Buying More Bank of America
Board: Bank of America
After the recent $8.5 billion in charges, BAC has $12.50/share of tangible book value. Essentially $27.7 billion below liquidation value right here.
For some reason, people keep posting the exact same information, and people still keep selling. Like this.
We've known this. I've read this $50+ billion number over and over for a month, and people keep writing it.
There's no bankruptcy risk here, just frustration that BAC faces an avalanche of charges and won't be able to raise it's dividend or buy back stock. People forget they earn over $110 million pre provision EVERY DAY. They will live.
Ben Graham wrote in Security Analysis that the market in the short term is essentially a popularity contest, and right now NO ONE likes BofA. Remember A&P grocery store? in the 1930's, A&P was the largest retailer in the country, selling for less than it's cash. Why? Fears of new taxes on chain stores! Not much different than BAC today.. Different fears but the same FEAR that blocks peoples ability to think clearly. Fear of litigation, capital charges, foreclosures. History repeats over and over.
I also think people forget that in addition to earning capital, BAC can shrink itself to raise capital. Let assets run off, sell divisions, sell China Construction Bank, etc. It's simply not the end of the world, and everyone seems to think it is.
So, Congratulations to the bears. You've done well. Not sure how low this will go, but you've done well.... And I'm still buying.