BAC Bank of America $6.91 this bank stock has been trading $6 -$7 range for quite some time and with news of $5 debt card fee going up in arms , many depositors and clients were left sour, they recently posted news of doing away with this fee, this leads us to believe that the bank is in trouble. This bank is trying to make money by any means possible, they are owners of Country Wide which now own billions in Toxic assets such as Foreclosures and Credit Default Swaps, are said to own trillions in toxic derivatives, recently there was news on FDIC and Federal Reserve insuring 75 trillion dollars in derivatives owned by Bank of America, today news was out on 400 million dilution by the bank and we feel that this stock is holding by a string regardless Warren Buffet investment. A recent video with Reggie Middleton I would like members to watch in regards to Bank of America going BUST
This news released after hours today: http://www.zerohedge.com/news/
Bank Of America Common Dilution Coming: To Issue 400 Million New Shares
Bank Of America Common Dilution Coming: To Issue 400 Million New Shares
And to think it was less than two months ago that Warren Buffett took a bath to provide the bank with capital it had "absolutely no need for" but was happy to take it anyway. Well, it turns out the firm is preparing to raise just a "little" more capital. From the just released 10Q: "During the third quarter, global economic uncertainty and volatility continued as described more fully in the Executive Summary – Third Quarter 2011 Economic and Business Environment discussion on page 7. Concerns over these and other issues contributed to a widening of credit spreads for many financial institutions, including the Corporation, resulting in lowering of market values of debt and preferred stock issued by financial institutions. The uncertainty in the market evidenced by, among other things, volatility in credit spread movements, makes it economically advantageous at this time to consider retirement of issued junior subordinated debt and preferred stock. As a result of these matters, we intend to explore the issuance of common stock and senior notes in exchange for shares of preferred stock and, subject to any required amendments to the applicable governing documents, certain trust preferred capital debt securities (Trust Securities) issued by unconsolidated trust companies, in privately negotiated transactions. If we pursue the exchange of Trust Securities, we would immediately use the purchased Trust Securities to retire a corresponding amount of our junior subordinated debt that we previously issued to the unconsolidated trust companies. These transactions would increase Tier 1 common capital and, on an after-tax basis, reduce the combined level of interest expense and dividends paid on the combined junior subordinated debt and preferred stock....We will not issue more than 400 million shares of common stock or $3 billion in new senior notes in connection with these exchanges."
Also today from BANKRUPT of AMERICA: http://www.zerohedge.com/news/
Bank Of America Posts Two $100MM+ Losses In Past Quarter
Remember when even the worst of all trading desks on Wall Street, that of Bank of America could do no wrong and disclosed a trading quarter of pure perfection? Yeah, that's over. The bank, which just jolted shareholders with news of material common dilution, in the form of $2.5 billion in new equity capital to be raised, has released its trading days data for Q3. Per the 10-Q: "During the three months ended September 30, 2011, positive trading-related revenue was recorded for 69 percent (44 days) of the trading days of which 47 percent (30 days) were daily trading gains of over $25 million, nine percent (six days) of the trading days had losses greater than $25 million, three percent (two days) of trading days had losses greater than $100 million and the largest loss was $119 million." On the flip side, BAC had not one $100MM+ trading win. In other words, BAC posted losses on a whopping 31% of the trading days (compared to 0% two quarters ago), something that indicates a very violent return to normalcy: after all if banks, with ZIRP, legal frontrunning, profit from default risk surges, and POMO are unable to make money 100% of the time, who else, besides all the day traders on twitter and the fine men and women on Fast Money of course, will post flawless trading records in the future?
And a very convenient chart which we hope other banks will follow suit in providing is the following presentation of the bank's VaR alongside its daily P&L. Granted, BAC could actually go ahead and mark the second axis properly, but what is most interesting is that, aside from the two $100MM+ losses distinctly highlighted (one of which obviously occurred around the time of the US debt ceiling fiasco, and the other in late August) is that the higher VaR goes, the lower the P&L trends! This has huge implications for market practice as it goes contrary to most prevailing conceptions, namely that the greater the risk, the greater the payoff on average, and, naturally, the greater the risk of a disastrous blow up. If confirmed by other banks this could serve as a policy guideline to limit excess risk-taking during times of high stress due to empirically proven adverse results on average.
We are seeing huge losses in bankrupt of America that along with expected "bank run" being planned on this bank Nov 5 we could see this stock plummet , PUTS long or short could bode well with BAC next few weeks we will see the dilution kick in and dumping of the stock , possibly Jan 21 Puts could bode well to $5 Strike or weekly $6 strike could bode well , if the bank does what I think it will hit $7 range I think Puts will be a low risk high reward type play
No comments:
Post a Comment