$15.05
-0.08 (-0.53%)
Bank of America Corp (BAC)
CAPS Rating:
The Company through its subsidiaries, provide banking & nonbanking financial services and products through three business segments: Global Consumer and Small Business Banking, Global Corporate & Investment Banking & Global Wealth & Investment Management.
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It is difficult to pick bottoms but at 30.5 BAC is really cheap. US government will not let Bank of America which is the largest bank by deposits go under. Also, the economic uncertainties made the fed allow BOA take over Countrywide and thereby become the #1 mortgage lender in the US as well. More than 8% dividend is enticing. Smarter people than myself (Warren Buffet, David Dreman, Brian Rogers, Richard Snow, etc. ) have bought this at higher prices in the last few months and now there is even insider buying. Is this the absolute bottom? who knows. But in 5 years, when the monopoly that BAC has been allowed to gain is paying off in a major way, people will start kicking themselves for not buying when there was blood on the streets.
I hope you're right. My worry at this point about BAC is that the dividend may get cut, which will further sink the stock. The payout ratio now hovers around 90% - far too high for comfort. I actually bought shares of BAC at $37 a few months back, and sold last week. My mistake was to buy a boat floating on a sinking tide - BAC seemed solid at the time, but you can't fight the tide. Hopefully I'll be able to buy back later, but for now I'm content to sit this one out. I hate the thought of selling at the bottom, but I've held to the bottom too many times in the past (TMA, for one).
The dividend will most likely be halved. their payout ratio is 104%, they won't keep that up for any length of time. Normally I would like the price of $25 on BAC but Kenneth Lewis seems to have a knak for doing terrible work. If he gets ousted i would buy the stock in a heartbeat. I think a better alternative to BAC is USB, they have good assets, decent management and an undervalued stock price.
I thought BAC had hit bottom at $25 last week and picked it to outperform, but it's still headed down. Glad I don't have real money in it.
CFC just added almost unlimited downside to BAC. The recession is going to make the banks really really cheap by the first part of next year. The dividend is toast! come on 10% is crazy, look for at least a 50% cut.Would not touch it for at least the next year then you can look to see who is in the best condition
Obviously I was early on this, which is the same as being wrong. I still think that this is a good longterm play. Obviously these are times of fear and there is the figurative blood on the street. But in times of distress, vultures such as BAC thrive and will emerge as long term winners. http://www.economist.com/finance/displaystory.cfm?story_id=11637798
I have to disagree with one of your statements: US government will not let Bank of America which is the largest bank by deposits go under.Yes, they would. If the government was to start bailing out companies (with the exception of air lines), they would be in a heap of trouble. Where would they stop? Where could they stop?Having said that, I agree that BAC is a great buy at this point in time. Yes, the dividend may get cut, which will lower the price, if briefly.CFC will look bad in the short term, as the shakeout really begins to unfold, but long term BAC should recover. With a true national presence as well as internationally, BAC should bottom soon.
Bank of America is too big to let go under. Once the air clears from the whole credit mess, Bank of America will be back on track. The stock is almost a fire sale!
Yep. Already bagged it at $21.56. P/B (although book is a heckuva unknown) looked great!
Take a look back at Chrysler and the rail road to name just 2, The Government is notorious for sticking it's nose in where it doesn't belong. That is one of the reasons for this mess we are in now.
You're right--the Feds won't, or maybe I should say "can't," let BAC go under because it would bankrupt the FDIC. Heck, the IndyMac collapse alone last month put a 2% dent in the FDIC's kitty. But, if it comes down to where the Feds have to jump in and save BAC, what will your stock be worth in real terms? (Hint: Ask some of the S&L stockholders from thirty years ago what their shares were worth after the government bail-out.)The U.S. financial/monetary/banking system is critically ill, and the government just keeps treating the symptoms instead of going for a cure. Investments made today in virtually any U.S. bank will be worth far less a year or two down the road. When our government loses another $5 Trillion bailing out Fannie and Freddie, plus WaMu, Wachovia, etc., your BAC shares may well be worth less than the paper they're printed on.
When and at what price did Buffet make this purchase? I believe you are incorrect on that one.Smarter people than me also ran Bear Stearns. Smarter people than me engaged in the transactions that caused BAC to lose billions. Don't rely on following "smarter" people. Look at the fundamentals. The fundamentals of BAC are not great, but they're not horrible either. BAC is sufficiently capitalized to take book losses of roughly $20B more before it becomes over-leveraged, or realized losses of $10B more. If we get another series of write-downs that reach more than $10B I will be out the door. Short of that, I'm long BAC.
I actually agree with you on your major points: 1. Don't rely on smarter people (though if they did buy at higher prices than myself it gives me comfort, Buffet owns about 9.1 million shares of BOA which he started buying last year)2. This whole bank rally (and the accompanying murder of global growth story such as steel, commodity, oil services etc.) is a bit overdone at least in the short term. while I bought BOA and Wells Fargo in the 20s for myself, I wouldn't be a buyer at this point especially given the rest of the market.
I think a better way to play this company is to buy the convertible preferred, but at prices below 800
I've just bought 700 BAC at $26. Was I crazy? I've have been their customer since 1995 with 6 different accounts from Credit card, Loans, Checking, Saving, Merchant, and Payroll
Other insights that might be valuable for investors:BAC has 13 cents for ever 1 dollar deposit, this is very high.BAC is giving .8 shares for every 100 shares of ML. Seems like a good deal for BAC.Expect a lot of volatility with this stock though.
Hmmmm ooops
Also BAC is trading at less than book value right now. Assuming no writedowns this could be a great deal and time to pickup some BAC. The next couple years might be rough but long term, I think BAC has a very bright future.
This guy was so wrong he makes me laugh. No offense, I probably would have agreed with him on 7/08/08. But man. So wrong.
Hey, already Governemnt bail out is not getting around to solving anything. Up from 700 billion to now around 5 trillion. I would liquidate any holding of this stock. I am watching it daily. Where is any evidence of turn around?
Hooray for buying high and selling low!!!You make Jim Cramer proud
Be careful of believing "book value" for companies that trade in paper. Banks count debts as assets, and insurance companies count bonds as assets. Both are actually IOU's that are only as good as the borrower. Book value doesn't mean much in these cases, as the current price of B. of A. currently shows. (This is not just hindsight--see my Aug. 4, 08 message above.) B. of A. currently has negative net worth and would not exist except for federal charity. Shareholders probably will eventually lose everything, as the incoming Democratic-Socialists are more radical than the departing Republican Neo-Socialists, and the new administration could well nationalize banks like BAC and CIT.
Ouch. Cheap at 30 how about at 3..
great pick