Marc Forgang

Betting on the Big Banks

BAC is the strongest consumer banking and investment franchise in the country. Half the deposits are in BAC branches. Remember that the market cap for Countrywide and Merrill were severly slashed before the purchase. The government forked over a 50 billion dollar loan to help BAC by Merrill. I also like WFC because they have a better balance sheet, however BAC is the strongest franchise. They have some of the highest fees in the industry and consumers still stick with them regardless.

Good feedback though. THANKS!


On Apr 22 01:09 PM Jason722 wrote:

> Interesting analysis. The financials are carry significant risk right
> now because the information available for fundamental analysis is
> even less reliable today than it was before this crisis started.
> Did JMP and WFC want to avoid TARP or not? I think so, but there
> are contrary reports daily. Can they and GS repay now if they want?
> Some say yes and some say no. Who really knows?
>
> The analysis above is severly flawed though if the outcome is that
> BAC is the best financial to own. Setting aside the information deficiency,
> BAC paid a premium for two assets that they could have gotten for
> pennies on the dollar just a few weeks/months later. The buy-at-any-price
> behavior displayed by BAC, especially when contrasted to the buy-when-cheap
> method of JPM and WFC shows a lack of strong management at BAC. BAC
> will not recover from the crisis as quickly as others because after
> the crisis, they will still need to overcome the overpayment for
> Merrill Lynch and Countrywide.

Betting on the Big Banks

Appreciate the contradiction. I am actually bullish in this market. There are great healthcare, tech, utilities, and transport companies that are great long term investments the market has over manipulated.

I believe BAC and WFC will do very well in the years to come. I just don't think the government should be spending taxpayer dollars to save some of the failing institutions. C would not be a single company today if the government had not rescued them, the parts would have been sold off.

You may have forgotten last year when C, JPM, and MS were first in line for TARP funds. Now that rates are just above 0, they are making big money on consumer loans, that is why you are now seeing profits reported.

We can all be bulls. Lets just try to go back to the days of long term investing and looking at true fundamentals and not just market manipulation and conjecture.


On Apr 22 09:52 AM Dr. Roberts wrote:

> "At this point, gambling on any of the big banks that suddenly find
> they really didn’t need the TARP funds is like a roll of the dice;
> seems like yesterday they were begging for government support." One
> of the more misleading of many statements found on this Bearish web
> site. The better run banks NEVER wanted a TARP injection. You just
> have to chuckle when a "columnist" chides WFC for pre-announcing
> and rocketing the DJIA up about 250 points. Once in a lifetime share
> prices were available for our best banks after the Bears beat the
> shares to a pulp. Now the Bears have the difficult task of convincing
> traders the worst is yet to come. Circumstances have changed boys.
> Rigid thinking will doom the Bank Bears.

Betting on the Big Banks

You forgot the BAC got a free 50 Billion dollar loan to buy Merill, the value of the company cratered before BAC bought them. They got an awesome deal with help from you and me, the taxpayers.

JPM got WM for pennies, again the taxpayer helped foot the bill for the bad assests, JPM got an excellent bank franchise. Not only did I pay taxes, I also gave them my 300 shares.

Thanks for your comments, and yes I am nuts about the ridiculous TARP program.


On Apr 22 09:20 AM Chemist29 wrote:

> bought merrill for pennies on the dollar? are you nuts? the whole
> argument is that they OVERPAID, and I dont see anyone else stepping
> in to buy merrill or countrywide...Great example of revisionist history.
> besides, they hardly concealed the fact they sold 1.6 billion from
> CCB.

Western Digital: Time to Sell?

Gary, thanks for your comments. Just to clarify, by flash I mean USB flash. There has been discussion for some time of USB flash overtaking solid state (RAM) drives. Analysts may be misinformed as you seem to have more knowledge then they do. I am going by the terms analysts have used. In addition WDC has a history of overstating sales projections, better to surprise every quarter instead. Keep in mind that even if inventories stay in check, pricing pressure will continue as PC, laptop, DVR prices continue to drop. I have invested in and followed this stock for over ten years. This is why I said to hold some and take some profits. Thanks.