Damnable big banks a buy

The Too Big To Fail banks are the new Philip Morris - "The most sued, regulated, politicized, and damned company in the last 50 years," value investor Bill Smead tells CNBC. Philip Morris (now Altria) also happens to be the best-performing stock on the NYSE during that time frame, he adds.

"Their sins are all six to eight years old," says Smead of Bank of America (BAC +0.2%), his fund's 4th largest holding. "The good things are all out in their future. Basically, as a value investor that's all you are looking for in this world."

Smead sees normalized earnings hitting $2.50 per share over the next four to five years, and a $30 stock price.

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Comments (10)
  • idkmybffjill
    , contributor
    Comments (1919) | Send Message
    A double over 4-5 years?


    There are definitely better opportunities in the market than that.
    10 Jun 2014, 10:00 AM Reply Like
  • d7mead
    , contributor
    Comments (44) | Send Message
    idk....please do tell how I can double my money in 2-3 years than
    10 Jun 2014, 10:52 AM Reply Like
  • idkmybffjill
    , contributor
    Comments (1919) | Send Message
    I wouldn't share those ideas on here. And SeekingAlpha articles are often contrarian indicators for the stocks that do double in under 3 years.


    However, if you are looking for ideas like these, then I suggest you try and apply to something like Value Investors Club. If you can get in, there's your reward...
    10 Jun 2014, 10:54 AM Reply Like
  • Chuck--Z
    , contributor
    Comments (15) | Send Message
    You fold it
    10 Jun 2014, 06:03 PM Reply Like
  • funfundvierzig
    , contributor
    Comments (5045) | Send Message
    ""Their sins are all six to eight years old…"


    This statement is deceptive misrepresentation with respect to the intractably troubled and corrupt Bank of America. Take for example, Brian Moynihan's greedy and unquestionably stupid move to rip off Bank customers with a $5.00 a month charge for possessing a debit card! Or the the instructions to Bank employees to lie and deceive mortgage customers on documentation and foreclosures taking place.


    Bottom-line, Bank of America may be too big to fail, but it is also too big to succeed.


    Investors who want "big" should look at superior-managed banks such as U. S. Bancorp or Wells Fargo or BB & T. …funfun..
    10 Jun 2014, 10:15 AM Reply Like
  • healthpicker
    , contributor
    Comments (1098) | Send Message
    funfun, there is no doubt that there have been mistakes in the past as you frequently mention. However I can assure you (in the retail bank) that BAC is doing all it can to improve the quality of service and customer satisfaction ratings. It has very good uptake of the mobile banking service and as you can see again in today's press they can continue to take out more branches without too much customer impact
    It is also crazy hot on compliance - the National Mortgage Settlement - that involved all of the big banks - taught them a big lesson about the cost of non compliance. The monitor has validated that they have met their responsibility in that regard.
    Sure they are not perfect as the capital calculation and dark pool errors have recently proved. However they are hardly customer sensitive errors.
    Looking at the improvement in the share price recently it seems investors are coming back in as they see the prospects for improved earnings post the upcoming DOJ settlement and approval of the revised capital plan.
    10 Jun 2014, 08:07 PM Reply Like
  • jackooo
    , contributor
    Comments (1738) | Send Message
    Brian did not tell employees to do that.
    11 Jun 2014, 02:53 PM Reply Like
  • funfundvierzig
    , contributor
    Comments (5045) | Send Message


    Perhaps you should catch up on the news:


    "Bank of America Former Employees, 'We Were Told To Lie' "


    NBC NEWS, by John W. Schoen June 17, 2013


    "Former employees of Bank of America say they were told to lie to customers about whether they could modify their loans to more affordable terms. They also paid cash bonuses to bank staffers to pushing homeowners into foreclosure."


    And indeed and in fact many of the sleazy practices were occurring under the tenure of Brian Moynihan from Jan. 1, 2010 forward.


    11 Jun 2014, 03:39 PM Reply Like
  • DoowopDave
    , contributor
    Comments (253) | Send Message
    I'm a skeptic, but even I'm expecting legal issues will be mostly out of the way & accounted for in 2-3 years. I sure hope it doesn't take 4-5 years. $2.50 / share depends on the aggressiveness of BAC share buybacks & their ability to continue reducing costs. Most important, they need to stop doing things that will lead to more suits.
    10 Jun 2014, 10:57 AM Reply Like
  • pig1mouse
    , contributor
    Comments (7) | Send Message
    10 year to 4% alone will get this above $25, due to better NIM. However, I believe the big changes taking place in asset-advisory(transpa... pricing, more regulation, more do-it-yourselfers) will cap any value added by Merrill Lynch, which could turn into their next beast of burden.
    10 Jun 2014, 12:01 PM Reply Like
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