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Ray Merola  

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  • Bank Of America Turning The Corner With Pulling Guards [View article]
    While I realize I'm wasting time, I'll bite:

    I thought loss provisions, net charge-offs and presumably even RPLs are reviewed and re-evaluated from time-to-time and may be adjusted based upon new facts and information. This may result in reserve releases (or increases) that affect net income.

    Most analysts don't carve out these releases when determining operating income. However I will concede, as noted before, that I don't always agree with Street analysts and methodology; I'm just a simple investor doing my own due diligence for some 30 years.

    Good luck with all your 2015 investments, dan7
    Aug 19, 2015. 08:39 PM | 1 Like Like |Link to Comment
  • Bank Of America Turning The Corner With Pulling Guards [View article]
    Good catch, dan7

    I should have written "RPL" versus "loss provision."

    When I see this sort of language from BAC, I assume at least some of the RPL will eventually be processed as an incremental loss provision. In other words, the RPL won't end up zero.

    The RPL was halved, so I suspect the "probable" loss provision increase should come down, too.
    Aug 19, 2015. 05:44 PM | Likes Like |Link to Comment
  • Energy leads averages lower [View news story]
    What I said earlier! Thanks, user27205633
    Aug 19, 2015. 02:20 PM | 2 Likes Like |Link to Comment
  • Energy leads averages lower [View news story]

    The production cost of many nations and companies is greater than $40. Some sovereign nations can produce for less, but their giveaway budgets are based upon higher oil revenues. They can produce and make money, but cannot balance their "obligations" to the people. So they will be out of luck and cut their own throats, too.

    If private companies produce just to meet cash requirements and service debt, it's unsustainable: the end game is bankruptcy. Banks stop lending to borrowers who struggle to generate enough net to service it. NOCs can bridge some of that gap for certain nations, but Western technology is required to produce efficiently. As service companies shrink or go out, this puts pressure on owners and sovereigns to get it out of the ground. Owning oil and getting it out of the ground are not the same thing. Ask the Venezuelans about production efficiency.

    Finally, the Saudis and Russians are pumping at max rates. I don't know about many of the other guys out there. However, I do know that in carbonate oil fields you cannot pump flat out forever. Eventually you start pumping water and oil. Then even when you slow pumping later, you still have water mixed in. Not good.

    Core Labs had a clear discussion about this last point during its most recent earnings conference call.
    Aug 19, 2015. 12:14 PM | 20 Likes Like |Link to Comment
  • Bank Of America Turning The Corner With Pulling Guards [View article]
    I believe the corporate remuneration system is a mess. It's worse now than years before due to pay consultants (whoever feeds me, I sing their song), complicit directors (get along, go along), and weak shareholders. The shareholders are the "goalies."

    Every year there's an annual meeting. Every year, individual shareholders get to vote on items, including board of directors' and "say on pay." No one is holding a gun to their heads. The shareholders aren't "told" by the company how to vote. The board "recommends" how to vote on some matters. It's up to the shareholders to do their due diligence, learn the facts, and vote as they see fit.

    Most shareholders are woeful at this. If they vote like idiots, or fail to vote, that's how the system works.

    The power to make changes in corporate governance and remuneration packages is with the shareholders. They have to power to elect new directors who share their philosophy and/or offer straight votes on resolutions that matter to them.

    At BAC, the September 22 special shareholder election is a call for just that, specifically.
    Aug 19, 2015. 12:01 PM | 1 Like Like |Link to Comment
  • Bank Of America Turning The Corner With Pulling Guards [View article]
    Thank you for reading and commenting, 909

    As a valuation tool, when viewing banks, I prefer utilizing tangible book value versus straight book. However, sometimes comparative and industry multiples are difficult to find, or a lot of work to generate/detangle.

    Using BV is relatively simple, but can artificially bump up FV for a bank like BAC with a lot of goodwill and intangibles. AOCI adds another dimension. So can preferred stock: classify it as equity or debt? You can be the judge.

    Since investing requires dealing with a level of uncertainty, I'm ok with doing the best I can using both metrics. I also find strong correlation between operating EPS and price for many of the large banking institutions.

    Hope this answers your question.

    Aug 19, 2015. 11:40 AM | Likes Like |Link to Comment
  • Energy leads averages lower [View news story]
    Perhaps the lone positive is the velocity of the decline. It appears oil goes down almost every day. Fortunately, it cannot fall below zero.

