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Bank Of America - Oil Contagion Fear Opening Opportunity
- 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.
Thu, Aug. 21, 9:12 AM
- Previously tipped off as being about $17B, the $16.65B comprehensive mortgage-related settlement with the DOJ and six states' Attorneys General includes a $9.65B cash payment and about $7B of consumer relief.
- The deal is expected to reduce Q3 pretax earnings by $5.3B and EPS (after tax) by about $0.43 per share.
- Source: Press Release
- BAC +1.1% premarket
- Previously: BofA reportedly settles mortgage claims for $17B
Thu, Aug. 21, 2:39 AM
- JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC) are planning to raise junior employees' salaries by at least 20%, Reuters reports
- Many banks have been considering pay hikes, as Wall Street continues to ease strains on junior bankers by limiting the hours they work and compensating them better.
- Yesterday, Goldman Sachs (NYSE:GS) announced its plans for salary increases and Citigroup (NYSE:C) is now considering a similar pay raise.
Wed, Aug. 20, 2:37 PM
- Bank of America (BAC +0.4%) will pay $10B in cash and provide customer relief valued at $7B in a settlement with federal and state authorities over its role in mortgages leading up to the financial crisis, reports the AP.
- The deal also requires the bank to acknowledge making misrepresentations about the quality of MBS packaged and sold by it, Countrywide, and Merrill Lynch.
- Previously: BofA reportedly near $16B-$17B deal with DOJ
Tue, Aug. 19, 2:16 AM
- Thomas Montag, Bank of America's (NYSE:BAC) top-paid senior manager, will become the bank's sole chief operating officer as co-COO David Darnell takes a new title so he can relocate to Florida.
- Darnell will serve as vice chairman and oversee the bank's business banking and global wealth and investment management divisions, while Montag will continue to be head of investment banking and capital markets businesses.
Wed, Aug. 13, 3:14 AM
- Bank officials, trade groups and lawmakers are quietly pressing the Federal Reserve for a delay of up to seven years regarding the rule that limits their investments in private-equity and venture-capital funds
- The "Volcker rule," part of the Dodd-Frank legislation, restricts banks' ownership stake in hedge funds and private equity funds, and prohibits banks from making speculative bets with their own money.
- Regulators finalized the rule in December but agreed not to enforce it until 2015.
- Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
Fri, Aug. 8, 12:03 PM
- Private equity firms have paid $1.3B this year to investment banks like JPMorgan (JPM +0.4%) and Goldman Sachs (GS +0.8%) for their assistance with arranging IPOs of portfolio companies, according to Dealogic. That's more than double the $498M paid over the same period in 2013.
- The share price performance of the IPOs leaves something to be desired - up 8.1% so far vs. a 25.9% gain for IPOs of businesses not backed by P-E. On the other hand, IPOs from P-E firms have performed better over the long-term - those from 2010, for example, are up 48.4%, while all other IPOs are down 19.2%.
- Goldman has the largest share of global fees from P-E firms with 11.1%, followed by JPMorgan with 8.2%. Bank of America (BAC -0.3%) has a 7.2% share.
Wed, Aug. 6, 4:09 PM
- The deal to settle allegations of mortgage shenanigans ahead of the financial crisis would have Bank of America (NYSE:BAC) paying about $9B in cash to Justice and other government entities, with the additional money going towards consumer relief, reports the WSJ.
- A previous report had BofA upping its settlement bid to $14B last week, but the DOJ still holding out for $17B.
Wed, Aug. 6, 9:49 AM
Wed, Aug. 6, 9:19 AM
- Bank of America (NYSE:BAC) was forced to resubmit its capital plan after finding an error in its capital calculations. The accepted plan calls for a boost in the dividend to $0.05 per share from $0.01, but the bank has dropped the proposal for $4B in share buybacks.
- Press release
- Shares +1.1% premarket
Wed, Aug. 6, 8:48 AM
- The Federal Reserve and the FDIC say the bankruptcy plans submitted by 11 of the largest banks make "unrealistic or inadequately supported" assumptions and "fail to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for" an orderly failure. Ouch!
