There were two times I saw Bank of America hit the $10 level. And as the world waits in abated breath to the biggest gainer of Dow Jones this year to double their stock price last night, BAC stock dips down contrary to the direction of the S&P.
Some would say its technicals; the stock simply hit their resistance level last night. But the rumor that BAC will issue a secondary offering continue to persist around the four corners of wall street. (Does wall street have four corners? unlikely. But then again, this is my blog and it has a nice ring to it. ) Going back, like any other investors, I'm beginning to have a seed of doubt regarding this latest rumor. A rumor that has been bouncing around for many days can affect one's faith in a stock. So my mind wanders back to its main man, Brian Moynihan. If I remember it right, last year, when Bank of America has seen its very worst, rumors also abound that it will sell stocks to beef up their capital. But Brian Moynihan said "no, it won't happen". So he went back to his desk and worked on his numbers, trying to devise ways to satisfy the Feds while meeting their mortgage obligations. And he delivered. Bank of America sold off more than $30 billion of assets last year. He unloaded private equity, credit cards and insurance company assets. And his divestiture strategy continues this year with Apollo Capital buying the Irish credit card. They also got an expensive deal with Warren Buffet for a $5 billion preferred shares.
So , it seems that Bank of america will not solve its problems by stock dilution. Not now when they are enjoying excess capital of a little bit more than $1 per share over Tier 1 ratio and they continue to have a line up of non-core assets to sell. The continued denial of Brian Moynihan of issuing secondary offering is enough for me. For now.
Some would say its technicals; the stock simply hit their resistance level last night. But the rumor that BAC will issue a secondary offering continue to persist around the four corners of wall street. (Does wall street have four corners? unlikely. But then again, this is my blog and it has a nice ring to it. ) Going back, like any other investors, I'm beginning to have a seed of doubt regarding this latest rumor. A rumor that has been bouncing around for many days can affect one's faith in a stock. So my mind wanders back to its main man, Brian Moynihan. If I remember it right, last year, when Bank of America has seen its very worst, rumors also abound that it will sell stocks to beef up their capital. But Brian Moynihan said "no, it won't happen". So he went back to his desk and worked on his numbers, trying to devise ways to satisfy the Feds while meeting their mortgage obligations. And he delivered. Bank of America sold off more than $30 billion of assets last year. He unloaded private equity, credit cards and insurance company assets. And his divestiture strategy continues this year with Apollo Capital buying the Irish credit card. They also got an expensive deal with Warren Buffet for a $5 billion preferred shares.
So , it seems that Bank of america will not solve its problems by stock dilution. Not now when they are enjoying excess capital of a little bit more than $1 per share over Tier 1 ratio and they continue to have a line up of non-core assets to sell. The continued denial of Brian Moynihan of issuing secondary offering is enough for me. For now.
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