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Bank of America (BAC): 5 Reasons to be Bearish

|Includes: Bank of America Corporation (BAC)
 
1. The acquisition of Merrill Lynch has altered Bank of America’s revenue and earnings structure.

2. Investment banking is a concern for some as investors and analysts worry that the downside of Bank of America’s enlarged i-banking business may very well offset any benefit that ML’s wealth-management business could potentially offer.

3. Due to the fact that Bank of America is now one of the top four major banks it will need to hold additional capital. How this will be structured is still murky and unclear.

3. The acquisition price of Countrywide right before the real estate collapse and that of Merrill Lynch during the Credit Crisis may have been too high. The probability of Bank of America ever breaking even on the deals now is extremely is low.

4. Recent financial regulation approval may cost it some profits over the short-to-medium term as it determines how to make up for it some other way.

5. Top level management is questionable and confidence seems to be lacking given what Bank of America of went through in the Credit Crisis.

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Summary:

We have no official buy or sell position on Bank of America (NYSE:BAC) but heavily encourage a positive discussion to see all points of view be they bullish, bearish, and or something else.