (at least since 2008) give you ample opportunities to re-enter at attractive prices.

 

I agree with KCLarkin. Momentum is in favor of BAC and there's no real reason for it to stop here. There have been nine positive earnings revisions since January and I'm expecting even more positive earnings revisions in the future. I think the loan loss allowance is too high and reserves will need to be released. I wouldn't be surprised if today's price ends up being only about 12 times 2022 earnings. Hardly overvalued for where we are in the cycle.

 

Where are we at in the cycle?  Beginning, middle, or end?

 

I don't believe the NBER has even declared the end of the recession so unless the central bankers and governments blow the whole world up, I'm going with beginning.

 

 

 

 

 

[TwoCitiesCapital]

For those who own this, are you getting nervous about the valuation?

 

Disclosure: I haven't owned BAC for several years. But here are my contradictory thoughts:

 

1. Momentum is real. It is generally better to hold past the point where value investors get nervous.

2. Banks (at least since 2008) give you ample opportunities to re-enter at attractive prices.

 

I agree with KCLarkin. Momentum is in favor of BAC and there's no real reason for it to stop here. There have been nine positive earnings revisions since January and I'm expecting even more positive earnings revisions in the future. I think the loan loss allowance is too high and reserves will need to be released. I wouldn't be surprised if today's price ends up being only about 12 times 2022 earnings. Hardly overvalued for where we are in the cycle.

 

Where are we at in the cycle?  Beginning, middle, or end?

 

I don't believe the NBER has even declared the end of the recession so unless the central bankers and governments blow the whole world up, I'm going with beginning.

 

I just wonder seeing as it's the first recession where aggregate incomes rose if it's actually the end of anything.

 

Stocks didn't break the upward trendline from 2009, aggregate incomes rose during the recession, and there was no appreciable corporate delevering (rather additional levering occurred).

 

So other than some arbitrary "end" to a recession by the NBER, it doesn't seem like the hallmarks of the "end" of the cycle played out to set the foundatt for the new cycle to begin IMO.  Just seems like we printed and borrowed money to buy time to extend the last cycle. So maybe we rewound to inning 7 or 8 instead of starting a new game at the 1st?

[ERICOPOLY]

Was the pandemic the cycle, or a cycle within a cycle?

[LearningMachine]

https://www.barrons.com/articles/bank-of-america-ceo-says-its-earnings-are-poised-to-substantially-increase-as-rates-rise-51616410821

 

Anyone else in the world telling you so clearly that their earnings will rise sharply as interest rates rise?  :-)

 

 

“The key is we’ve been able to invest $3.5 billion a year in technology. We’ve been able to open up branches in many new cities. We’ve been able to raise minimum wages, while we’ve kept expenses down. Now that’s the magic in a franchise, so when rates rise, which they will at some point—and when they did in ’16 and ’17—the earnings rise sharply, because we have no more expenses to deploy and all the revenue that comes in from the deposit base,” Moynihan said.

[fareastwarriors]

https://www.barrons.com/articles/bank-of-america-ceo-says-its-earnings-are-poised-to-substantially-increase-as-rates-rise-51616410821

 

Anyone else in the world telling you so clearly that their earnings will rise sharply as interest rates rise?  :-)

 

 

“The key is we’ve been able to invest $3.5 billion a year in technology. We’ve been able to open up branches in many new cities. We’ve been able to raise minimum wages, while we’ve kept expenses down. Now that’s the magic in a franchise, so when rates rise, which they will at some point—and when they did in ’16 and ’17—the earnings rise sharply, because we have no more expenses to deploy and all the revenue that comes in from the deposit base,” Moynihan said.

 

 

I been riding this (+WFC) all the way to the Bank.  8)

 

https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210325a.htm

 

The floodgates open on 6/30

 

 

 

https://www.wsj.com/articles/payday-might-be-coming-for-u-s-bank-investors-11616781627?mod=business_minor_pos10

Payday Might Be Coming for U.S. Bank Investors

Federal Reserve’s decision to roll back bank payout restrictions is mostly a return to normal for buyback decisions