1. BAC will be $35 within six months. Not a bad return for the patient.
2. BAC has about $18 to $20 billion China investments. Over time these investments will likely outperform virtually all other country stocks. $40 billion disposable assets in Asia, Latin America / such as SAMBA, Makati and a multitude other outside USA.
3. During the economic slowdown, Americans are, for the first time in decades, saving more. Most of this savings is going into checking and savings accounts. BAC has accounts with over 50 percent of Americans, thus odds favor BAC deposits rising. This is good. The input feed that drives banks is deposits = money.
4. Deposits are reaping about 1 to 2 percent in most accounts. Banks can borrow at just over 1 percent.
5. Banks products are those that make about 400 percent profit (including all costs) on that 1 percent money by lending it out at 5 percent or better. (Buffet referred to this today using copper as an example.)
6. New loans require 20 percent or more down payment on mortgates. This means that, combined with making about 400% profit on these new mortgages, BAC has a large cushion. Additionally, due to the demand for credit VS supply, BAC is lending to the "cream of the crop" = least risk borrowers. This applies to both business and consumers.
(A few loans are being obtained by those with a very high FICO score with as little as 3% down but these are now extremely rare).
7. BAC, previously a very conservative, low risk lender with focus on deposit money as source of funds has now moved more heavily into mortgages via CFC and investment banking via MER. BAC is implementing the same BAC conservative policies and procedures on these business units = higher margins, lower risk, huge potential as we move out of this recession. BAC could very well emerge as the most important financial institution in USA. One thing about BAC that GS does not have is its huge deposits business. In fact, it is so large, until last year, BAC had to limit its growth in deposits to adhere to the 10 percent rule.
8. With 50 percent of Americans having an account with BAC it is highly unlikely politicians are going to come even close to nationalizing this bank. In fact, the politicians who want to be re-elected will do whatever it takes to support this company for this reason alone. 535 Senators and Congresspersons are the same. No chance BAC will be nationalized when over 50 percent of American voters have accounts with this company. Actually, Lehman Brothers, Bear Stearns and Washington Mutual were virtual unknowns to most Americans. BAC has a "presence" in in virtually every locality in USA and "all politics is local".
9. IMHO being a wise investor, it might be worthy of consideration to buy and hold this stock for the next five to ten years to see this emerge. One must consider all factors and I think the factor most important is survival. BAC is a survivor.
10. BAC operations center in Makati in the Philippines has been its hub in fast growth Asia for about 30 years. BAC has more experience in Asia than virtually any other USA business entity. Its diverse business transactions and holdings in Asia and Latin America are sufficiently pristine that others can only hope to emulate that presence.
11. Bank of America Corp. now ranks as the largest U.S. bank ranked by assets, according to a study by SNL Financial. "Charlotte, N.C.-based BofA had total assets of almost $2.5 trillion as of Dec. 31."
12. "Buy into fear, sell into cheer." "Buy only when others are fearful." This crisis will end and the proof of that will be AFTER recovery. The Feds are going to make it happen. 21 insiders purchased 1,134,500 shares.
I would like to point out that BAC was very conservative. They did ALMOST NO SUBPRIME LOANS, ALMOST NO RISKY LOANS, THEY HARDLY HAVE ANY DEFAULTS!!! Its a shame they are being lumped in with the other banks. Ken Lewis steered this ship clear of ALL RISK! Give the man a raise already!
That's what they said in 1989 during the S&L crisis. All doom and gloom.
BAC subsequently rose several thousand percentage points from $6/share at that time. Including a multitude of stock splits since 1989, BAC is still up several hundred percent.
With BAC + CFC + MER combined and BAC 45 years building business enterprises in Asia under its belt, the new combination will make this company a "blockbuster earnings machine" (Bert Ely, the number one banking consultant last month).