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ZJW7364
11-12-2006, 01:00 AM
Analysis

In the annals of Bank of America's more than century of history, the past year certainly will rank among the firm's most bountiful.


B of A has made tremendous strides. It has generated record profits in 2006, consummated a lucrative merger with MBNA, and shaken off the last vestiges of doubt regarding the Fleet Boston acquisition. But past laurels are irrelevant to the question of whether success can be repeated in sufficient measure to provide superior future stock performance. We opine that B of A's recently robust growth will continue into 2007, that virtually inevitable net interest margin expansion will propel double-digit income gains for several years thereafter, and that procuring adequate and attractively priced funding--not finding sufficient loan growth--will fast become the firm's primary vexation.

We believe that B of A's future funding constraints--namely, luring in more deposits--will ironically come as a result of one of its greatest advantages, namely that it is already the leading retail bank in the U.S., with double the deposits of its nearest rival. Even as B of A has aggressively courted consumers in their demand for mortgages and credit cards--as well as businesses for their loan needs--the bank itself is finding cheap funding harder to come by. In times past, B of A solved this quandary quite simply by purchasing a competitor and its deposit base. However, a federal cap prohibits banks from purchasing rivals if the combined deposit market share would pierce 10%, which B of A already has. Barring a repeal of this ceiling--or B of A developing some proprietary process for capturing greater market share organically--the firm's deposit growth rate will be only about 5% per annum in future years. In our view, this will present the firm with only three obvious options: 1) Reduce loan growth, 2) Issue higher-cost debt to fund loans, or 3) Deploy resources into investments in riskier or less attractive markets, like buying foreign banks and expanding into brokerage or asset management.

That said, these issues would not give us pause in investing in B of A at attractive prices, as we have accounted for them within our valuation. For a company that offers commodity products and services, B of A is an impressive firm with an attractively profitable business. We estimate 18% returns on invested capital on average over the next five years, and given B of A's strong competitive position, the firm should maintain above-average returns for many years thereafter.

Highlights

We continue to anticipate that non-mortgage consumer, commercial lending and market sensitive fee-based businesses will drive revenue growth in a healthy economy in 2006 and
2007.We believe that continued solid credit quality and efficiency improvements are likely to make a positive contribution to the company's earnings growth. We view the acquisition of MBNA as an opportunity for BAC to add higher returning loans to its portfolio and help mitigate the effects of a challenging interest rate environment. We look for the net interest margin to remain relatively stable or widen.

Overview

CORPORATE OVERVIEW. Bank of America has operations in 31 countries, with about 6,000 banking centers and approximately 17,000 ATMs in the U.S. at the end of 2005. BAC reports the results of its operations through four business segments: Global Consumer and Small Business Banking, Global Business and Financial Services, Global Capital Markets and Investment Banking, and Global Wealth and Investment Management.

Global Consumer and Small Business Banking provide a diversified range of products and services to individuals and small businesses through multiple delivery channels. Global Business and Financial Services serves domestic and international business clients providing financial services, specialized industry expertise and local delivery through a global team of client managers and a variety of businesses. Global Capital Markets and Investment. Banking provides capital-raising solutions, advisory services, derivatives

kittydashwood
11-12-2006, 07:28 AM
Stopped out of BAC last week.

21-Day / 50-Day Bearish Moving Average Cross
NAME:BANK OF AMERICA
SYMBOL:BAC
OPEN:52.30
HIGH:52.38
LOW:51.32
CLOSE:51.66
Relative Strength: 91 which is Bearish.
Moving Average Convergence/Divergence (MACD) indicates a Bearish Trend.
Chart pattern indicates a Weak Downward Trend, however the market is seasonally in a positive frame of mind. If market posture changes BAC will tank.
The Up/Down volume pattern indicates that the stock is under Distribution.
The 50 day Moving Average is falling which is Bearish. The 200 day Moving Average is rising which is Bullish.

