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Techmonkey

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  • Bank Of America Still A Mess [View article]
    Short-term profitability is clearly an issue. At this point, everyone is aware of the bevy of potential or pending suits and claims, and BAC's 10Q shows several billion in excess of reserves.

    However, I'm not sure how you make the jump from that to no evidence of long-term profitability or profit potential. There has been clear progress made in lowering debt/settling claims/increasing capital base. After (eventually) paying the remaining claims, taking the losses on the NPL's, and jettisoning or redeploying the thousands of excess employees who've been working on legacy/NPL's, future profitability at some level seems extremely likely. Now, if you said you're not sure how long-term that long-term might be, I'd agree--it could still take years to deal with the outstanding claims and liability.
    Nov 7, 2012. 05:14 PM | Likes Like |Link to Comment
  • Finding Bank Of America's True Value: Legacy Assets And Legal Risks Continue To Weigh Heavily On Its Market Price [View article]
    I agree with almost everything in your analysis, except perhaps one point right at the top--was much of the fall in in revenue due to discontinued operations (such as discontinued mortgage operations or overseas credit card portfolio sale)? If so, I wouldn't see the revenue drop as troubling...whereas lower net income is always troubling.
    Nov 7, 2012. 05:00 PM | Likes Like |Link to Comment
  • Bank Of America Might Have A Big Earnings Surprise [View article]
    Disappointed in the $1 bil increase in unreserved to $6 bil. That's enough to eat up a couple of quarters of healthy earnings...and the earnings right now aren't healthy. Looks like the return to normality is further down the road than I was expecting.
    Oct 18, 2012. 03:14 PM | Likes Like |Link to Comment
  • Bank Of America Might Have A Big Earnings Surprise [View article]
    I would rather see them use the cash to continue their buyback of the remaining trust securities (to the extent that they can), then switch to share buybacks/dividends and not play with a reverse split at all. A switch to the dividend tax rate may affect which one is more advantageous. I'd like to see both, but probably a bit heavier on the buyback at this share price, switching to heavier dividend at higher share prices. Of course, both would be subject to regulatory approval post-stress test--BAC hasn't requested (or been cleared) to do either yet.
    Oct 16, 2012. 12:40 PM | Likes Like |Link to Comment
  • Bank Of America Might Have A Big Earnings Surprise [View article]
    Reverse split has no impact on the monetary value of the shares outstanding, although it can affect certain exchange listing or stock-fund requirements.

    A buyback cuts the total number of the shares outstanding by purchasing some of the float; therefore, the smaller number of remaining shares outstanding is normally immediately worth more. There are quite a few discussions as to whether stock buybacks or additional dividends are better for a company overall, but between a buyback and a reverse split there's just no comparison--reverse split should have no impact on the price, while a buyback should increase the stock price.
    Oct 15, 2012. 05:38 PM | 2 Likes Like |Link to Comment
  • Bank Of America Might Have A Big Earnings Surprise [View article]
    I'm more excited to see progress in their expense reduction than anything else. Right now, their expenses are much higher than their competitors; if the "New BAC" project is effective, the new cost structure should greatly increase profitability, even in a low-NIM environment. Accelerating that program and buying back some of the trust securities (as previously disclosed) could give a near-term pop. Still a huge mortgage/litigation overhang, but overall status does appear to be improving.

    Disclosure: Long BAC.
    Oct 15, 2012. 11:20 AM | 1 Like Like |Link to Comment
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