What's pushing this stock down?

Well the market has been down and all the financials, so I dont see
why BAC would be immune.

They haven't announced that they are pulling out of the countrywide
fiasco.

Ken Lewis needs to realize you can't polish a turd.

I look for the stock to go up at least 2 pts if such an announcement
is made.

Why would you be unhappy about it going down? you own some? well more
opportunity to buy more :).

Would anyone comment on this simple valuation of BAC at current price:

Today Price: $36.6 US
Quarterly Dividend : 0.64  ---> Annual Dividend = 4x0.64 = $2.56 US

Assuming divident does not grow and stays at this level for few years,
and discounting it conservatively by (4% Treasury + inflation rate +
margin) = 10%, present value of the dividend before tax would be
2.56/0.1 = $25.6 US, meaning you are paying $36.6 - $25.6= $10 US for
earnings (pre tax). Considering 30% tax would give 36.6 - 25.6 x 0.7 =
$18.6.

assuming no growth in EPS = $2.37 US for a while (conservative), gives
P/E = 18.6/2.37 = 7.8 for a big US bank, not involved in subprime.

Any comments?
Thanks!

Yeah, BAC is really worrying me. I bought BAC at $35.55, my price
target is $46.95. I am thinking if I should lower my price target to
$41.50.

I think BAC will be a great investment 5 to 10 years from now, but I
am not willing to wait that long.

http://dividend-growth.blogspot.com/

The market is not perfect.  BAC is oversold, undervalued and a
bargain.  The market is in a fear, gloom and doom cycle.  BAC is
paying a FAT 6 plus per cent dividend yield, the current stock is low
and management is positioning itself for more favorable terms in the
CFC takeover.

The market is offering BAC at bargain prices because of AIG
incompetence, Citibank restructuring and misjudging financial
mortgages.  BAC's earnings, without allowances and accruals for
mortgage writedowns, are pretty darn good.

BAC is getting the mortgage servicing, origination and valuable
California real estate from CFC at bargain basement prices.  BAC has
teams of managers going through CFC mortgages, throwing out the bad
and keeping the good.  I don't see the price changing for CFC but I do
see the quality of the purchase increasing.

BAC is not assuming all the fraud, bad loans and moral turpitude in
the CFC operations.  The deceit and dishonesty will be evicerated from
the mortgage portfolio and operations of CFC.  Only the good will be
purchased and transferred to the BAC mortgage portfolio

The CFC cruddy business operations will be segregated into a separate
operating company and allowed to go bankrupt and rot.

I have a $100 price target on BAC and a $5 dividend.  Reverse the last
2 for 1 stock split and you have a $100 dollar stock and $5 dollar
plus dividend.  The past has a way of repeating itself.  Look for more
opportunities in BAC.  We might even be able to acquire more BAC at
cheaper prices going into the June dividend.

Good Luck All,

Best Regards,

Kurt

I just bought in.  I have a good feeling about this.

Hey rosw, Good Buy, you are definitely buying low and going into a 6%
plus dividend yield you can definitely sell high.  I sold my Friday
buy (36.80) today at 37.35 and I'm looking to buy it back lower at the
close.  I still have positions at 37.65, 37.95, 38.77, 39, 39.25 and
40.  I opine BAC will trade in the 40's before ex-dividend date.  I'm
never always right but I like my chances.

Good luck,

Best Regards,

Kurt

sound like a good plan if you have money to sit there doing nothing
and you have time for that. to me, i'd rather doing take-and-go during
the dividend period and some range trading for bac.

your plan really would work out nicely. but can you use that money to
earn/raise money in the same time frame?

cheers!

http://stockbb.net

I am thinking of selling my bac at $41.50. Do you guys think it's a
good plan?

http://dividend-growth.blogspot.com/

If you are looking for a short term gain and you are going to make
money on the sale then go for it. If you are going to loose money but
you have something to put it in that will make quick money then good
too. Otherwise, this is a great stock to go long term with, especially
at this price.

Dont they actually have to be able to afford the dividend to pay it
out? With Countrywide deal.. more losses will certainly mount, so the
dividend is more than likely to be under pressure. If you are valuing
solely on dividend.. look at some of the other financials who had cut
theirs.. they need money.. and they arent lending money which is the
crux of their business.
Furthermore, after sub prime, financials will move onto focusing on
the HELOCs, auto, and CC loans on their balance sheets.. only makes
sense that these will follow with higher than normal default rates??
Dividend staying at current levels.. I wouldnt bet on it

If you listen to the Quarterly Earnings report BofA said that while
they would not take a dividend cut off the table they felt they have
other options if they needed capital.   Unlike most of the rest of the
banking sector BofA and JP Morgan actually turned a profit this
quarter.  The CFC deal is alot of paper loss but they are going to buy
whats left of the CFC portfolio pennies on the dollar.  From what I
can see BofA and JPMorgan are weathering everything pretty well.  Go
look at Citi or AIG(cringe) and you will see what im talking about.
WB always says.."Be fearful when everyone else is greedy and be greedy
when everyone else is fearful".
It boils down to the simple fact that BofA will make it out of this
mess and they will rebound.  Stock is cheap now and if you can ride
the storm it will be a performer again.  The Dividend will be a Perk.

Everyone thinks CFC is a complete disaster, but CFC was a good
business for 20+ years and now because of the subprime they are worth
nothing all of a sudden? They have made money before, and once they
sort out the current mess they will be worth something again. CFC buy
is a good thing long term.

Today was a nice day to buy. Bought a third of my position today @
36.40 to help bring my average down. For me, BAC presents plenty of
upside, with minimal downside at this point. Bad news is unlikely to
push it too much farther lower, and good news (renegotiate/cancel CFC
deal, economic upturn, etc.) will do a lot to raise it. I don't think
the share price is well represented by the future P/E nor the dividend
yield. That won't last (dividend will come down, or PPS will go up).
I'm hoping for the latter :).

will it cross 40 ? in upcoming days?

The CFC deal is the drag and I hope we get news soon about a
renegotiated (lower) price, or withdrawal all together.  It's hard to
watch the market recover and see BAC still hugging the lows.

Buy more before it goes back up then.

u have you remember that part of BAC's business was with Country as
well. when cfc becomes part of BAC, bac doesn't realy own them
anything anymore right?

I see BAC buying CFC as getting their average price down from the $2B
they sunk in at $18 a share. But they still shouldn't give them $7+ a
share. I'd like to see $3 a share for CFC, but not sure because BAC
likes to overpay (which is their biggest downside as far as M&A).

my sentiments exactly!  most posting notes on this blog are hoping for
a quick buck.  unlike them, you seem quite logical however.

thanks for the input.

Let it go down, I'll just buy more.... and I have lost 27% on this
stock already. I am waiting for a better discount before buying even
more shares. Look at the position this company is in to actually
capitalize on this mortgage tragedy. BAC is a long term investment
with strong dividend position and a national bank with a huge market
share. Dont let the frenzy scare you away from a value stock that has
huge income and growth potential. If you are still scared about the
housing market, wait until you start to see things get better. But
then again its always better to be early then late.

It will hit 35.50 again the pull the trigger

Just how low will this stock go? It's dropping yet again

BAC shows 36.40 as its bottom gets to that and bounces. Could be a
bottom. When they end the write downs the principal income of the Biz
is still there and back we go. Fold in the CFC assests eliminate the
baggage there and off we go.