    The faster it hits rock bottom, the faster fundamentals will shift, price finds a floor, and reverses. I have no idea how far down, or how fast up. However, I do know that $40 world oil isn't sustainable.

    Both oil companies and sovereign states will crack.
    Aug 19, 2015. 11:32 AM | 40 Likes Like |Link to Comment
  • Bank Of America Turning The Corner With Pulling Guards [View article]
    NOTE TO READERS: September is a big month for BAC. Shareholder vote on splitting CEO and Chairman roles; CCAR revisions due a week later. Bank of America better get the CCAR revisions right. No excuses.
    Aug 19, 2015. 10:18 AM | 2 Likes Like |Link to Comment
  • Bank Of America Turning The Corner With Pulling Guards [View article]

    I'm not exactly sure who the executive cliques are, but I do know there are plenty of shareholders who can force change. It's their right to do so. For reference, I've attached a Morningstar list of the largest institutional shareholders.

    The list is fragmented, despite 60% of the shares held by institutions.

    As a whole, most shareholders of listed companies are a hapless lot. Rarely do they harmonize themselves, or coordinate issues. Many retail investors don't bother to read and vote upon corporate governance and remuneration at all.

    I don't seek government intervention. I would like to see more shareholders get active, starting with the big boys; right down to the little guys like me.
    Aug 19, 2015. 09:31 AM | Likes Like |Link to Comment
  • Key Post-Earnings Observations And Opportunities: Alaska Air Group [View article]
    Thank you for sharing, Phr3d

    I may comment to the S.A. contributor team and relay your remark. It's seems something's going on with the site. Comments and readership appears to have declined recently. I've got enough articles under my belt to be able to estimate how many folks will view my work, contingent upon ticker, time of year, topic, etc.
    Aug 19, 2015. 06:51 AM | Likes Like |Link to Comment
  • Union Pacific - Enter The Forest At The Darkest Point [View article]
    I believe UNP is the best-of-breed Class I railroad. As such, investment perspective is reality. Diving in head first isn't recommended for any stock, let alone the rails, but it appears to me the low ebb for UNP shares is $88 to $92.

    I've begun accumulating shares.

    Given a long-term investment horizon, I'm not going to fret a point or two. Sans a U.S. recession, I suspect freight will rebound somewhat in 2016. Coal shipments reflect stockpiles and floods. Agriculture cycles up and down. Autos are up. Lumber is good. Oil was not a big commodity for UNP, but frac sand and pipe is more significant. I premise North American production is down, but not out.
    Aug 18, 2015. 11:43 PM | 4 Likes Like |Link to Comment
  • AT&T: More Risky Than You Might Think [View article]
    I am bullish on T, but I appreciate the points you've made and the downside risks outlined.

    One note: DirecTV Latin America wasn't a sideshow; it was nearly half the total subscriber base. Part of my T investment thesis is legacy AT&T management doesn't have to be the smartest cross-border guys in the room. What's new to them isn't necessarily new to legacy DirecTV.

    Perhaps all they have to is listen to legacy DTV management who have already fought a number of battles in Latin America?
    Aug 18, 2015. 11:30 PM | 2 Likes Like |Link to Comment
  • Bank Of America Turning The Corner With Pulling Guards [View article]
    Your point about the CCAR is a good one. Likewise, I fret a bit about the upcoming regulatory CET requirements. BAC isn't home free, but knocking back a few of the skeletons.
    Aug 18, 2015. 10:34 PM | 1 Like Like |Link to Comment
  • Bank Of America Turning The Corner With Pulling Guards [View article]

    I believe you're on the right track. As Warren Buffett says, "It's better to be approximately right than precisely wrong." I'm ok with not ferreting out every detail if the great majority of the investment thesis stands up.

    For a bank as large and diverse as BAC, there's always going to be some stray dogs and cats in the earnings report.
    Aug 18, 2015. 10:32 PM | 1 Like Like |Link to Comment
  • Bank Of America Turning The Corner With Pulling Guards [View article]
    Thanks for the input and detail, dan7.

    Guess I'm just more of a practical investor than a technical Street analyst.

    Sometimes I wonder if some of the Wall Street wizards miss the forest for the trees.
    Aug 18, 2015. 10:29 PM | 2 Likes Like |Link to Comment