Allied World Assurance: Undervalued And Prudently Managed [View article]
Perhaps, but this company is very good at managing their capital. It is my largest holding already, but if someone wrote me a big check today I would probably sink more money into it even though it trades for nearly twice what I was paying for it in 2011. At the end of the day, you can't complain much about over-reserving for losses if the balance sheet and income statement still look fantastic relative to the price you pay for the company.
Merrill Lynch (BAC) is fined $1.05M (not a typo) by Finra and ordered to pay $323K in restitution for failing to provide the best possible execution prices on certain transactions. "This matter ... was caused by a processing issue that has been corrected," says a BofA representative. [View news story]
Bank Of America First Quarter Earnings Preview [View article]
They did not ask to increase the dividend. Moynihan gave an interview (with Charlie Rose, as I recall) where he talks about how the bank was buying back shares, making acquisitions, and paying dividends before the crisis. He implies all this return/use of capital was excessive and that had they done two, but not all three, the bank would have been better prepared for the crisis. This might provide some insight into his thinking.
Now, as a young man I much prefer the buybacks. I don't even mind if the shares trade sideways with no dividend if it means I can increase my ownership more in the long term with share float reduction. Those that need the income may prefer something else, but long term shareholders will reap the rewards of this accretive capital return strategy as BAC buys shares below their value.
It may be true that WFC is the best operation of the pack but it also may be true that BAC is the best investment. With BAC you get a wonderful deposit base like WFC but you get Merrill on top of it, all for a discount due to headline and legal exposure.
There are many thought experiments one could perform but here is one that arrives at a similar figure to the author's:
If you take AIG's P/B to be about 0.6, then 60 cents spent on AIG common buys you one full dollar worth of equity. If you spent 60 cents on a dollar, your return is about 66.7%, since 1 dollar is 40 cents more than 60 cents, and thus you "made" 40 cents for every 60 cents you spent. Your return on your investment would be 40c/60c, which is 2/3, or 66.7%.
So if AIG spent some of its equity (book value) on its shares, the unrealized return for its shareholders would be about 66% on that equity. If the share price appreciated to book value, then shareholders would be able realize a return as capital gain if they wanted to. That's because book value per share will have increased, and thus their shares will reach a higher price as they approach the new, higher book value per share.
Avoid the "origination-reliant" bank names ahead of Q1 earnings, says FBR's Paul Miller, as the strong mortgage results from the past few reports will likely weaken. Most at risk: BAC, FITB, FBC, USB, STI, and WFC. That mortgage profits have worsened isn't news, but Miller suggests things have gotten worse than previous muted expectations. [View news story]
Avoid the "origination-reliant" bank names ahead of Q1 earnings, says FBR's Paul Miller, as the strong mortgage results from the past few reports will likely weaken. Most at risk: BAC, FITB, FBC, USB, STI, and WFC. That mortgage profits have worsened isn't news, but Miller suggests things have gotten worse than previous muted expectations. [View news story]
You don't really believe that, do you, regarded?
You are away of the repurchase program BAC submitted.
American Capital Announces the Purchase of 9 Million of Its Shares [View article]
Buybacks are probably better than dividends for the long term investor if the company trades below book value. That is, unless the company is a wholly owned subsidiary.
If you have $100 of assets per share and retain $0.60 of earnings, your assets per share does not go up by $8.57? I think you meant equity per share in your scenario.
"If you're a long-term bank stock investor, you need compelling evidence to think that any bank's long run A-PS growth will be higher than 6%, especially a big bank."
Are you saying that in order to believe this, the evidence must be compelling; or are you saying that in order to be a long term bank investor, you need to believe banks will have Assets/Share growth above 6%?
How can asset growth (per share or otherwise) be much use when evaluating a business unless it is considered alongside liability growth?
It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors [View article]
"You see the foil in this hat? That's 100% Tin. Kids these days just don't understand banking. I say it's all that Aluminum in their hats. Us Charter Members don't have that problem..."
When Searching For Dividend Growth Look For Share Count Reduction [View article]
Based on what you are saying, we might infer that younger investors have an advantage in some regards. Anyone that needs to take capital out periodically is automatically in a worse bargaining position than someone without such a need. Some people may avoid the best deals because they prefer the known, consistent schedule of a dividend to the relatively less predictable effects associated with buybacks (in the short term).
Allied World Assurance: Undervalued And Prudently Managed [View article]
Bank Of America Creates Value By Tight Expense Management [View article]
Merrill Lynch (BAC) is fined $1.05M (not a typo) by Finra and ordered to pay $323K in restitution for failing to provide the best possible execution prices on certain transactions. "This matter ... was caused by a processing issue that has been corrected," says a BofA representative. [View news story]
How Fast Can Banks Grow? [View article]
Bank Of America First Quarter Earnings Preview [View article]
Now, as a young man I much prefer the buybacks. I don't even mind if the shares trade sideways with no dividend if it means I can increase my ownership more in the long term with share float reduction. Those that need the income may prefer something else, but long term shareholders will reap the rewards of this accretive capital return strategy as BAC buys shares below their value.
A Look At The 4 Big Banks [View article]
An Open Letter To Bob Benmosche [View article]
An Open Letter To Bob Benmosche [View article]
If you take AIG's P/B to be about 0.6, then 60 cents spent on AIG common buys you one full dollar worth of equity. If you spent 60 cents on a dollar, your return is about 66.7%, since 1 dollar is 40 cents more than 60 cents, and thus you "made" 40 cents for every 60 cents you spent. Your return on your investment would be 40c/60c, which is 2/3, or 66.7%.
So if AIG spent some of its equity (book value) on its shares, the unrealized return for its shareholders would be about 66% on that equity. If the share price appreciated to book value, then shareholders would be able realize a return as capital gain if they wanted to. That's because book value per share will have increased, and thus their shares will reach a higher price as they approach the new, higher book value per share.
Here's the diagram I made:
http://bit.ly/10pwzWN
Avoid the "origination-reliant" bank names ahead of Q1 earnings, says FBR's Paul Miller, as the strong mortgage results from the past few reports will likely weaken. Most at risk: BAC, FITB, FBC, USB, STI, and WFC. That mortgage profits have worsened isn't news, but Miller suggests things have gotten worse than previous muted expectations. [View news story]
Avoid the "origination-reliant" bank names ahead of Q1 earnings, says FBR's Paul Miller, as the strong mortgage results from the past few reports will likely weaken. Most at risk: BAC, FITB, FBC, USB, STI, and WFC. That mortgage profits have worsened isn't news, but Miller suggests things have gotten worse than previous muted expectations. [View news story]
You are away of the repurchase program BAC submitted.
American Capital Announces the Purchase of 9 Million of Its Shares [View article]
To see a visual depiction, visit this:
http://bit.ly/10pwzWN
How Fast Can Banks Grow? [View article]
How Fast Can Banks Grow? [View article]
Are you saying that in order to believe this, the evidence must be compelling; or are you saying that in order to be a long term bank investor, you need to believe banks will have Assets/Share growth above 6%?
How can asset growth (per share or otherwise) be much use when evaluating a business unless it is considered alongside liability growth?
It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors [View article]
When Searching For Dividend Growth Look For Share Count Reduction [View article]