- Full feedback
- The 11 dinged: BAC, BK, C, GS, JPM, MS, STT, and the U.S. units of BCS, CS, DB, and UBS.
- To review: Dodd-Frank requires banks annually submit a "living will" detailing their operations and exposures and how they could be dismantled without the need of a bailout in the event they near failure. Pleasing the regulators is a must as they have the power to force tougher capital rules or restrictions on growth, or even mandate a breakup of the lenders. As for the current failures, the banks have about a year to address D.C.'s concerns.
- "Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support," says the FDIC's #2 official, Thomas Hoenig.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
Sun, Aug. 3, 10:28 AM
- Wall Street firms led by Goldman Sachs (NYSE:GS) are closing in on a deal to purchase a stake in chat and instant messaging start-up Perzo as an alternative to Bloomberg's similar application, Reuters reports.
- Bloomberg has dominated Wall Street for years, but banks have been looking for a substitute as sluggish trading volumes and higher regulations weigh on revenues. Bloomberg's trading and news terminal costs about $20,000 a year, while Perzo's applications are open-source and free. Bloomberg customers must also buy an entire terminal, and cannot just buy the messaging system and adapt it.
- Several other banks and asset managers have received term sheets for the Perzo deal and have recently signed non-disclosure agreements including Morgan Stanley (NYSE:MS), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Deutsche Bank (NYSE:DB), HSBC (NYSE:HSBC), and BlackRock (NYSE:BLK).
- Goldman has been looking at alternatives to Bloomberg's messaging program for years, and launched a project internally called "Babel" in early 2013 to develop a competitor.
Thu, Jul. 31, 9:48 AM
- Bank of America (BAC -0.5%) had previously offered $13B, with just $4B of that in cash, to financial crisis-era mortgage issues with the U.S., but the NYT says the bank has upped its offer to $14B, and the cash portion to $7B.
- The DOJ however, wants $17B, has rejected the offer, and has threatened a lawsuit within days if a deal doesn't come.
- Underscoring why no bank wants to see the inside of a courtroom on this, yesterday a judge ordered BofA to pay nearly $1.3B in another federal mortgage case.
Wed, Jul. 30, 4:05 PM
- Calling it a "brazen fraud" in which the Countrywide set up a scheme to sell toxic mortgages to the GSEs, Judge Jed Rakoff orders Bank of America (BAC +1.6%) to pay a $1.3B fine.
- The fine is less than the $2.1B sought by the government, more sharply higher than what the bank had hoped to pay.
- BofA: "We believe that this figure simply bears no relation to a limited Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company. We’re reviewing the ruling and will assess our appellate options.”
Thu, Jul. 24, 4:53 PM
- Bank of America (NYSE:BAC) agrees to a $16.6M penalty over U.S. charges of processing about 200 transactions worth more than $91K between 2005-09 for 10 individuals on the Treasury Department's blacklist.
- The base penalty for the violations was $83.7M because the bank failed to fix the known deficiency in its screening processes for more than two years, but BofA was able to narrow the fine in part by voluntarily getting back up to speed.
Thu, Jul. 24, 4:42 AM
- U.S. regulators have voted 3 to 2 to pass the new restrictions on the $2.6T U.S. money market industry to avoid a recurrence of the jeopardized corporate lending which arose during the 2008 financial crisis.
- The rules "will reduce the risk of runs in money market funds and provide important new tools that will help further protect investors and the financial system," says SEC chairwoman Mary Jo White.
- Related tickers: BLK, SCHW, BAC, FII, TROW, EV, BEN, GBL
Wed, Jul. 23, 2:26 AM
- U.S. regulators are expected to approve new rules that force prime money funds held by corporations or large institutions to float their share price instead of the stable $1 per share NAV.
- The new rules are aimed at avoiding a repeat of the investor stampede out of the $2.6T industry, which endangered corporate lending during the financial crisis.
- Additionally, the SEC's new plan will include a second provision which will limit access or impose fees on investors if they redeem shares in times of market tumult.
- Related tickers: BLK, SCHW, BAC, FII, TROW, EV, BEN, GBL
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.
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