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  • inlet_boater inlet_boater Nov 6, 2011 11:41 AM Flag

    Who Do You Trust?

    Norm claims I said BBT stock would tumble. Here is what I really said: "My point is - BBT can not be expected to perform well during a recession". In other words history teaches us financials (including BBT) will probably under perform during a recession.

    I have been saying for months you needed to use caution regarding investments in BBT. If you bought above $25 last spring how is your investment working out for you? I have not bashed management or the company, but merely expressed my concern in regards to performance in the prevailing economic environment.

    Norm has over estimated the recovery in BBT earnings for months. Go back thru past mesasages and check it out for yourself.

    So who do you trust? A respected organization like ECRI? Someone whose caution on this company has been proven right? Or, someone who has consistently been too positive on performance (talked their investment instead of reality)?

    It is you $s - you decide. I am avoiding financials so it is no sking off my back. If you are a trader and time it properly you can make $s on BBT (I would suggest the current range is $21 or a little less to $24 or a little more). I have a friend who has held BBT and made $s selling calls and/or shorting against the box whenever it got above $23. But be careful this could change.

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    • Not that it matters anymore Inlet but bbt has taken around $400 million of additional marks on their reos September YTD. That's equals around $.17 cents per qtr. At 9/30/11, there marks on reos is around 60%. If you anticipated this, you are indeed clairvoyant. I certainly did not.

      Read Clark Starnes 11/3 presentation. Many analysts are going to wake up soon and realize that Credit Suisse's credit cost projection for 2012 is vastly overstated. The provision for bad debt expense in 2012 will drop significantly from around 120 bsp in 2011. Credit Suisse predicts it will be the same next year. Baloney!

      On top of this Clark Starnes said in his presentation that foreclosure expense (primarily additional marks) and other reo expense (professional services, personal etc.) will drop in 2012 by $700 million. This is on top of the provision for bad debt expense reduction which I think will drop by $200 to $300 million vs. 2011. Starnes said that early stage delinquencies at 9/30/11 are at the same level as 2006.

      Awful big numbers which I believe you and the street still do not understand.

      • 2 Replies to normlasky
      • Norm - I am saying you ignore the macro picture at your own risk and that the micro picture only tells you so much.

        The world financial system is a total mess. Europe is near an abyss. Emerging counties are starting to falter. The Fed and the DC politicians are clueless as to what to do. If they referred to Levicitus chapters 25-27 about the Jubilee year (every 50 years --- hmmm the K-Wave) they might catch a clue. Those who ignore history and the wisdom of the ages are doomed to repeat it.

        Until the financial system is flushed - the best case is the economy struggles, but more likely we see a recession starting in 3-6 months. BBT is not an island and cannot escape what happens in the overall economy.

    • Believe BB&T will move with other banks. Slightly better on the downside. Where are the banks going???

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