The Bank of America Bug 17 comments
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My first position in Bank of America (BAC) was a 1/30 P on 6/4. Since then, I added a second position of 1/27.50s on 6/12. This week I added a third position of 1/22.50s on 6/24.
Everything I have read, and the credit climate I see, tells me this stock has the potential to drop down into the teens like Citi (C). While Citi has an unbelievable amount of exposure to the consumer lending market, BAC has a similar risk in its extremely heavy credit card portfolio.
Of course, this also comes on the tail of a ill-advised merger with Countrywide Financial (CFC). To brighten the day on Wall Street, one story congratulated the brilliance of BAC management because the CFC purchase had garnered the bank a tax write-off over the next 20 years. My belief is BAC should worry more about the here and now, and forget about the back slapping of "brilliant" ideas.
Now, there is more reason to cheer, as BAC announced that it will "lay-off" more than 7,500 employees over the next two years. It is my belief between the CFC merger and credit card exposure, BAC still has a distance to run down into the teens.
For a complete weekly wrap visit: USMegatrends
Disclosure: Author holds a short position in BAC
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This article has 17 comments:
Ken Lewis is the reason that Bank of America stayed clear of the sub-prime crisis. The company could have made billions more (i.e. Bear Sterns, CountryWide) if they'd lent solely based on ARM mortgages with short-sightedness.
Bank of America is the second largest retail bank on the planet. The only one above them is Citigroup....and they lost $5 billion in first quarter, laying off 7,000 employees. Bank of America made $1.21 billion in profit first quarter.
Sounds like a smart company to me.
This Union of equality – This Union of Justice – This Union of Freedom for All – For all men - women and children – Are all created equal – Under this Union – The Constitution of - All the Free.
Now Under this Union – of All – our house must too be in order.
WE have Liberman – trying to hold the world hostage – with his – I’ll vote repub – if you don’t give me what I want – of my world of greed.
Then we Have Dodd and others – who have also walked across the graves of the American dream – Millions of Americans – taken for a ride – on the greed of countrywide – and VIP insider loan buyers.
In order to correct our house – Liberman needs to be told – retire repub – and Dodd needs to be replaced on the banking committee – The other given small posts.
Let Cheney come down to the senate – and make all the headlines – of the lying repubs they are – on all his votes.
If we do not clean the log out of our own eye – how can we say – anything about the trees in the repubs eyes?
It’s clean house time boys and girls.
This Union of equality – This Union of Justice – This Union of Freedom for All – For all men - women and children – Are all created equal – Under this Union – The Constitution of - All the Free.
Now Under this Union – of All – our house must too be in order.
WE have Liberman – trying to hold the world hostage – with his – I’ll vote repub – if you don’t give me what I want – of my world of greed.
Then we Have Dodd and others – who have also walked across the graves of the American dream – Millions of Americans – taken for a ride – on the greed of countrywide – and VIP insider loan buyers.
In order to correct our house – Liberman needs to be told – retire repub – and Dodd needs to be replaced on the banking committee – The other given small posts.
Let Cheney come down to the senate – and make all the headlines – of the lying repubs they are – on all his votes.
If we do not clean the log out of our own eye – how can we say – anything about the trees in the repubs eyes?
It’s clean house time boys and girls.
thanks.
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FriendyAnil
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Harley Davidson---Harley Davidson