From other sites
at Zacks.com (Thu, 4:10PM)
at Nasdaq.com (Thu, 3:38PM)
at Nasdaq.com (Thu, 10:50AM)
at Zacks.com (Wed, 11:10AM)
at Zacks.com (Tue, 7:05PM)
at CNBC.com (Tue, 2:25PM)
at Zacks.com (Mon, 6:50PM)
at Nasdaq.com (Mon, 4:42PM)
at Nasdaq.com (Mon, 4:02PM)
at CNBC.com (Mon, 2:27AM)
- A new factor, the risk of oil contagion, is driving fear across the financial sector and opening opportunity in some stocks.
- The banking sector is usually affected by crisis due to lending throughout the economy, but today's banking sector is better prepared for crisis than ever before thanks to the Fed.
- Bank of America still bears fresh scars from the last financial crisis and has not been taking excessive risks while still under the watchful eye of regulators.
- I expect value to be created for new stakes to be taken in Bank of America before long, but I would wait until after the holidays to take long-term stakes.
- Current long-term holders may want to hedge short-term risk using options or short positions on the XLF security.
3 Reasons Why Bank Of America Is One Of My Top Picks For 2015
- Company fundamentals, a growing jobs market, and the sunsetting of legal issues all could propel Bank of America to meaningful gains in 2015.
- Bank of America currently trades at a 19% discount to its book value whereas competitors like JPMorgan and Wells Fargo trade at above book value.
- The company currently meets Fed capital adequacy requirements including the proposed capital surcharge rules.
- A good year for Bank of America has the potential to lead to further stock buybacks and dividend increases.
- Warren Buffett's Berkshire Hathaway owns 700M equity warrants of Bank of America, which if converted represents 6.6% of Bank of America's outstanding shares.
- Bank of America's share price is still trading at a 17% discount to its book value.
- Bank of America's Projected FY2015 EPS of $1.49 exceeds its combined EPS from 2011 to 2014.
- Bank of America is putting its litigation woes behind it through its numerous charges for litigation.
Bank Of America: Intrinsic Value Approaching $27 Per Share, 50%+ Upside Potential In 2015
- The U.S. economy is showing signs of life with strong job creation data and low unemployment rates.
- Economic tailwinds and a serious undervaluation make Bank of America my favorite bank investment in 2015.
- I estimate Bank of America's intrinsic value to be in the mid $20s, giving shares more than 50% upside potential.
Bank Of America: A Perfect Storm Of Profits Lies Ahead
- The entire banking sector rose after a strong jobs number was reported Friday morning. Bank of America’s stock was up nearly 3% on the day.
- The strong jobs growth coupled with several other positive catalysts on the horizon could make 2015 a very exciting year for the bank.
- Nevertheless, there are always risks to any investment thesis. In the following article we will separate the wheat from the chaff and make a determination.
Bank Of America: Are You Ready For The Next Move To The Upside?
- While business headwinds and risks will always be with us, the most controversial issues have been put to bed.
- The stock has been meandering for several months now.
- The next earnings report is not far off.
- Bank of America is well positioned to for considerable upside in 2015.
- The bank seems to have finally put its litigation risk behind it. This has been well documented over the past month.
- Even so, I believe Bank of America has another major catalyst on the horizon I haven’t seen covered in recent articles.
- This “ace up its sleeve”, so to speak, could mean billions to the bottom line next year for Bank of America. The great news is the ace must be played.
Update: After Moynihan's Commentary, We Still Like Bank Of America
- Bank of America CEO Brian Moynihan has done a great job.
- He recently made statements noting that he would not go down the same path the bank followed in 2008. A bit obvious, but we like it nonetheless.
- We like Bank of America as an investment here.
Bank Of America: Is A Return To Glory In 2015 In The Cards?
- Bank of America has been clawing its way back from the brink since the 2008 crash.
- The company cut the dividend drastically down from $0.64 in the 3rd quarter of 2008 to $0.01 by the 1st quarter of 2009.
- With the bank apparently putting its legacy mortgage woes behind it and EPS expected to rise substantially in 2015, could Bank of America return to glory in 2015?
- Bank of America still trades at a significant discount on a historical and comparative basis.
- A more favorable cost structure coupled with increasing interest rates will generate tremendous income.
- BAC is in the 9th inning of getting out of the mess that was the financial crisis and is poised for success.
Bank Of America: Fasten Your Seat Belt And Prepare For Takeoff
- Bank Of America has panoply of positive catalysts on the horizon.
- These catalysts combined with the bank putting its mortgage litigation woes behind it should spur the stock higher.
