BAC-WT - Bank of America Warrants

[texual]

In 2013 if they re-instate dividends I might turn off my DRIP (div reinvestment plan) for the accounts that hold BAC... what do you guys think? I would much rather take cash instead of repurchasing higher priced shares. If anything that would average me UP when I really prefer going down.

 

What are some of the boards opinions on dividend re-investing on BAC especially since it seems most of us bought well below 10. Would them putting dividends when its a 13, 15, or 20 dollar share price keep you interested in having dividends re invested?

[texual]

Case in point with NYX, I owned it for a number of years below the cost of the takeout but the dividends kept raising my cost average since those 30 cent div's each quarter got me shares at a higher cost than I paid. On the end I think it sunk my average return just by having the DRIP enabled. Sad little realization I had tonight after analyzing the trade.

[ericd1]

I'm looking for the spreadsheets on TARP warrants but can't seem to find them with the search function.  Can some body direct me to them. Thanks in advance.

 

Besides BAC and AIG are there any others attracting attention? 

[Investmentacct]

Are you looking for this?

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/tarp-warrants/?action=dlattach;attach=663

 

 

Ericd1

>>> I'm looking for the spreadsheets

[PLynchJr]

Texual...that just sounds like price anchoring to me.  Regardless I never use automatic dividend reinvestment.  I prefer to invest in whatever is the best value at the time.

[Olmsted]

http://www.bloomberg.com/news/2012-12-21/bank-of-america-misses-lending-money-machine-mortgages.html?source=email_rt_mc_body&ifp=0

 

Bank of America Corp. (BAC) and Citigroup Inc. © are missing out on the biggest mortgage profits on record after catastrophic losses during the housing crash made them wary of offering new loans.

 

“Loans have never been safer, they’ve never been more profitable,” said Scott Simon, the mortgage head at Pacific Investment Management Co., manager of the world’s largest bond fund. “Bank of America is the biggest mystery to us. Now I get that they got their faces torn off. But this is a different environment.”

 

[ericd1]

Are you looking for this?    Ericd1

>>> I'm looking for the spreadsheets

 

Investment -- Thanks!!!

[wescobrk]

With "plan b" failing last night, it looks like the probability of a cliff deal shifted from Dec 28th till Jan 3rd-5th.

Once market places certainty on a deal, we should get close to Sanjeev's tbv for BAC. We could easily see 12.50 on news of a deal.

[fareastwarriors]

http://www.bloomberg.com/news/2012-12-21/bank-of-america-misses-lending-money-machine-mortgages.html

 

 

Bank of America Misses Lending ‘Money Machine’: Mortgages

[jrallen81]

Hi all,

 

I'm just wondering if anyone else is surprised at the relative valuation gap that has opened up between the "A" and "B" warrants. Now I realize obviously the B's have a far greater chance of expiring worthless, but in the past they traded in a much tighter range with the common and the "A's" and the time decay really shouldn't account for that. Any thoughts?

[redskin]

Hi all,

 

I'm just wondering if anyone else is surprised at the relative valuation gap that has opened up between the "A" and "B" warrants. Now I realize obviously the B's have a far greater chance of expiring worthless, but in the past they traded in a much tighter range with the common and the "A's" and the time decay really shouldn't account for that. Any thoughts?

 

I think the performance of the B's is dependent upon how much stock they are able to buy back.  I look at a big advance in the short term as a long term negative for the B's. 

[jrallen81]

I suppose that could be the case but in theory anything taking the share price closer to the strike price should be a positive for the warrant price.

[berkshiremystery]

Here's a great article about BofA by our board member Alex Bossert of Milestone Capital.

 

 

Bank of America Is a "Lean, Mean, Profit-Making Machine"

Published: December 20, 2012

 

http://sumzero.com/headlines/financials_and_insurance/BAC/149-bank-of-america-is-a-lean-mean-profit-making-machine

 

“Bank of America is a strong, well‐led company...I am impressed with the profit‐generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them.” - Warren Buffett August 25, 2011

 

 

[AJB96]

Thanks Berkshiremystery!

