Bank of America

[dreamybear]

Buffett buys more Bank of America stock, with stake’s value rising to $29 billion

Published: July 29, 2019 7:43 a.m. ET

Bank of America Corp. is by far Warren Buffett’s favorite bank, as his Berkshire Hathaway Inc. has boosted its stake in the moneycenter bank to more than $29 billion.

In a Form 3 filing with the Securities and Exchange Commission late Thursday, Berkshire Hathaway disclosed that it owned 950.0 million shares of Bank of America, or more than 10% of the common shares outstanding. Buffett is Berkshire’s chairman and chief executive officer.

That’s up from a previous disclosure of a 896.2 million-share stake, or about 9.4% of the shares outstanding, as of March 31.
Berkshire has extended its lead as the Bank of America’s largest shareholder. The Vanguard Group is the second largest shareholder at about 6.4%, followed by SSgA Funds Management Inc. at 4.1%, according to FactSet.

Bank of America’s stock BAC, -0.36%  surged 1.4% to $30.77 on Friday to close at a three-month high. At that price, Berkshire’s stake would be valued at $29.23 billion. That is well above the value of Berkshire’s second-largest bank holding, as the 409.8 million shares of Wells Fargo & Co. WFC, +0.11%  ..............

Berkshire’s holding of Wells Fargo common stock has been declining, from 426.8 million shares as of Dec. 31, 2018 and 442.4 million shares as of Sept. 30, 2018.


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More details : https://www.marketwatch.com/story/buffet...2019-07-26

*happily vested since 2011 as stock is "endorsed" by the great WB himself*  

[dreamybear]

Will Bank of America Stock Dip Below Book Value Now?
August 30, 2019

On at least one key metric, Bank of America (NYSE:BAC) stock looks far too cheap. The BAC stock price closed at $26.85 on Wednesday. That’s marginally above the $26.41 book value per share figure the company reported after its second quarter. At a little over 1x book, Bank of America stock would seem to be a steal.

To be sure, it’s not quite that simple. Tangible book value is closer to $19. And while it might seem like the BAC stock price almost by definition would be too cheap at 1x book, that’s not how trading necessarily has played out. Bank of America stock in fact traded below 0.9x book for the entire post-financial crisis period until crossing that threshold in late 2016.

Meanwhile, as I wrote in May, there are external factors at play. And while I’ve been a bull on BAC going back to 2016, I gave up on the bull case above $30 after last month’s earnings report.

In this market in particular, it’s tempting to argue that a 10%+ decline shouldn’t change the investment case all that much. But for bank stocks (and indeed, for all stocks, given that 10% is a nice annual return over the long haul), it does. The questions to ask are if the lower price changes the case enough, and if book value can act as near-term support.

The BAC Stock Price Nears Book Value

On its own, book value isn’t necessarily support for the BAC stock price. There’s $69 billion in goodwill included in the $247 billion total. Bank of America owns $45 billion in derivatives and $246 billion in debt securities carried at fair value. A goodwill write-off or a reduced valuation for the derivatives and securities — neither of which would be a surprise in a recession — would lower book value.

That said, a ratio of 1.01 is cheap. It’s the lowest multiple assigned Bank of America stock in almost two years — with one exception. BAC stock traded below book value last December, as markets plunged. It bounced about 30% the next month.

So an investor can’t look at book value — or even tangible book value — as a floor under BAC shares. But it is a reflection of the asset base here. And value investors or banking bulls can at least argue that the market is giving exceedingly little value, and potentially too little value, to the Bank of America franchise.

The Risks to BAC Stock

One potential way to look at the current P/B multiple is to argue that Bank of America stock almost certainly is too cheap if current economic conditions hold.........

Read more : https://finance.yahoo.com/news/bank-amer...16255.html

[soros]

What is the annual dividend and yield on BAC share price of $26.5 ?

[fanobell]

https://www.marketwatch.com/investing/st...financials

About 2.6%

[fanobell]

Good choice to study US banks now.... if Fed cuts rate further, banks' earning will drop. then we can go in
dreamybear, would you buy into Bank of America? Do you think it offers more value than OCBC bank?

[dreamybear]

dreamybear, would you buy into Bank of America? Do you think it offers more value than OCBC bank?

I really dun know how to answer whether BOA or OCBC offers better value - maybe the gurus in this forum can better answer the question. But I think both are very good companies to invest in(when they are cheap).

According to the article ( https://www.gurufocus.com/news/770820/wa...-sanofi-sa ), Buffett's purchase price of BOA shares :

"Added: Bank of America Corporation (NYSE:BAC)
Warren Buffett (Trades, Portfolio) added to his holdings in Bank of America Corporation by 29.20%. His purchase prices were between $27.78 and $31.8, with an estimated average price of $30.46. ....."

Since WB's arguably the best investor(& master calculator of intrinic value) in the world, I wld think any purchase price below his should be good. Personally, I wld buy more closer to NTA $19(coz my cash holdings is getting low) but I think there is an extremely high chance for me to miss the boat. Also, as with "investing with WB", our time horizons must be long term - I am prepared to hold BOA possibly forever(already held for 8 yrs +-).

As for OCBC, I think SG/HK/China economies may all face more headwinds in the near future so I wld wait for the price to go at least lower than the NAV(Before valuation surplus). I am not sure what is the NTA of OCBC. 

But if u intend to invest quite a lot, I wld think OCBC is better as there is a chance to earn 4% share lending income.  

[fanobell]

d.bear good analysis! do you mind create a mini summary at your top post?

W.B purchase price = $27.18 - $31.80
NTA =
NIM =
etc.

So it will be easier for everyone to take a quick glance at the important metrics.

[dreamybear]

Thanks fanobell for your suggestions, but it may not be a good idea as  the metrics change frequently(quarterly or daily for share price based data like P/E, P/B). There are also many websites already providing the data like the marketwatch link u suggested or e.g. https://www.reuters.com/companies/BAC.N/key-metrics.  Besides, local SGX stocks are more popular with buddies(myself included) in this forum.

[jolinchew]

I would like to know the effect of coming fed fund rate cut (september), as fed fund rate decreases, does lending rate and deposit rate decrease at the same speed? any change on NIM for bank of america, thanks

[dreamybear]

Queuing to sell for past few days(preferred selling price $27 - $28 range) to no avail. With the master's latest endorsement, I will continue to hold as it's probably a blessing in disguise.     

Based on the current price, the P/E is abt 11, P/B slightly more than 1. Given that the US/global economy may not have seen the worst of covid economic impact, it is interesting how WB evaluate BAC in the current circumstances. If it were me, I am anticipating and waiting for further share price correction, rather than buying during this time. Then again, I am galaxies away from his standard.  

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Warren Buffett's Latest Stock Buy Adds To Bet On Main Street Economic Recovery
04:41 PM ET 07/28/2020

".....Berkshire Hathaway (BRKB) bought roughly 16 million more shares of Bank of America July 23-27, at an average price of just over 24, SEC filings show. That adds to 34 million shares picked up July 20-22, taking Berkshire's total stake to 998.1 million shares........

Bank of America was already the No. 1 stock in Berkshire's stock investment portfolio by number of shares at the end of March. It also was second largest by dollar value after Apple (AAPL)....."

https://www.investors.com/news/warren-bu...stock-buy/

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http://investor.bankofamerica.com/static...d866ed2a96              [2Q2020 Earnings]

Why the U.S. economy’s recovery from the coronavirus is likely to be long and painful
https://www.marketwatch.com/story/why-th...2020-04-22