- Even so, headwinds remain. Nevertheless, with the Republicans taking control of the Senate, is the worm finally about to turn?
- A review of critical investment points which demonstrate why Bank of America is not ideal for income investors.
- Capital could be best deployed in other higher dividend yielding North American banks.
- Review of JP Morgan Chase and Toronto Dominion Bank of Canada.
Bank Of America: An Investment That Cannot Lose, Maybe
- The trials and tribulations of BAC are well documented and fading into the past.
- If Bank of America simply plays by the rules and works like a bank should, I cannot see how investors can lose. Of course, that is a big "if".
- The business of money is like any other business, only better.
Bank Of America: That Which Does Not Kill Us Makes Us Stronger
- Bank of America was nearly driven into bankruptcy by litigation expenses due to the 2008 housing debacle.
- Nonetheless, the bank managed to survive and litigation risk is now clearly in the rear view mirror.
- Ironically, an uptick in recent mortgage activity may be just the thing to propel Bank of America shares higher.
- Bank of America’s performance for the quarter was overshadowed by their $16.7 billion settlement with the Justice Department.
- Revenues for the quarter amounted to $21.2 billion, which was a 5.8% increase over the previous year.
- The bank was able to achieve broad based growth in profitability over the quarter.
- Dividends grew over the previous quarter and year, highlighting the bank’s desire to reward its investors.
- Bank of America has established its prowess this quarter as a competitor in the banking industry.
- Bank of America’s stock has been deluged by a significant number of headwinds over the past few months.
- The major issue at hand was the overhang of litigation risk.
- With litigation risk seemingly in the rear view mirror and a potential catalyst on the horizon, is it time to start a position?
BAC: Best Practice Model Validation For Fed Stress-Testing, Value At Risk And Credit VAR
- Last Friday the Fed decried banks' reliance on poor risk models in announcing the rules for the imminent stress testing exercise with results due in January.
- These stress tests have important implications for BAC, C, JPM and WFC and the banks regulated by the European Central Bank and UK authorities.
- This note, which is designed for serious nerds, focuses on best practice model validation for stress testing, value at risk, and credit-adjusted value at risk.
Bank Of America: Selling Into Market Weakness Is Never A Good Idea
- Bank of America just released third quarter earnings, which were solid (with the exception of CRES).
- Investors sold off Bank of America in light of a weaker stock market, not because results were bad.
- Bank of America is oversold at the moment and the 4.6% decline yesterday makes no sense at all.
- With settlements in the rearview mirror, Bank of America is an interesting Buy at a 25% discount to book value.
Bank Of America - No Surprises, Operational Improvements And Multi-Billion Legal Fees
- Bank of America posts relatively solid third quarter results adjusted for one-time items.
- Following multi-billion legal charges the company is essentially breaking even.
- I remain very cautious given the troubled past and continued legal expenses, while operational achievements are really visible.
Wed, Sep. 10, 11:43 AM
- Cost savings of $2B from the New BAC initiative were originally expected by mid-2015, but with $1.8B already booked by Q2, Bank of America (BAC +0.5%) expects to hit $2B by the end of this year, says CFO Bruce Thompson. The other savings initiative - Legacy Assets and Servicing costs are expected to fall to $1.1B by 2015 Q1. They were $1.4B in Q2 of this year.
- Presentation slides
- Turning to capital, the bank's fully phased-in Basel 3 common equity tier 1 ratio of 9.9% compares to the proposed minimum of 8.5% by 2019.
- As for net interest income, it's holding steady - $10.4B in Q2 vs. $10.5B two years ago - but, like everyone else in financial services, the bank awaits higher interest rates for growth in this segment.
- Credit quality trends continue to improve, and the bank is highly provisioned: Its allowance for loans and losses - $15.8B in Q2 vs. $21.2B two years ago - is 3.67x the annualized charge-off rate vs. 2.51x two years ago.
- Guidance for capital returns in 2015? The new CCAR rules aren't even out yet, says Thompson, but the bank is particularly focused on improving its metrics at those points where it was closest to failing in this year's test.
Tue, Sep. 9, 12:24 PM
- The Fed intends to impose a capital surcharge on banks tougher than the international standard, according to Fed Governor Daniel Tarullo's prepared remarks for the Senate Banking Committee. Those banks with heavier reliance on short-term funding like overnight loans - i.e. Goldman Sachs (GS -1%) and Morgan Stanley (MS -1.8%) - will likely face even more rigorous requirements.
- Officials haven't yet decided on a number, but reportedly are considering as much as 200 basis points more than the top range of 2.5% of risk-weighted assets agreed to by international regulators.