 

As part of my research I read through this thread in full twice. The work all of you have done on BAC is incredible. As a college student I appreciate learning from the work all of you have done on the company. I hope my report adds some additional analysis.

 

Please read the report in full rather than the snipit on Sumzero: http://alexbossert.blogspot.com/2012/12/bank-of-america-report.html

 

I also attached my report.

[Guest hellsten]

Thanks Berkshiremystery!

 

As part of my research I read through this thread in full twice. The work all of you have done on BAC is incredible. As a college student I appreciate learning from the work all of you have done on the company. I hope my report adds some additional analysis.

 

Please read the report in full rather than the snipit on Sumzero: http://alexbossert.blogspot.com/2012/12/bank-of-america-report.html

 

I also attached my report.

 

 

Alex Bossert

 

 

Thank you Alex. Great report.

[berkshiremystery]

Thanks Berkshiremystery!

 

As part of my research I read through this thread in full twice. The work all of you have done on BAC is incredible. As a college student I appreciate learning from the work all of you have done on the company. I hope my report adds some additional analysis.

 

Please read the report in full rather than the snipit on Sumzero: http://alexbossert.blogspot.com/2012/12/bank-of-america-report.html

 

I also attached my report.

 

 

Alex Bossert

 

 

Thank you Alex. Great report.

 

+1

 

You wrote a marvelous research paper about BofA.

[obtuse_investor]

Thanks Berkshiremystery!

 

As part of my research I read through this thread in full twice. The work all of you have done on BAC is incredible. As a college student I appreciate learning from the work all of you have done on the company. I hope my report adds some additional analysis.

 

Please read the report in full rather than the snipit on Sumzero: http://alexbossert.blogspot.com/2012/12/bank-of-america-report.html

 

I also attached my report.

 

 

Alex Bossert

 

Thanks Alex! I enjoyed reading the report.

 

$25 is a very reasonable conservative estimate-- which is about 2x TBV.

[nkp007]

Just doing some thinking.

 

I know many of us have gains on the warrants well in excess of 50%. Still, I think there are a few compelling reasons to hold these warrants to expiry (given current visibility)

 

1) American real estate is now a tailwind

2) Legal liabilities should begin to wind down over the next 12 months

3) The investor crowd will re-rate valuations on financial institutions to perhaps closer to book value

4) Over the next few years, net interest margin should increase

 

Take any three of these components and you have a lollapalooza effect.

 

I believe the company is still worth multiples of where the market price currently is. I don't plan on selling anytime soon, especially when the true beauty of the franchise is still not apparent to the investing public.

 

Not to mention these warrants have some kick-ass sweeteners.

[LC]

Just doing some thinking.

 

I know many of us have gains on the warrants well in excess of 50%. Still, I think there are a few compelling reasons to hold these warrants to expiry (given current visibility)

 

1) American real estate is now a tailwind

2) Legal liabilities should begin to wind down over the next 12 months

3) The investor crowd will re-rate valuations on financial institutions to perhaps closer to book value

4) Over the next few years, net interest margin should increase

 

Take any three of these components and you have a lollapalooza effect.

 

I believe the company is still worth multiples of where the market price currently is. I don't plan on selling anytime soon, especially when the true beauty of the franchise is still not apparent to the investing public.

 

Not to mention these warrants have some kick-ass sweeteners.

 

Are you buying at these levels? If no, why not?

[nkp007]

Already bought enough to make me happy (50%+ of my family's liquid net worth).

[fareastwarriors]

Not enough capital

[txlaw]

Just doing some thinking.

 

I know many of us have gains on the warrants well in excess of 50%. Still, I think there are a few compelling reasons to hold these warrants to expiry (given current visibility)

 

1) American real estate is now a tailwind

2) Legal liabilities should begin to wind down over the next 12 months

3) The investor crowd will re-rate valuations on financial institutions to perhaps closer to book value

4) Over the next few years, net interest margin should increase

 

Take any three of these components and you have a lollapalooza effect.

 

I believe the company is still worth multiples of where the market price currently is. I don't plan on selling anytime soon, especially when the true beauty of the franchise is still not apparent to the investing public.

