Comments on: Warren Buffett’s magical fairy dust lands on BofA

By: bidrec

bidrec — Sun, 28 Aug 2011 14:14:04 +0000

Remember when Charles Schwab sold his company to Bank of America for ten percent ownership? He was on the board of directors but when they called BOD meetings they would not tell him. It was a different era.

He ended up buying back his company out of disgust.

By: TFF

TFF — Fri, 26 Aug 2011 13:05:41 +0000

From a fundamentals perspective, I don’t see how this deal significantly improves the situation for BoA. They are paying a rich premium for that capital infusion (more than their peers need to pay), which puts them at a competitive disadvantage.

The Buffett fairy dust effect on BAC stock will wear off after a while, perhaps in less than a day. Warren Buffett is betting that BoA will survive, and helping to ensure that they do so, but all signs point towards some seriously bad news coming down the road.

By: David239

David239 — Fri, 26 Aug 2011 03:03:51 +0000

One of your fellow bloggers just argued that BoA should be nationalized (well, GM-ified, with top management replaced) on the grounds that (among many other things) it is in serious do-do over robo-signed mortgages. Does this $5 billion change that argument?

By: y2kurtus

y2kurtus — Fri, 26 Aug 2011 01:30:40 +0000

What would be nice would be to see BofA take the 5 billion at 6% and use it to buy back their highest coupon bonds which are trading at like 90 cents on the dollar. That would boost their earnings in the next quarter which they could probably use!

By: klhoughton

klhoughton — Fri, 26 Aug 2011 00:24:37 +0000

“Room 714 She’ll be waiting…”

Just in case anyone was wondering about where the strike price came from…

By: Faraday

Faraday — Thu, 25 Aug 2011 22:13:40 +0000

Eigenstate? Awesome.

By: minderbender

minderbender — Thu, 25 Aug 2011 17:34:19 +0000

I think you mean igonstate.

By: jmh530

jmh530 — Thu, 25 Aug 2011 16:15:45 +0000

But didn’t Goldman buy out Buffett’s stake back in March when the stock was around $160?