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BB&T Corporation Message Board

  • ayscuew ayscuew Jul 14, 2011 6:21 PM Flag

    Att: nobank & boat.

    Where would you buy?? Believe ole Kelly will meet the street estimate for the second quarter using the reserves. I call it cooking the books.
    Are there any numbers being reported that would trigger a buy by you guys??
    Appreciate your comments.

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    • I can think of no good reason to buy BBT or any other bank.

      With unemployment at 9.2% (and real underemployment, unemployment aproaching 17%) I do not see that as a growth environment for banks.

      There are other areas that make a lot more sense than banks IMO.

      Finally, according to my analysis the market goes sidways the rest of July into early August and then sets a yearly low in September.

      It is a trader's market.

    • Meant 4% annualized of course.

    • As you asked:

      I am only going to buy the yield.
      Loan Loss reserves are a paper drill. Meaningless. Loan growth is not robust. Acquisitions would be nice, but other than Colonial (not a home run), I have not seen anything. Dividend increases will come, but not sure when and in what amount. I look at what my risk should be in owning this bank at its current yield agaisnt what i can get owning either an equivant maturity treasury or even gold. Right now I would certainly expect to get more than 2.5% for owning a stock that is still highly risky. I think you will see an $0.80 or better dividend going forward. (that will be the first incremental step back to $1.50, but that will take years). Given my expectaiton of the dividend, and assuming I want to lock in a yield at 4.5% or better for now, I would not pay over $18. Oddly, my investment criteria for owning the bank is similar to the way the bank views its own credit. It wants a lower price (ie. more collateral) and a higher yield. The bank cannot have that and perhaps neither can it any wonder our entire eceonomy is in a state of limbo?

      • 2 Replies to nobankersplease
      • "Given my expectaiton of the dividend, and assuming I want to lock in a yield at 4.5% or better for now, I would not pay over $18."

        Sell price for a january 2013 put is $1.12 per share at $17.50 strike. There's your trade. I've been doing it on both bbt and usb at these levels.

        The math is simply - bbt normalized earnings are $4.50/5.00 share. Don't think you'll ever get the opportunity to go long bbt at $18 which is close to their current tbv.

        Next week I think you and many other folks will be surprised that their delinquencies are quickly approaching a normalized level. Plus, their loss severity rates will start to approach zilch on 09,10,11 defaults so their losses will be very small.

      • Thank you nobank. Think you have it right. You do know that the old dividend (2008) was $1.88. Your forecast of $1.50 ain't no big deal. Thanks anyway. Let me know when you buy the banks.
        Thanks again.

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