Richard Shinnick

Will BofA Really Buy Countrywide?

Now, throw in a reported FBI investigation. Come on Ken!!!! Get real!!!

Will BofA Really Buy Countrywide?

Hi User,

"So Richard, question for you: Have you sold all your investments lately?"

Uh, no. I think that is clear above. I like this discussion. It kind of centers on what the RIGHT reason to own BAC is. But, lets all agree on one thing, the price is unknown. CFC's value on the day the deal closes will determine the ultimate price and its mortgage book will set that value. Look at all the banks trying to dump mortgage books right now, BAC is buying when they are selling. Helluva time to try to catch a falling knife, but maybe Lewis is the guy to do it.

Maybe not, he still has time to punt.

Will BofA Really Buy Countrywide?

Very interesting comments. One one side you have those who think BoA will do best if the shed the deal on the other you have those (like me) who think this is a great deal. I guess if either side is right it will be good for BoA, only if BoA buys CFC and it turns out to be a mistake will BoA be a bad deal.

As far as those who think tha BAC is getting CFC's network for a song: The deal has two components which are the price (dillutive to BAC shareholders) and assumption of liabilities. The second is the real price and the real question.

Yes, CFC's servicing unit has value but it comes with the mortgage portfolio. Here is another example, E*Trade, it's brokerage has huge value, but it has 30-40 billion in stated income lonas hanging around it, look at what happened to that stock. I wrote on that too and got smacked around on that thread.

Time will tell. I will note that Mr. Lews himself does not seem to have personally affirmed the deal since January (as I read it). All deals are "on" until the precise moment in time when they are off.

BTW, I don't think anybody here is saying tht BAC actually needs this deal or would suffer without it. That is the interesting thing.

Buying Countrywide Ahead of Today's Fed Action

A cut of 50 basis points will be immediately disliked. Financial stocks and homebuilders may sell off. (This will be bad for me, since I currently hold Countrywide shares and Hovnanian LEAP calls.) However, I think the market will eventually right its overreaction (whether it be by the end of the day, week, or in a few weeks).

So far it kind of went the other way, we will have to see the long run. Also, BTW in a contract, an "out" clause that is that broad is really pretty significant, although, there may be a duty of good faith that poses some restrictions.

Ken Lewis's Call Option on Countrywide

Good points Felix. The question is whether you think BAC is a hold at this point, I do. The market may discount BAC as if the CFC deal is already done, but truth is that if things get too dicey BAC can probably count on help from the Fed, Treasury and various home loan institutions. Is this the deal that is "too big to fail." 1 year ago this would have already been labeled "anti-competitive" by the same folks who took a huge sigh of relief when the deal was announced. The times, they are a changin'

BofA Deal May Not Rescue Countrywide Shareholders

Good price? Bad price? I really don't know. Once again, a good deal for CFC, but is this a good deal for BoA? Is BoA just saving face on its own $2 billion investment that has been marked down $1.5 billion already? Will the deal fall apart? What does this do to BoA credit rating? I am taking a cue from Warren Buffet here, if you don't understand it, don't invest in it. I am out of BofA (with a small loss) until I get a handle on this deal which has been sorely lacking in details.

BofA Deal May Not Rescue Countrywide Shareholders

As I submitted this article yesterday, I have to admit that I was surprised that this deal happened, but not at all surprised that it priced below CFC share price at close yesterday. Here is the problem though, as usual the press reports this deal as "done" it is not "done" and a lot can happen between now and then. I live smack in the middle of CFC country (Thousand Oaks, California) and can't help but wonder how this will be good for "CFC employees" as Angelo promises? Angelo makes a lot of promises and whatever else this deal is he just saved face big time!

Countrywide Takeover By BoA Would Make Sense

Sorry for the doube post, but I read your article again and had two more questions:

1. BAC gets CFC at a "discount" to what? CFC "true" value, "book" value, what metric is that discount calculated against?

2. Wouldn't BAC get a big chunk of market share anyway if CFC failed?

Countrywide Takeover By BoA Would Make Sense

With respect, it makes sense for BAC to buy CFC because BAC "can sustain any last losses" and because CFC has "liquidity" issues. Huh?

I don't want to buy a company because it is going bankrupt and I can sustain the losses, I want to buy a company because I can make money. How exactly does this benefit BAC? That it benefits CFC is a given.