They are paying to much for the Schwab trust and speculation is they are paying too much for Barclays Bank. Combined with the decline in the US dollar, last two years returns for BAC have not outperformed my NZX holdings.

However all mainstream banks (except Citi) have seen technically deterioration over the last couple of weeks. In the present down trend, support at 51.26-51.44 is being seriously tested but I wouldn't enter BAC till the short term dust settles. Try an Aussie, Canadian, South African or South American bank mate, they say you should skate where the puck is going not where it's been.

kittydashwood
11-12-2006, 08:04 AM
http://dealbook.blogs.nytimes.com/2006/12/08/rumors-of-a-barclays-takeover-resurface-with-all-the-usual-suspects/

Bank of America is likely to bid for Barclays, the No. 3 bank in the United Kingdom, to further its international expansion strategy, a Merrill Lynch analyst said in a research report Friday. The analyst called Barclays “the perfect fit” for Bank of America, and suggested that the United States-based bank could pay a premium of 25 percent to 30 percent above Barclays’ current stock price. Shares of Barclays, which gained 3 percent Thursday amid speculation it was a takeover target, continued to rise on Friday, valuing the British lender at more than 46 billion pounds ($90.6 billion), Reuters reported.

The analyst calculated that Bank of America, which has been vying with Citigroup for the title of the world’s largest bank by market capitalization, could afford to offer a 25 percent to 30 percent premium above Barclays’ current stock price. A 30 percent premium would value Barclays at around $117.6 billion, or roughly half of Bank of America’s market capitalization, MarketWatch reported.

The report says:

Barclays would give BAC the following: 1) a large international presence in fixed-income-oriented inv. banking including corporate and high yield debt, structured products, derivatives, syndicated lending and treasury mgmt services (all of which would be a strong compliment to BAC’s U.S. investment bank); 2) the leading UK credit card business (which could be merged with BAC’s UK card business); 3) a large UK retail and commercial bank (with significant efficiency improvement opportunities), and 4) the leading global indexed asset mgmt and ETF business.

Earlier in the week, there was heated speculation about the possibility that Spain’s BBVA or Banco Santander could make a run at Barclays.

Bank of America’s chief financial officer, Alvaro G. de Molina, recently said would step down in January to look for other opportunities. His exit was a surprise given that the bank has had a string of successes of late. The report speculates that if Mr. de Molina knew that Bank of America was pursuing a large transaction, he might have chosen to resign before the deal, rather than cause a potential disruption after an announcement.

ZJW7364
11-12-2006, 03:06 PM
Yes. I think BAC will drop to about $40-45 then going up. S&P500 current PE at 22 and history average is 15. I consider S&P500 will drop about 20%, first support at 120 move average line 1317.

winner69
04-03-2012, 04:16 PM
Interesting thread in retrospective

Only pulled it up to ask belg whether he still had some of his bargain basement BAC from a year or so ago

BAC done well this year .... $5 to $8 ..... but apparently getting into the habit of massaging earnings again (noy really fiddling the books but some big tweaks) .... using accounting standards like SFAS 159 to do what you want

Nothings changed .... BofA is just as crocked as it was ..... bankruptcy the only just resuly say many

A big short I think

Marilyn Munroe
04-03-2012, 05:47 PM
John Key would have ended up with Bank of America shares as a result of their takeover of Merrill Lynch.

I wonder if he has still got them?

Boop boop de do

Marilyn

Xerof
04-03-2012, 08:26 PM
So you don't die wondering, he cashed the vast majority of those chips at the time he left ML. That was around 2000/01 I believe. He clearly did rather well...... And repatriated at cycle lows in NZD/USD

stoploss
04-03-2012, 09:33 PM
So you don't die wondering, he cashed all those chips at the time he left ML. That was around 2000/01 I believe. He clearly did rather well...... And repatriated at cycle lows in NZD/USD

Certainly didn't cash em all in ........
http://www.nzherald.co.nz/john-key-the-unauthorised-biography/news/article.cfm?c_id=1502247&objectid=10523316