With a stock price of 15 or so, either:
1. BBT management is lying through their teeth and they are in much worse shape than they said even as recently as two days ago. (I don't think so.)
2. BBT management is honest but terribly naive and cannot see how bad things really are. (I don't think so.)
3. The whole country is collapsing and BBT will be dragged to ruin along with every other company and institution. (Possible. Especially with Obama/Pelosi/Reid/Schumer running amuck.)
4. BBT is the buy of a lifetime. With a core business that is growing at 10% in the midst of a deep recession. With a 12% dividend that the CEO said two days ago is looking solid if things go as they expect this year. With their competition falling by the wayside. With a return to much higher margins with the collapse of Wall Street competition for business and deposits. With the chance for huge capital gains if/when the economy returns to normalcy. Did I mention a 12% dividend? Heck, if they cut it in half its still 6% while we wait for the economy.
Is it 3 or is it 4? Thats the question in my mind.
Really makes you wonder , if this is such a great deal why aren't all the directors buying? I am fearful that in reading so many reports from bank 10Q reports, most of them expect the economy to continue to deteriorate . BBT is indeed a quality bank but maybe management, at times, may be out of touch with key managers as the unemployment rate continues to climb to perhaps over 10% Lets hope Congress quits giving away our $$$$$
Their dividend yield is not sustainable in the soon to be consolidated banking industry. TARP funded banks will not be allowed to pay 12% dividends. Do you realy think Geitner is going to come up with a plan that has the American Tax payer paying a 12% dividend? BB&T will go the way of BAC soon, and is trading less than WFC because WFC will likely own them soon (after the cut their dividend).
This is just a lot of negativism on the financials, even the ones that are making money. When everyone is slamming financials, why not get on board and sell, or sell short?
This is the tech bubble in reverse. During that bubble everything, even the most worthless company was bid up. Now even banks that are making money and don't have significant exposure to the toxic assets are being sold.
Someone needs to say "irrational negativism."
My heart says take a new stake with BBT, but my head says your probably close to the mark. My biggest fear is that even though BBT's business model was ok, with the crumbing of the big banks its killing the overall business climate in the country and that is knocking a lot of formerly very credit worthy customers out for the count.
My fear is that the next two shoes to drop will be the commercial real estate market then the consumer credit card market. On the commerical side, retailers are going to draw down footage at a historic rate this year IMO. That will leave a lot of mall/strips in a world of hurt as vacancies increase and current lease rates fall hard.
Hope I am wrong. I'm staying on the bank sidelines for now. Best of luck to all those taking a position at this point in time. Minimally one would think that the banks deserve at least a technical bounce after the killing they have been through this week. If you have a long time horizon and BBT can make it through this deep valley, they will produce a great return. It is definately a high risk/high reward bet.