Ryan Sequeira's  Instablog

By the looks of the closing price of $4.99/share, one would think that Bank of America has no future.  A company that has been around for over 100 years and that is operating in an industry that has fewer competitors than before, seems to be on the brink of collapse.  It’s a bank with $2.2 trillion in assets, but the whole business is available for $50 billion.  Compare that to JP Morgan (JPM) with $2.3 trillion in assets, but the whole business is selling for $116B. 

The market pays no attention to BAC’s improving NPA ratios of 2.9% down from 4% in 2009 and NCO ratio of 2.3% down from 3.6% in 2009.  There also seems to be no attention paid to its improving capital ratios, of which are likely to continue improving as more bad loans disappear with time.  Tangible book value has been increasing steadily as well, yet share prices continue to decrease.  It seems as though the market truly is manic-depressive as Ben Graham would say.  Will this be a repeat of March 2009 when there was a huge rally just before banks reported earnings?  I can’t predict the short-term, but I’m betting on the long-term.