- What's not yet clear is who would need to raise capital to meet the new, tougher standard.
- Citigroup (C -1%), Bank of America (BAC -0.6%), JPMorgan (JPM -1.3%), Wells Fargo (WFC -0.4%), State Street (STT -1.1%), Bank of New York Mellon (BK -0.9%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, IAI, SEF, IYG, FXO, FNCL, FINU, KCE, RWW, RYF, KBWC, FINZ
Tue, Sep. 9, 11:46 AM
- Michele Foresti was supposed to take over FICC trading in the EMEA region for Bank of America (BAC -1%) in June, but he's currently in the bank's London offices working, but not taking part in management duties.
- Foresti comes over from Deutsche Bank, but the lender hasn't yet given regulators the clearance necessary for him to begin his new job. At issue are tougher background checks for new hires, and while Foresti - who was at Deutsche for 18 years - has never been accused of wrongdoing, "At the moment, it's safer to say no than yes," says a bank analyst.
- Previously: Banks reportedly delaying hiring on increased scrutiny
Mon, Sep. 8, 8:41 AM
- "The major catalyst for shares in our opinion is the resolution of the bulk of Bank of America's (NYSE:BAC) legal issues with its AG settlement," says analyst Richard Ramsden, upgrading to a Buy with price target lifted to $19 from $17.
- "Legal costs have obscured much of the fundamental improvement at BAC."
- Shares +1.1% premarket
Fri, Sep. 5, 3:41 AM
- U.S. Federal Judge Denise Cote has ruled that investors may press claims against 12 major banks for violating antitrust law by limiting competition and fixing prices in the $21T CDS market, even though improved liquidity should have driven costs down.
- The defendants include BofA (NYSE:BAC), Barclays (NYSE:BCS), BNP Paribas (OTC:BNPZY), Citigroup (NYSE:C), Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB), Goldman Sachs (NYSE:GS), HSBC (NYSE:HSBC), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS), RBS (NYSE:RBS) and UBS (NYSE:UBS).
Thu, Sep. 4, 3:18 AM
- U.S. regulators have approved of the proposed liquidity rules to safeguard banks in case of a financial crunch.
- The rules are requiring large U.S. banks to load up on ultra-safe assets to ensure enough cash and securities to fund their operations for 30 days. Separate liquidity rules for foreign banks will be drawn up at a later date.
- Big banks will need to hold a total of about $2.5T in easy-to-sell assets by 2017, which would result in a $100B shortfall if the threshold applied today.
- Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
- Previously: Bank regulators to vote on new liquidity rules
Wed, Sep. 3, 7:39 AM
- "CCAR represents the binding capital constraint for Bank of America (NYSE:BAC)," says analyst Steven Chubak, pulling his Buy rating on the stock. The higher required capital, he says, cuts the ROE potential by 120 basis points to just 13%, supporting a price target cut to $17, and a downgrade to Neutral.
- Alongside the cut in BofA, Chubak upgrades JPMorgan (NYSE:JPM) to a Buy with price target hiked to $69 from $64. Citigroup (NYSE:C) remains Nomura's top pick among the banks.
Wed, Sep. 3, 3:16 AM
- JPMorgan (NYSE:JPM) is in talks to sell its oil-supply agreement with Philadelphia Energy Solutions to Bank of America (NYSE:BAC).
- Operated as a joint venture between Sunoco and the Carlyle Group (NASDAQ:CG), Philadelphia Energy Solutions is one of the largest refineries in the country, processing 330K barrels of crude a day.
- Under the terms of the current agreement, JPMorgan supplies the refinery with crude oil and credit and receives refined fuel products that it can trade.
Wed, Sep. 3, 2:39 AM
- Bank regulators are expected to finalize rules today that would require banks to hold capital against every asset on their books, and approve of a "liquidity-coverage ratio", which would require large banks to load up on ultra-safe assets to fund their operations for 30 days.
- The new rules have Wall Street concerned due to the likely harm to earnings and lending restrictions, although regulators say the policies will create a safer financial system.
- Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
Tue, Sep. 2, 2:49 PM
- Bank of America (BAC +0.5%) is offering $2B of benchmark perpetual shares with a 6.25% coupon, reports Bloomberg. Also being sold is $1B of perpetual preferred stock with a 6.625% coupon - callable in five years.
- The bank in August sold $4.5B in a three-part note sale after agreeing to more than $16B in mortgage-related fines. Included in that offering were $3B of 4.2% 10-year notes. They closed last week priced to yield 4.06%.
