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  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Thanks very much. These are great questions. Let's see

    1) It's year-end and quarter-end, so the trades at the close (so-called "market on close" orders) are being done this week.These trades are to facilitate any client redemptions for the quarter, tax-loss selling for the fund, and "window-dressing" the portfolio for the year-end report. Bonuses are often based on yearly return as of 4pm today, so I guarantee you everyone is logged onto Bloomberg right now lol.

    2) We used to be able to measure that by volume- institutions would trade large block trades. Now with dark pools, "high frequency" or "algorithmic" trading etc, funds can mask their trading more effectively. They tend to break up their 1,000,000 share trades into many 500 share trades so they blend in with everyone else in the market.

    3) That varies by fund- if you have a specific fund I can see if I can research it. Generally, there are many more restrictions on mutual funds than hedge funds. There's a low price limit (about $5/share), a position disclosure requirement, and some other requirements. Each fund's individual prospectuses detail their specific limits. The prospectus for mutual funds are available on the firms websites. For hedge funds- those may require some digging.
    Dec 30 03:31 PM | 1 Like Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Thanks much and happy investing in 2012!
    Dec 30 03:08 AM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    You're right, there's some chicken and egg there. But expect BAC to surge on news of a European fix. While we don't know the timing (next week, month, year, etc), we do know that's a big overhang on the shares. So waiting is not a bad way to protect yourself from further downside, just note the opportunity cost: you'll be giving up a good part of the upside as well.

    I want to reiterate- this trade is not for everyone. It's a good potential play for diversified long-term investors. Short-term traders should not consider this, in my opinion- too many unknowns over the short-term. Long-term picture is considerably more clear.
    Dec 29 04:22 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Actually, I quantified the upside above. The upside is three times the downside-- that's the investment thesis.
    Dec 28 02:08 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Let's agree to disagree- you cannot time the bottom nor do you need to.

    I covered the anatomy of a value investment in some depth here- http://seekingalpha.co...

    "We've got Walter Schloss's archives, and it looks like -- we haven't got the numbers yet -- a large percentage of Walter Schloss's returns have come also over time from knowing that you're buying something worth buying. And then when it goes down, not getting frightened and dumping it, but continuing to buy. And then selling on the way up. Looks like that does a lot better than just averaging down."
    Dec 28 02:04 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Thanks and that's exactly right- I have a quote from a Columbia Business School professor in my RIM Part II article that emphasizes this important point.

    Can the price decline in the near-term? Sure, but in the long-run I believe this will prove to have been a good time to enter into the stock. Similar to when Buffett entered GS in October 2008: his warrants were for an exercise price of $115. One week later, GS traded at $62. At the time, many said Buffett lost his mind. By March 2009, GS traded at $150, and many said Buffett got a sweatheart deal.

    We can't time the absolute bottom, but we can feel comfortable we are pretty close to it.
    Dec 27 07:33 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Fortunately, the days of government investment in banks have passed. But you're right- Hank Paulson's shotgun wedding between Merrill and BofA in 2008 was a huge burden for BofA. Had BofA been allowed to walk away from Merrill, they'd be a much stronger bank today.

    Once there is clarity about BofA's loan portfolio, the shares should recover.
    Dec 27 02:48 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    I use Bloomberg for work, but cited Yahoo as the source so that you can verify the numbers yourself.
    Dec 27 02:45 PM | 2 Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Thanks, yes I think the market is having flashbacks to 2008. But the facts have changed, as you noted- BofA is much better capitalized today. They were well capitalized in 2008, before their purchases of CFC and Merrill (gasp- why on Earth did they do that?)
    Dec 27 02:44 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Investing requires comfort with probable outcomes. It's important to think in scenarios- both upside and downside. The best investors - the Buffett's and Lynch's of the world- are right 55% of the time. That's a nice way of saying they are wrong 45% of the time.

    I run from any investment thesis that does not acknowledge where the thesis could go wrong.
    Dec 27 02:42 PM | 3 Likes Like |Link to Comment
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