What's your take on BAC as a buy candidate?
Over 11% dividend sounds too good to be true.
Answers
270 points
BradOK answered 4 months ago …
On a consumer end I've been hearing bad things. People are less than satisfied with many of their consumer credit services and I for one am not a fan of their banks.
On top of that they just purchased Country Wide and that's going to come with a whole slew of integration and financial difficulties.
Furthermore, the stock looks like it's locked in a solid downtrend. I'm not one to comment on technical analysis, but if some of the other TickerHound members could weigh in, then that'd be great.
3086 points
EthanR answered 4 months ago …
I like BAC as a long term investment, but definitely not as a short term trade. The dividend yield is excellent right now, assuming they don't cut the dividend. It's the number one Dog of the Dow, which historically has had an excellent return. In fact, I wrote about buying it in my article today at TheTycoonReport.com
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209 points
MichaelShulman answered 4 months ago …
The days of super leverage are gone for the big banks. Going forward, we'll see private equity financings, increased M&A activity and IPOs, as well as the slowdown in mainstream economic activity and tighter credit standards that will shake the banks core business.
The mess is far from over, and I see at least one more leg down. I expect Bank of America (BAC) to slide below $20 before it's all said and done.
393 points
jester112358 answered 4 months ago …
If it sounds too good to be true it probably is. Don't buy it. The dividend will be cut and the countrywide purchase will turn out to be a big mistake. Buying deep-in-the-money PUTs with an expiration around Jan '09 could be quite profitable.
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127 points
kingfisher209 answered 4 months ago …
Long term prospects for BAC is good, Since 10% of the banks are already down with the crisis and few more at the brink of going out of business, BAC with 10% of the depositor base is going to have increased market share and will come out very strong but near term there are lot of head winds against it and it could fall to low teens before taking a leg up
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assisi answered 4 months ago …
Horrendous customer service at the branch level is a hallmark of B of A out west. They haven't integrated systems between states, even after acquiring other banks over 25 years ago. Correcting problems is a perennial disaster in the consumer bank.
Even if B of A takes its own failed mortgages and adds them to the recently set up subsidiary where the Countrywide toxic mortgages were placed, it will still have to support them on some level. B of A has done no better job at selling off its failed properties secured by mortgages than its competitors. If financial institutions with these mortgages don't deal with them quickly, i.e., find a buyer and cut their losses, the ultimate cost grows with each month they sit on the bank's books and require attorney's fees, property management expense, property taxes, etc.
161 points
kobla answered 4 months ago …
BAC has there earnings after the bell on Monday 7-21-08 ,, Citibank lost 25 billion and the market loved it ,, if it goes back under $20 it should be good to make some money
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kobla answered 4 months ago …
Citibank,s loss was $2.5 billion,,,,,, not $25 billion like I put in the answer before,,, Sorry
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