I post on Yahoo message board yesterday that BAC would advance together with other big banks today. It didn’t happen although other big banks like JP Morgan, Wells Fargo and US Bank Corp were indeed bid up by investors. 
Their closing price on last trading were proven to be attractive to many investors. They opened higher even before the better than expected consumer sentiment news.
However there was too much selling pressure on Bank of America. I lost patient and unloaded 2000 shares at $11.05 and unloaded another 2000 share at $11.10. In the mid of the day after I sold all my BAC shares its price ever went up above $11.20. I regret I sold but felt I took the right move when I saw how it closed. It seemed to me investors were not buying into the upgrades on Bank of America and they all viewed it as an opportunity to sell. The idea of more than 500 million new shares offered at $10 was not so easy to be digested in a few days. I thought about the scenario that people were going to take profit tomorrow on other big banks following today’s big run and decided not to keep BAC. The chance that Bank of America going further down tomorrow would be big
I did some trades back and forth on US Bank Corp after I sold Bank of America and at the end I maintained 300 shares of short position on USB which I entered at $19.04. I felt a run up of 6.5% was too much and I hope it will retreat a bit when it opens tomorrow morning. At the end of the day my account was up $133.84. It is really not an exciting day.
Added at 3:20PM
I looked at Bank of America’s price and thought it might be a good idea to buy some shares. So I bought 600 share of BAC at $10.94. I am thinking tomorrow if the banking sector tanks I will add some more BAC and take profit on USB. If the banking sector continue to advance I don’t think BAC will be left out again. We will see tomorrow.
Account Balance Change: +$133.84
The following is the reasoning behind Bank of America’s upgrade by Goldman Sachs and Morgan Stanley which is posted in yahoo message board by a person named Perry, screen name tothemoon8. It seems to me it is from a professional analyst’s mind and I found it is quite convincing. Of course I buy into his view because I am holding 4000 shares of BAC. The strange thing I feel is I should’ve read it from news release of Goldman Sachs or Morgan Stanley instead of from Yahoo message board. Anyhow it found it help me firming my mind. I will certainly hold.
BofA, according to Barrons, orchestrated a brilliant stock sale to raise the capital that was mandated by the FEDS. Apparently a tremendous number of mutual funds and hedge funds were interested in the offer which required a minimum of 1 million shares purchased and BofA sold these shares off the market so that it does not disturb the stock price. Next, they rejected the stock issues to any funds that had shorted BofA in the past year (call it a pay back if you will) and last they require the purchasers to hold the stocks for a substantial amount of time.
According to Goldman and Barrons BofA’s stock offerings will conclude and finalize by the end of today. By next week BofA will announce that it has raised over $25 Billion from it’s stock offerings and asset sales which with the earnings that they have ear marked will close the gap to their $35 Billion capital requirments. Here are some interesting facts:
1) When BofA took over Merryl they also inherited 51% of BlackRock Group which manages over $1.3 TRILLION in assets. Imagine the fees collected annually on this amount.
2) BofA could easily say couple of years from today complete an IPO on Merryl again and hold 60% majority stake. This will make BofA and its shareholders an astounding stock price gain.
3) Over ONE THIRD of all daily ACH transactions completed in the U.S. goes through BofA.
4) As of today BofA has a nest egg of $178 BILLION for loan loss provisions and cash. When in the near future the economy turns around, unused loan loss provisions have to be accounted backward and be recognized as earnings… this is the event that will take the stock to $40 level and beyond. Which is why Goldman has now added BofA to their conviction buy list and Morgan Stanely upgraded BofA with a $32 price target.
5) BofA is still tracking a $38 Billion + quarterly revenue for this quarter which will net them between $3.5 to $5 Billion in income again which is massive by any standard. Why? They are borrowing money from the Fed at ZERO percent rate and lending it out at 500% to 600% profit. Also, the mark to market accounting rules all but gone, BofA and other banks get the breathing room to recognize the loss of some assets over the next few years as their earnings and income pick up momentum and off sets those book value losses.
It is from If you are longs check out this facts
