Personally I actually like the CFC deal for BAC. Buy low, sell high.
And bac is defintely doing that. One thing I find interesting about
the deal, from BAC's perspective, is that they are not paying any cash
- its pure stock. As a result, I doubt mgmt is terribly worried about
it aside form the balance sheet issues.

Ultimately, if you have the balance sheet and the patience to make it
thru this market to survive, that paper will go back up in value over
time. BAC has that as does JPM. THIS is when you SHOULD be doing M&A -
not at the height of a boom like all of those Blackstone deals last
year.

Would you rather be in wachovia's position? Buying Golden West for $25
billion, pure PayOption ARM portfolio? GWP = pure garbage (ditto on
CFC's POA portfolio).

Long term, there is major benefit to buying CFC at such a low price; a
massive portfolio to pitch BAC products to; mtg servicing improves
with scale (the bigger the better) and as such will become mroe
profitable, and finally, the originations divisions of CFC are some of
the best around. It may not be the most profitable now, but 3 years
from now it will be gravy.

Of course, short term, there is Q2 earnings still to come and I
perosnally blv they will be ugly all over the sector. But thats until
August.

shorted 2000 shares of BAC at ~$40 since Jan... thanks for the 8k+,
should i pull out now?

Nice trade.  I would cover and look for a bounce back up to 38. I'm
never always right. Good luck

myself and KL disagree on alot of things (he didnt like me invading
his Wachovia boards back before the most recent slide in April
earnings), its scary to be on the same side...

Note: I play both long and short sides of the market - so long as the
market is moving, so am I. So far, this is my best year ever. I love
the VIX this year!

I have to agree with those that said that BAC is for the most part a
victim of the overall market.  For the many here looking for the quick
buck, it might take a few months at least for a recovery.  Meanwhile,
I'm confident they can maintain the dividend and I'm looking to buy
for the 7%+ yield and go long term.

In for the slaughter at 34.95. If BAC sinks, I'll just buy a
submarine. Plus the 7% dividend seems hefty :D

I'm in, went long right here at 34.75.  The credit crisis had little
effect on BAC and a good bounce going into the dividend, to 38 plus is
a sure thing.  Houses are selling and non performing assets are being
monetized.  I look for a flat existings home sales report on Friday.
I opine for my own entertainment, good luck all.

B of A hasn't earned enough to pay its dividend for two quarters
straight. That puts the dividend at risk. The purchase of Countrywide
Financial is also making investors very nervous.

If you are discounting the dividend by 10%, then shouldn't you be
multiplying 2.56 by 0.1 rather than dividing?  Very confused about
that...  though I am not familiar with the way these financial assets
are valued.

Depends on how early.  Right now we might be through the first inning
of this debacle.  The US consumer is getting poorer by the day
compared to the fiscally responsible Asians and even Europeans are
making up ground on us.  With rising inflation, housing prices
dropping, and likely credit card defaults increasing rapidly, I do not
see how the banks will manage to make decent profits in this
environment.  This situation could last many years.  There are many
places I'd rather be than in the financials right now...  In fact I'd
rather be in anywhere else.

BofA and JP Morgan are your safe bets right now in Financials.  That
of course is relative. The CFC deal is a stock swap so no cash will be
changing hands. I have several friends in the lending business and one
that works for JPM. They basically say that the volumn of loans
"wanted" is still very high they are just being very selective and
doing all their homework.(no more no doc loans).
JPM and BofA also turned a profit last quarter (unlike almost all the
others). Deposits are up for BofA and they are going after alot of
higher value clients in their CC business.  One other thing that
should be known but with all the write downs I dont know how valuable
it is..   The Book value per share of BAC is right around 31 dollars.
If it goes below that they would be smart to start buying back shares.

BAC might still be dropping because of capital issues as decribed
below.

The sale takes Bank of America's capital raisings to $19.7 billion
this year. The bank was depleted by $14.8 billion in credit losses and
writedowns and the $21 billion cash payment for LaSalle Bank last
year. Banks and securities firms led by Citigroup Inc.,UBS AG and
Merrill Lynch & Co. recorded $380.5 billion of writedowns and losses
on assets tied to subprime mortgages since July.  ``Given the amount
of capital that Bank of America has raised since the end of 2007, its
balance sheet impairments may be rivaling those at Citigroup, UBS and
Merrill Lynch,'' Charles Peabody, an analyst with New York-based
Portales Partners LLC, said in a report to clients today.

I know you mention BofA and JP Morgan as safe bets but I think you
left off WFC on the safe side.  They are still the only AAA rated US
Bank and have not had to raise any capital yet to offset losses.  From
my friends working there, I have heard that there commercial business
lines are booming on the credit side because many banks can't handle
any more loans right now.  I know the CEO already mentioned that the
mortgage business had a record quarter in applications.

I dont like Wells for the simple fact they are not playing
opportunistic enough. The CEO of Wells has the right idea - this is
the time to buy something on the cheap that can lead to lots of growth
on a recovery; I dont know what internal mechanism is stopping him
from picking up NCC or WM. EVENTUALLY, we will hit recovery, even
bears like me agree with this. I like companies who play the Buy Low
Sell High game - I dislike companies that Buy High and get Sold Low
(eg, Wachovia, Blackstone, etc.)

This is for long term thought of course.

drac...

I don't totally disagree with your point but it plays to the culture
at WFC.  This is a very conservative bank and is why they have emerged
relatively unscathed from the financial crisis so far.  Most people
agree that WM doesn't make sense for WFC since their markets overlap
so much and would probably have to divest brances.  NCC is interesting
and I can only imagine that there is something really ugly on their
books that WFC doesn't want to touch.

That reluctance and conservatism is also what makes them a safe bet.

http://blogs.barrons.com/stockstowatchtoday/2008/05/20/energy-patch-p...

Fears of a dividend cut.

You may be right TheDude. It makes sense to say the least; I ahve to
admit I was scratching my head when the CEO of Wells sounded like he
was whining he could buy something. After all, as CEO, you'd think he
had the wherewithall to garner the internal support needed.

Anyways, conservative plays may protect their balance sheet, but it
will also hinder their topside on the recovery. If I wanted pure
safety Id buy Treasuries (altho not at these prices lol).

Anyhows, the BAC ex-div date is on June 4th, so let the Bears/Shorts
pay for that one. Today's closing price below $34 is the low for the
next month imo. You realize thats a 1.9% payment in like 2 weeks? You
cana rgue future divs will be cut, but this one is already announced
so...

With the Enron Loophole closed, we should see oil prices heading down
soon.  This will give a boost to equities and hopefully lift all the
financials as well.  Be happy that you can buy more of BAC at such a
low price when the ex-date is coming up.   I'm shorting oil (by buying
DUG) and long on financials and tech.

I'm with you on the financials and tech, but the only thing that will
bring oil down is a stronger dollar, which isn't happening anytime
soon. Demand for oil will not abate; the developing world can't get
enough of it. Current fields are drying up, and the new fields can't
fill the void.