Mon, Sep. 1, 1:56 AM
- America Movil (NYSE:AMX) has hired Bank of America (NYSE:BAC) to sell a significant amount of its wireline/mobile assets, in order to lower its market share by less than 50%.
- Potential buyers include AT&T (NYSE:T) and SoftBank (OTCPK:SFTBY), a source tells Bloomberg.
- The move is in response to new Mexican regulation designed to curb the company's dominance. America Movil announced the sale in July.
Sat, Aug. 30, 6:48 PM
- "Most of the reason that banks are underearning relative to their historical norms ... is economic and not regulatory," says Richard Pzena (NYSE:PZN), who remains bullish on the TBTFs. Low interest rates, weak trading, and "government persecution" are the three factors, and - should these normalize - earnings could nearly double at Bank of America (NYSE:BAC) and Citigroup (NYSE:C), though JPMorgan's (NYSE:JPM) boost would be more modest. Goldman Sachs (NYSE:GS) is another favorite.
- Broad financial ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
- Another cheap sector is energy, says Pzena, and based on relative valuation against the broader market - whether price-to-book or price-to-earnings - the major integrated oil companies are selling near all-time lows.
- What the market is missing, says Pzena, is the nature of oil investment. The old days saw capital spending one year, and boosted volume the next. Projects nowadays are far larger and require several years of spending before returns roll in. "We think those big new projects are going to perform and produce decent returns." HIs favorites: BP, RDS.A, RDS.B, XOM, TOT.
- Broad energy ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, PXJ, FENY, RYE, FXN, DDG
Fri, Aug. 29, 2:01 AM
- Bank of America (NYSE:BAC) has asked Judge Jed Rakoff to dismiss the jury verdict which found its Countrywide unit guilty of past mortgage fraud that resulted in a $1.3B penalty.
- Known as the "hustle" case, the lawsuit accuses BofA of selling toxic mortgages to Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), although the bank argues that the evidence at the trial does not support the claims.
- The motion comes just one week after BofA agreed to a record $16.7B settlement with the U.S. government to settle charges over its role in mortgages leading up to the financial crisis.
Mon, Aug. 25, 12:44 PM| 16 Comments
Thu, Aug. 21, 2:51 PM
- "We can start to see how [Brian Moynihan] can start running the company for shareholders and not litigants," says analyst Marty Mosby following Bank of America's (BAC +3.8%) $16.65B mortgage settlement with the government.
- The removal of the legal overhang is nice as is today's rally, says portfolio manager Dave Ellison (an owner of the stock), but higher interest rates are necessary for a sustained move upward in the shares.
- "We believe they have a wonderful franchise - the question now is, 'Do they,'" says fund manager Greg Donaldson. "If they do, their earnings will move sharply up because all of their energies will be poured into making their businesses better."
- And from The Oracle - whose 700M warrants struck at $7.14, if exercised, would make Berkshire Hathaway BofA's largest shareholder? "[Moynihan] is nurturing a huge and attractive underlying business that will endure long after today's problems are forgotten," he said in his annual letter in 2012.
- Previously: Bank of America confirms U.S. deal; +1.1% premarket
Thu, Aug. 21, 11:43 AM
- Hedge funds are having a difficult time of it again this year, up 1% vs. a 7.5% gain for the S&P 500, according to Goldman Sachs, which crunched the numbers on 775 funds with $1.9T in AUM.
- Nevertheless, Goldman's list of 50 stocks which "matter most" to hedge funds has outperformed the S&P 500 on a quarterly basis 66% of the time since 2001. The stocks this quarter (posted in order of the number of funds in which a name is a top-10 holding):
- ACT, AAPL, FB, AGN, AAL, GM, TWC, AIG, MSFT, HTZ, CHTR, MU, WMB, LNG, C, DAL, HCA, APC, CBS, ALLY, GOOGL, APD, NRF, BAC, EBAY, LBTYK, PCLN, VRX, BIDU, DTV, DISH, DG, EQIX, MA, WAG, ARCP, GILD, LINTA, MON, FOXA, VC, AMZN, BRK.A, BRK.B, SUNE, CMCSA, JPM, MIC, CCI, HES, LAMR.
- A special call-out to Northstar Realty (NYSE:NRF), Visteon (NYSE:VC), SunEdison (NYSE:SUNE), Macquarie Infrastructure (NYSE:MIC), and Lamar Advertising (NASDAQ:LAMR) for making the list of hedge fund hotels despite their relatively tiny market caps.
BAC vs. ETF Alternatives
Bank of America Corporation is a bank holding and a financial holding company. Through its subsidiaries, it provides banking and non-banking financial services and products throughout the United States and in selected international markets.
Other News & PR