Mayo refreshes bearish view on BofA

"Don't confuse brains with a bull market," writes Mike Mayo, reiterating his long-held (relative) bearish stance on Bank of America (BAC) and its leader Brian Moynihan. Yes, the shares have done well, but so has the market, particularly the banks. BofA, says Mayo, has trailed the KBW Bank Index by 5800 basis points since Moynihan took over in 2010.

It's a muddled message, says Mayo, to put slimming-down efforts front and center while also bragging about the size and scope of the bank. One of the areas of retreat - the mortgage business in 2011 - cost the bank billions, he says.

Also at issue is the bank's decision to measure progress using different metrics than previously. “We’ve reviewed several annual reports and presentations and can’t seem to connect the aspirational pie-in-the-sky statements with progress reports ... (it) raises questions about data integrity, consistency and information systems."

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Comments (16)
  • DoowopDave
    , contributor
    Comments (253) | Send Message
    I don't see BofA retreating from the mortgage business. They bought a pile of junk from Countrywide and the economic collapse caused a significant number to go sour as millions of people lost their jobs. I'm tired of hearing that the banks caused the downturn. The downturn caused the loans to go south. It's true that BofA backed away from making high risk mortgage loans, but as they recover, they are already loosening the tight restrictions. It will take longer than we might hope for a full recovery, due to ongoing litigation. But in a few years that will fade.
    13 Nov 2013, 08:27 AM Reply Like
  • GlueBall
    , contributor
    Comments (9) | Send Message
 Warren Buffet had made a mistake when investing $5B in BAC?
    13 Nov 2013, 08:43 AM Reply Like
  • ronahlquist
    , contributor
    Comments (6) | Send Message
    Bought a lot of BAC in 2011 and more in 2012...still have it.
    More than doubled, and looking good going forward.
    Let me know what else you don't like...
    13 Nov 2013, 11:10 AM Reply Like
  • smashera
    , contributor
    Comments (3) | Send Message
    Warren also bought preferred shares and at bottom dollar prices to include a option to buy at 2011 prices for nearly two years. That certainly wasn't a mistake. I can't say that about investing right now in comparison to other large banks. If you bought back a year ago you got a good deal...can't say that about current price levels.
    13 Nov 2013, 04:48 PM Reply Like
  • RVH
    , contributor
    Comments (44) | Send Message
    While it's true that BAC trails the BKX index over five and three years, it is way ahead of it for the last two years.
    13 Nov 2013, 09:20 AM Reply Like
  • Iknownothing
    , contributor
    Comments (91) | Send Message
    Saw Mayo on TV last week.
    He sure didn't play well on the visual media.
    Therefore, I've downgraded Mike from a hold to a sell.
    13 Nov 2013, 09:25 AM Reply Like
  • gwynfryn
    , contributor
    Comments (6546) | Send Message
    So you judge people by appearances, Ik? Thanks for the warning...
    14 Nov 2013, 08:15 AM Reply Like
  • rgperrin
    , contributor
    Comments (1683) | Send Message
    It's about time. Given enough time, Bank of America is likely to recover from the most recent of its many near-death experiences. And when it does, those of still in the game will have another chance to exit stage left, this time, perhaps, once and for all.
    13 Nov 2013, 10:44 AM Reply Like
  • Microloan
    , contributor
    Comments (14) | Send Message
    Mayo's a BAC "negative". His clients have lost opportunity listening to his advice. How sad.
    13 Nov 2013, 10:50 AM Reply Like
  • ehrler
    , contributor
    Comments (2) | Send Message
    Your comment "don't confuse brains with a bull market" coupled with your condescending comments about Moynihan speak volumes about your attitude toward Moynihan and the bank. Keep up the "bearish" remarks and watch the bank stock climb.
    13 Nov 2013, 11:10 AM Reply Like
  • Dr Joseph Haluska
    , contributor
    Comments (499) | Send Message
    I agree. I could argue his comments suggest faulty reasoning at best, and maybe sour grapes at worst. I'm long BAC, and very profitable.
    18 Nov 2013, 07:24 AM Reply Like
  • joker
    , contributor
    Comments (172) | Send Message
    This guy is full of BULL. Totally out of his own competency - talking about "accountability" stuff. Is he a politician or stock analyst? Mortgage business is down - tell me if there is anyone in the world who has not known that yet. And he thinks the whole world is clueless so need him to speak that out?


    If he is a good stock analyst, then lay out a scenario most likely to happen, with concrete numbers and therefore the stock price. We'll then judge the tracking in several quarters to see really how good Mr. Mayo is. Otherwise, just shut the mouth. Shouting out loud the obvious makes one a fool.
    13 Nov 2013, 12:18 PM Reply Like
  • new slang
    , contributor
    Comments (180) | Send Message
    "It's a muddled message, says Mayo, to put slimming-down efforts front and center while also bragging about the size and scope of the bank."
    - Idiot


    Slimming down the mortgage business (i.e. not elminating, but getting rid of the bad part) in no way limits the global reach of the bank or spectrum of services. When after a historical series of mergers do you not slim down? It's called realizing synergies.
    13 Nov 2013, 02:05 PM Reply Like
  • gwynfryn
    , contributor
    Comments (6546) | Send Message
    When you get rid of people, you also get rid of whatever capabilities they had, and I've not noticed that management are adept at identifying the dead wood.
    14 Nov 2013, 08:19 AM Reply Like
  • new slang
    , contributor
    Comments (180) | Send Message
    I don't know... you can still go to Bank of America and get a mortgage. I don't see how this is hurting them at all.
    14 Nov 2013, 11:04 AM Reply Like
  • EHB1
    , contributor
    Comments (22) | Send Message
    The actual business they backed away from was loans originated by third parties. While the core mortgage business has slowed due to economic reasons and management focus on cleaning up the legacy mess from Countrywide, it will rebound and track the economy. The exit of third party origination helps to avoid the problems and litigation risk they are still resolving.
    13 Nov 2013, 10:48 PM Reply Like
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