Oppenheimer's Whitney Dines with BofA’s Chief; Rates Stock a "Perform"

Celebrity/bank stock analyst Meredith Whitney says in a note to clients that she had dinner with the head of Bank of America (BAC) Tuesday, and the Oppenheimer & Co. analyst appears to have come away reasonably satisfied.

Ms. Whitney, a Fox News pundit who is married to a professional wrestler, has made headlines with ultra-bearish predictions on bank stocks in the past 12 months. However, her “takeaways” from dinner with BofA chief Ken Lewis included some positive notes for the giant bank.

According to Ms. Whitney, Mr. Lewis was “cautiously optimistic” on the economy for instance  mortgage delinquencies have slowed and credit losses are concentrated in a handful of high-risk U.S. states. The BofA chief also persuaded Ms. Whitney of the strength of investment banking revenues - which have fallen at most Canadian banks as the deal flow turns into a trickle - on both the debt and the equity side.

“As competitors are forced to de-lever and reduce risk, Bank of America sees itself gaining market share,” notes Ms. Whitney, largely through business from existing clients but also because of “notable unsolicited asset inflows with the demise of Bear Stearns (BSC).”

The high-profile analyst says Bank of America views its dividend is safe, and does not have a problem with its capital levels. She rates the bank’s stock a “perform.”

Comments

[CrossProfit_]

This is a recurring theme with all analysts. While sitting at our desks we tend to believe that we know it all and our understanding of the situation is complete.
Once we get out and start talking to people we then realize that no one thinks of all the angles of a very complex situation. Even what appears to be a simple business has many attributes composing the entire business scene.
For every negative there is a positive and it is the analyst's job to understand both sides of the coin before committing to an unwaivering position.
Mrs. Whitney should have known better. We are NOT saying this because of Whitney's change of heart. We've been saying this all along. As an Oppenheimer analyst, we expected her to share some of her research on which she based her previous conclusions. This wasn't forthcoming and though one original call was dead on we began to suspect subsequent spill-over analytical dirge was in play.
Better late than never. Congrats Whitney.

CrossProfit

2008 Jun 13 06:48 AM

[buyitcheap]

Whitney's calls have been spot on. And there's probably more to come. Obviously this was damage control by BAC.

It should also be noted that marriage to a professional wrestler (and a former writer of some pretty good articles at thestreet.com) does not discount one from being a prescient analyst.

I'd much prefer her calls to come from analysis and not from dinner-conversation. It does unfortunately make one wonders what her calls might have been had other CEOs picked up the tab, maybe Bear would still be on life support. :-)

2008 Jun 13 07:46 AM

[Military Doc]

Forgive me if I am wrong, but in the statement Mr. Lewis makes “cautiously optimistic" is contradicted by an actual increase of 7% from April to May for foreclosure filings the same day this meeting took place. How could this possibly be optomistic and by what reasoning would Ms. Whitney give a rating of perform? I am willing to admit that I am not an analyst, but with all the uncertanty in this sector as well as the re-setting of ARMS in 2009 ( a potential 500 Billion dollar liability to the financial industry that has not been considered thus far) the thought of an analyst and "head of BAC" being optomistic is at least misleading if not simply wrong. Add to this the rise in unemployment, rise in commodities, labile strength of the dollar and decreasing home values does not lead to being optomistic. What it does lead to is a lack of confidence and full understanding of the economy as a whole. I feel that unless Ms. Whitney has information other than whats reported that she should inform the rest of us so we can truly understand what this optomism is all about.

Military Doc

2008 Jun 13 08:31 AM

[CynicalSam]

Meredith Whitney has established a niche for herself as the "Ann Coulter of Analysts" - habitually making outrageous comments for the publicity and air-time on Fox, Bloomberg etc. Sooner or later, she will come down to earth as other analysts before her.

2008 Jun 13 01:28 PM