Seeking Alpha
View as an RSS Feed

Ray Merola  

View Ray Merola's Comments BY TICKER:

Latest  |  Highest rated
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    "Talking book" is commonplace on Wall Street. Leaking it to the media happens all the time. Hence the reason to do our own research, review the data, and draw conclusions based upon data and interpretation versus trying to piggy-back on others' reading the tea leaves.

    In the case of "earnings headlines," I'm not convinced it's even about talking book: just pressure to get something out first.....anything.
    Jul 17, 2015. 11:02 PM | 2 Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Traders (or "speculators" as Benjamin Graham called them) often open up opportunities for "investors" like us.
    Jul 17, 2015. 11:00 PM | 1 Like Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Appreciate the generous words of encouragement, popster76. I will do my best to meet or beat your expectations.
    Jul 17, 2015. 10:58 PM | Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Agree fully CapeCap. Wells is the best-run large Main Street bank; only real rival is USB, another Warren Buffett favorite.
    Jul 17, 2015. 10:57 PM | Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Thanks, Tex
    Jul 17, 2015. 10:56 PM | Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Indeed, tringe

    Wells Fargo measures "cross-sell," a specific operational metric whereby the company offers customers using one Wells service other additional banking and financial services.

    Core checking is often the first step in that process.
    Jul 17, 2015. 10:56 PM | 1 Like Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    pappyJack

    Not sure I have the credentials to "enlighten" good readers like yourself, but I promise to do my best to offer grounded, valued-added commentary.
    Jul 17, 2015. 10:54 PM | 4 Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Yes. For many banks, I like to cross-check with tangible book value. Bank of America is one such bank.
    Jul 17, 2015. 07:58 PM | 2 Likes Like |Link to Comment
  • Bank Of America Remains A Poor Investment [View article]
    IP

    The CET1 issue is a concern. I believe the Basel III advance approach regulatory target is 10 percent. If the current approach isn't accepted, BAC has a shortfall; then the CET1 is 9.3%.

    A 1.4x TBV ratio? Hard to say. Wells Fargo has a 2.0x P/B multiple now.

    There's several moving parts before there's enough clarity to determine the BoA end game.
    Jul 17, 2015. 07:10 PM | 3 Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Our portfolios include some of the same stocks and a common approach, wdchil.

    I tend to ride the sames horses a long time. Rarely do I engage in trading.
    Jul 17, 2015. 06:59 PM | 1 Like Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    You know the drill, Travel4Yields.

    The recent Wells' earnings headlines just made the point too big to ignore. It told the bold face media print story with an exclamation point.

    Had to jump on it.

    Jul 17, 2015. 05:51 PM | 2 Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    You are welcome, tondi01

    I'm not sure I could come up with a better company and long-term stock than Wells Fargo (WFC).

    It's no longer a cheap stock, but I would not consider it at all expensive, either.

    I view a stake in Wells Fargo as a stake in the American economy.
    Jul 17, 2015. 05:48 PM | 5 Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Yessir, that guy Buffett has a pretty good track record. He's Wells Fargo's largest shareholder, too.

    I bet he doesn't read the headlines, either.
    Jul 17, 2015. 05:45 PM | 6 Likes Like |Link to Comment
  • Wells Fargo Investors: Don't Get Duped By The Media [View article]
    Thank you for the kind words, Hoopono

    The media machine often rushes to grind out the sausage.....and get there first. In turn, others pile on.

    Prudent investors attempt to stop, read, think.....then act.
    Jul 17, 2015. 05:15 PM | 4 Likes Like |Link to Comment
  • Bank Of America Remains A Poor Investment [View article]
    Nicholas, thanks for your article about BAC.

    I caution investors not to look in the rear view mirror too much. Where a stock has been is of far less importance than where one believes it is going. US Bancorp is a best-of-breed banking institution; comparable to Wells Fargo. I wrote an article along these lines awhile back.

    However, part of investing is not just finding wonderful companies, but purchasing the stock at the right price. I owned USB for several years, then sold USB in Sept/Oct last year at ~$43 not due to its management or results: these were and remain excellent. I sold it because I believed the upside potential had been largely wrung out.

    I reinvested the proceeds into Bank of America.

    BoA was riddled with myriad problems, but some appear to be diminishing. While higher interest rates may turbocharge results, this isn't the primary reason many investors are warming up to the stock.

    Significant non-interest expense reduction (YoY down 6%), largely due to sharp declines in legal expense, penalties and staff cuts, suggest a new non-IE run-rate and commensurate efficiency ratio. Likewise, credit quality and NCOs have dipped, again suggesting a new (and much improved) run rate. Even the LAS unit, long adding abysmal results into the stew, appears to have found a floor as bad loans are rolling off. A favorable ruling on old Reps and Warranties also provides relief to the long-ailing segment.

    Book value and TBV have been rising consistently.

    I still harbor concerns about senior management. The potential "regulatory modifications" affecting the CET1 ratio bothers me. RoA stinks.

    However, when viewed in light of valuation; it's hard to write off BAC. Premising much better non-interest expense, NCO, and LAS run rates, Bank of America should be able to clear up to $1.50 to $1.60 ttm EPS heading into 2016. Just a 13 multiple on that offers a $20 to $21 stock. That's 16% up from here, sans the modest dividend.

    A 1.4x P/B ratio on current TBV suggests a similar price target.

    I question whether USB shares can approach that kind of total return, despite being a better-run bank with more ratable (but backward-looking) results.
    Jul 17, 2015. 04:46 PM | 10 Likes Like |Link to Comment
COMMENTS STATS
4,306 Comments
7,038 Likes