 

Not to mention these warrants have some kick-ass sweeteners.

 

In addition to everything you said above, I've also been very impressed with what Moynihan is doing with ML.  It appears to be moving up in the rankings of i-banks thanks to Moynihan's focus, and perhaps it can be best in class?

 

Any bankers out there want to comment on this conjecture?

[Parsad]

Congressional investigation, into Countrywide's "Friends of Angelo" preferrential lending, ends with no action.  Cheers!

 

http://wallstcheatsheet.com/stocks/countrywide-congressional-probe-ends-blackstone-sticks-with-sac-financial-business-review.html/?ref=YF

[Kraven]

In addition to everything you said above, I've also been very impressed with what Moynihan is doing with ML.  It appears to be moving up in the rankings of i-banks thanks to Moynihan's focus, and perhaps it can be best in class?

 

Any bankers out there want to comment on this conjecture?

 

I am not sure "moving up" is correct.  ML is a very good investment bank.  It's certainly one of the top ones.  I am not sure how much higher they go.  In terms of best in class, you've kind of got Goldman and despite what some people might wish, I don't see that changing any time soon.  You've got MS.  ML is certainly right up there with usual crowd.  It's a very nice asset to have at BAC.  I wouldn't be surprised to see it spun off at some point.  Maybe whenever the next frothy bull run is to get super maximum value.

[berkshiremystery]

In addition to everything you said above, I've also been very impressed with what Moynihan is doing with ML.  It appears to be moving up in the rankings of i-banks thanks to Moynihan's focus, and perhaps it can be best in class?

 

Any bankers out there want to comment on this conjecture?

 

I am not sure "moving up" is correct.  ML is a very good investment bank.  It's certainly one of the top ones.  I am not sure how much higher they go.  In terms of best in class, you've kind of got Goldman and despite what some people might wish, I don't see that changing any time soon.  You've got MS.  ML is certainly right up there with usual crowd.  It's a very nice asset to have at BAC.  I wouldn't be surprised to see it spun off at some point.  Maybe whenever the next frothy bull run is to get super maximum value.

 

If they might be able to spin them off at the next frothy bull run,... they might fetch between $50-100b alone.

 

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On Sunday, September 14, 2008, Bank of America announced it was in talks to purchase Merrill Lynch for $38.25 billion in stock.[47] The Wall Street Journal reported later that day that Merrill Lynch was sold to Bank of America for 0.8595 shares of Bank of America common stock for each Merrill Lynch common share, or about US$50 billion or $29 per share.[48] This price represented a 70.1% premium over the September 12 closing price or a 38% premium over Merrill's book value of $21 a share,[49] but that also meant a discount of 61% from its September 2007 price

 

source:  http://en.wikipedia.org/wiki/Merrill_Lynch#Sale_to_Bank_of_America

 

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The Universal Appeal Of BofA

2008-09-15 Forbes

http://www.forbes.com/2008/09/15/bofa-merrill-deal-markets-equity-cx_er_0915markets2.html?partner=newsweek

 

Bank of America’s offer represents a 70.1% premium from Friday’s closing price. Nonetheless, Bank of America is acquiring the 94-year-old firm at a 61% discount from its year-ago price, when it was trading at roughly $75 a share.

 

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Merrill Lynch Saved by Bank of America Buyout

http://www.stocktradingtogo.com/2008/09/15/merrill-lynch-saved-by-bank-of-america-buyout/

 

http://www.stocktradingtogo.com/wp-content/uploads/2008/09/mer.png?9d7bd4

 

http://www.stocktradingtogo.com/wp-content/uploads/2008/09/bank-of-america.png?9d7bd4

 

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Wall Street teeters, Lehman Brothers in bankruptcy, Merrill Lynch sold to Bank of America

2008-09-14

http://eahopp.blogspot.de/2008/09/wall-street-teeters-lehman-brothers-in.html?m=1

 

http://1.bp.blogspot.com/_EYdeHflgyIg/SM3SoyrKZbI/AAAAAAAAA-I/7eRKkZK_FVY/s1600-h/merrill+lynch.png