BAC - Bank of America Corporation
Chart Events
Momentum
Performance Outlook
- Short Term2W - 6W
- Mid Term6W - 9M
- Long Term9M+
| Previous Close | 22.90 |
| Open | 22.93 |
| Bid | 22.67 x 3100 |
| Ask | 22.68 x 29200 |
| Day's Range | 22.46 - 22.95 |
| 52 Week Range | 17.95 - 35.72 |
| Volume | 48,107,033 |
| Avg. Volume | 94,043,267 |
| Market Cap | 196.589B |
| Beta (5Y Monthly) | 1.61 |
| PE Ratio (TTM) | 9.21 |
| EPS (TTM) | 2.46 |
| Earnings Date | Jul 16, 2020 |
| Forward Dividend & Yield | 0.72 (3.14%) |
| Ex-Dividend Date | Jun 04, 2020 |
| 1y Target Est | 27.15 |
Fair Value
Related Research
- Insider Monkey
Bank of America Corporation (BAC): Hedge Funds Sentiment Near All Time Low
Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out […]
- GuruFocus.com
Warren Buffett's Top 5 Holdings as of the 1st Quarter
Berkshire’s top holdings occupy close to 70% of the equity portfolio, with Apple occupying 35% Continue reading...
- GuruFocus.com
Francis Chou Slims 4 Positions in the 1st Quarter
Canadian guru releases portfolio. Sells include major Berkshire bank holding Bank of America. Continue reading...
- GuruFocus.com
Richard Snow Buys Into Tyson and Reduces Dow in 1st Quarter
Guru's top buys and sells Continue reading...
- GuruFocus.com
Caxton Associates Exits Aptiv, Bank Of America
Firm's largest sales of the 1st quarter Continue reading...
- Reuters
MOVES-Bank of America insurance investment banking chief exits -sources
Thomas Solomon has decided to step down as head of insurance investment banking in the Americas at Bank of America Corp, people familiar with the matter said on Wednesday. Bank of America declined to comment.
- Bloomberg
Bank of America Says Pandemic Bond Proves ESG a ‘Bear Market Necessity’
(Bloomberg) -- Bank of America Corp. was the first on Wall Street to issue a pandemic bond. It hopes to set a trend.The bank priced a $1 billion bond offering May 14 to fund projects addressing social issues related to Covid-19, the first sale from a U.S. financial institution that explicitly links all proceeds to tackling the virus. Response from investors has been enthusiastic, said Karen Fang, the bank’s global head of sustainable finance.“ESG is not just a bull market luxury,” Fang said in an interview, citing the bank’s own research. “ESG is a bear market necessity.”Corporations, governments, multilateral organizations and development banks have raised a record $108.4 billion of debt this year to alleviate the impacts of the deadly virus, according to data compiled by Bloomberg. Chinese companies have sold most of the so-called pandemic bonds, raising about $48.3 billion.Bank of America’s bond came about in March as the virus spread through the U.S. and much of the country began to shut down. Senior executives, including Vice Chairman Anne Finucane and Chief Operating Officer Tom Montag, were involved in internal discussions on the bond, which took weeks to construct.The pricing for the fixed-to-floating rate notes earmarked for lending to the health care industry was aggressive. The deal priced tighter than the lender’s regular benchmarks, Fang said, and the bonds will yield 1.30 percentage points above Treasuries.Strong PipelineBank of America has raised more than $8 billion through environmentally and socially themed bonds and has a “very strong” pipeline, Fang said. Other virus-related debt includes Pfizer Inc.’s $1.25 billion sustainability bond and USAA Capital Corp.’s $800 million offering to fund projects that may include Covid-19 relief.While the deal makes sense for a lender like Bank of America with a large presence in green and social bond markets, it might not open the floodgates for similar transactions, according to CreditSights analysts.“We’re a little doubtful we’re going to see an imminent increase in ESG-type offerings from the banks,” CreditSights’ chief of ESG and sustainability Josh Olazabal and the head of U.S. financials Jesse Rosenthal, wrote in an email. “It will really come down to the issuer’s internal goals around ESG products and investors.”Still, ESG-focused investors like Nuveen and Eaton Vance Management anticipate that more commercial banks will follow suit. Other lenders that have “the focus and expertise” to originate such loans will seek to replicate Bank of America’s deal, according to Vishal Khanduja, head of investment-grade portfolio management at Eaton Vance.“We expect other sponsors to continue to innovate the structure and provide investable impact opportunities at scale,” Khanduja said Tuesday in an interview.Nuveen, which oversees about $1 trillion in assets, has already had discussions with underwriters from two banks because there is interest in similar deals, according to Stephen Liberatore, head of the responsible fixed-income strategy team.“This was the leader,” Liberatore said of Bank of America’s bond. “Now that others are seeing what’s expected and how it can be done, there’s a template for other banks.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Barrons.com
Loud Brands Are Out and ‘Understated’ Is In as No One Wants to Show Off In a Pandemic, Bank of America Finds
A pandemic is no time to show off. That is the conclusion of a Bank of America examination into the luxury-goods sector, which finds “understated” items are in and more gaudy items are out.
