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Varchild2008 (83.61)

Worst LARGE CAP to Own right Now..... (BAC)

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October 24, 2009 – Comments (2) | RELATED TICKERS: BAC

Varchild strongly believes (BAC) is the absolute worst stock you ever possibly own right now....
Before disagreeing with me if you are a holder of shares of BAC....Let's see if you can talk UP the stock after going through my Grocery List of Negatives:

1)  Ken Lewis is getting kicked out and I'm not sure a replacement has been chosen.... You may think better management is on its way.... Before you do so....Who exactly that is talented will take up the reigns as C.E.O. of Bank of America while the bank is still TARPED and thus under a 90% Pay Cut status by the Pay Czar?  Who?  What Top Quality Executive wants this job???

2)  Barack Obama is currently placing the blame of the credit crunch still on-going on the Large Banks..That means blaming Bank of America for not handing out more loans to Small Businesses.

First of all.... There is always the element of risk in the loan business....risk of defaults that cut into a bank's balance sheet.  Given the shaky economic situation, with a large dividend payment BAC has to pay already hurting the balance sheet from their TARPED status, along with on-going loan losses from the loans they already have dolled out in previous quarters this year.... What do you think will happen if Obama gets his way and pressures BAC to hand out more loans....should the economy worsen????

Everyone wants to talk up "economy is recovering" except for the C.E.O.s of Railroad companys and Jeff Fetig of Whirlpool Corp.  Jeff Fetig basically said his Cost Cutting will keep his company's earnings looking much better than analysts have expected for the 4th Quarter....  This is not a template of economic recovery.

3)  Bank of America is still under pending lawsuits..... Here's a list of court battles:

http://www.cnbc.com/id/32409218              (BAC drops Arbitration opening door for more Lawsuits on Credit Card issues)

http://www.thetruthaboutmortgage.com/bank-of-america-launches-modification-program-to-satisfy-countrywide-lawsuits/           BAC has to modify 400,000 loans due to massive amount of Countrywide Lawsuits

"The combined company modified loans for more than 73,000 borrowers during the third quarter, up from 14,000 in the same period a year earlier."

http://livetrade.com/?p=191455    Facing Investigations and Lawsuits over acquisition of Merril Lynch had to provide documents to regulators on the deal Oct. 12th.

http://www.dispatchpolitics.com/live/content/local_news/stories/2009/09/29/copy/Bank_America_lawsuit.html?adsec=politics&sid=101    More info on previous mention of Merril Lawsuits concerning the State of OHIO taking the lead on the lawsuit money chasing lawyer spree.

http://www.marketwatch.com/story/bank-of-america-settles-lawsuit-with-parmalat-2009-07-28?dist=dist_smartbrief?dist=dist_smartbrief&dist=dist_smartbrief&dist=dist_smartbrief
Here's a $100 million settlement BAC paid back in late July of this year to Parmalat.

http://www.hbsslaw.com/bacerisa     An ERISA lawsuit case listed as not having been settled yet although I think this one may have been... not sure though.... dealing with the Merril Lynch issue.

U.S. Panel to Subpoena Countrywide over VIP Loan Plan.  (DOW JONES NEWS)

Ok.. I think I am out of breath..... But, I think people need to look at BAC's current economic situation TODAY and compare that with KENNETH LEWIS statements in MARCH of 2009.

http://www.reuters.com/article/ousiv/idUSTRE52H3OD20090318

Kenneth Lewis said the largest U.S. bank could repay the $45 billion of government capital it has taken by late 2009 or early 2010

REALITY:  Bank of America in September has said the COULD POSSIBLY pay off less than half or $20 billion of the TARP soon.

Kenneth Lewis said unless the economy suffers unexpected weakness he believed BAC would be profitable this year.

REALITY:  Q2 required a major SELL-OFF of a Chinese Bank Stake among other 1 off items in order to produce a profit and Q3 was a LOSS of 5 cents a share....  With less and less 1 offs left at BACs disposal they are unable to manufacture profit in last quarter and most likely unable going forward as America suffers under a 17.5% unemployment rate likely to worsen into 2010.

The U.S. Dollar weakening is NOT a Bullish situation for BAC either.

11 of 25 highly paid executives have already left Bank of America due to recent actions my the PAY CZAR Feinberg.    

Still think excellent C.E.O. shopping is going to happen under this atmosphere???
Only the world's junkiest C.E.O. imaginable will want a job as junky as this one.

Bank of America's quarterly (3rd Quarter 2009) profit fell a much larger-than-expected 32 percent, hurt by mounting credit losses and poor trading results in its investment banking unit.

In a year when the DOW JONES INDUSTRIAL AVERAGE went up 4,000 pts... How in the *&^% can it possibly be that BAC's investment unit was a major culprit for the massive profit loss?

HOW??????

HOW?????    Unless BAC can not hold onto or obtain reasonable quality investors who can recognize that the market was headed up???    They must have been shorting this massive rally since March to produce these kinds of HORRID results.... That's extremely poor management in the Investment side of BAC's business....  Extremely pathetic....horrible.....employees over their not having the slightest clue how to play the Stock Market.....

Good Lord... VARCHILD2008  going LONG the market since 2008 has done FAR BETTER than BAC's investment unit despite less than 2 years of experience in investing.

BAC =  WORST STOCK to have in your portfolio right now.....  What?? You want to pin your hopes that BAC will pay back part of their TARP when their original promise was to pay it in FULL???

I wouldn't put hopes/faith in BAC.... I wouldn't given the circumstances couldn't be any worse for BAC going forward with a Federal Dictatorship breathing down the company's backs.
 

 



 

2 Comments – Post Your Own

#1) On October 24, 2009 at 9:50 PM, Teacherman1 (56.67) wrote:

Total Regulatory Capital  $138B.

Tier 1 Capital Ratio 12.46

Total Capital Ratio 16.69

Non performing assets $37B

TANGIBLE book value $12.00

In at $4.63

Think I'll hold and watch.

Have a nice weekend. 

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#2) On October 25, 2009 at 2:05 AM, Varchild2008 (83.61) wrote:

Nice stats that omit:

1) Cost of TARP Dividend

2) Cost of having to fork over the $20 Billion whenever BAC gets around to doing it...if it will.... and when it does the capital ratios plummet and 25$ billion of TARP is still on the books.

3) BAC has already ruled out any future at least for the short term increases in dividend payments.  If the capital structure story was as strong as your limited list of statistics then why can't they raise their dividend above that of  1 penny a share?

Banks of TCF (TCB) are mightilly struggling but still pay out 5 cents a share.

4)  TANGIBLE book value is a deteriorating $12.00.

You can't say that a Bank bleeding from loan losses is somehow some balance sheet figure when 3 minutes from now it may suffer another loss from another loan defaulting.

Or another loss from an investment banking unit that continues to not know what they are doing...

Losses are losses.... they have to be reflected in your statistics... You can't say a stock has a Price to Earnings of X when we know for a fact that the company's earnings are dropping continuously.

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