- GuruFocus.com
Buffett's Sale of Goldman Sachs Is Not Bad News for Bank Stocks
Trimming the stake in the bank by 84% might be a strategic asset allocation decision Continue reading...
- Bloomberg
Jamie Dimon Can’t Hold Back His Competitive Side
(Bloomberg Opinion) -- At first glance, the latest memo from JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon reads like nothing short of a kumbaya moment from the billionaire who leads the biggest U.S. bank.Ahead of JPMorgan’s annual shareholder meeting, Dimon highlighted a $250 million global business and philanthropic commitment that will help “vulnerable and underrepresented communities”; a collaboration with Marriott International Inc. and others that will provide up to $10 million of hotel stays for health-care workers addressing Covid-19 in the U.S.; a lifeline to “hundreds of thousands of homeowners” to delay mortgage payments for three months; and almost $1 billion in new loans for small-business clients. The list goes on.The numbers that stuck out to me, however: JPMorgan has helped investment-grade companies raise $664 billion and an additional $104 billion in high yield so far this year. It’s not entirely clear what “helped” means, but the bank’s earnings presentation last month said it had “helped clients raise $380B+ through the investment-grade debt market in 1Q20,” implying that whatever the criteria, it has done an additional $284 billion of it in the second quarter with six weeks to go.April was a record month for the broad high-grade bond market, with some $300 billion of deals pricing, and May has shown little signs of slowing down with about $168 billion in the books. High-yield volume rebounded in April to $37.3 billion, the most in a month this year, and so far an additional $23.8 billion has priced in May. As Federal Reserve Chair Jerome Powell said in his “60 Minutes” interview about the central bank’s corporate credit facilities, “we haven't actually had to lend anyone any money because now the markets are working because the markets know that we’re there.”Functioning bond markets might be enough for Powell, but for Dimon and his counterparts like Bank of America Corp.’s Brian Moynihan, it’s still market share that matters. In a subtle way, Dimon might have been letting his competitive side show by lauding the bank’s underwriting figures so far in 2020.According to Bloomberg’s league tables, JPMorgan finished No. 1 in both investment-grade and high-yield underwriting in 2019. As it stands now, JPMorgan is on track to reclaim its titles in 2020. A back-to-back finish atop the rankings hasn’t happened for the bank since 2013, which capped off a four-year string of first-place finishes after the last recession.The league tables, which use a stricter criteria on which deals qualify for a given bank, show just how slim the margins can be at the top. For instance, Bank of America snatched first place in investment-grade underwriting in 2018, the only time in the past decade that JPMorgan didn’t hold the top spot. The two banks underwrote $141 billion and $139.9 billion, respectively. That same year, JPMorgan edged out Credit Suisse in high yield, $17 billion to $16.1 billion. So far in 2020, JPMorgan has increased its investment-grade market share year-over-year by 3.28 percentage points, more than any other bank. Its closest competitor, Bank of America, has increased its share by 2.21 percentage points. In high yield, Bank of America has picked up the most market share and has done the most deals, though it still trails JPMorgan in overall volume, according to the Bloomberg league tables.All this is to say, fees from debt underwriting will play an important role in the second-quarter earnings results of the biggest U.S. banks. With Treasury yields near record lows, net interest income will inevitably come under pressure. Market volatility is nowhere near the levels seen in March, as measured by the VIX Index, which means trading revenue won’t be the lifesaver it was in the previous quarter. And provisions for credit losses will still eat into profitability. One of the few constants so far in the second quarter has been the flood of new bond deals hitting the market.JPMorgan and other big banks are clearly trying to tone down their competitive side during this pandemic to avoid appearing greedy during a time of fear. As I’ve said before, bankers are positioning themselves to be the good guys in this crisis, given that they’re well capitalized and have the capacity to be there for clients, unlike in 2008.Dimon’s memo, in that sense, effectively summarizes the mood. “Let’s leverage this moment to think creatively about how we can mobilize to address so many issues that inhibit the creation of an inclusive economy and fray our social fabric,” he wrote. “By doing the right thing during times of crisis, we can emerge stronger and more cohesive in its wake.” At the same time, he has an obligation to have JPMorgan emerge stronger from this economic downturn as well. Part of that is keeping a tight grip on its debt-underwriting throne.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Bank of America CEO Says Sees Recovery at End of 2021
(Bloomberg) -- Bank of America Corp. Chief Executive Officer Brian Moynihan said consumer spending is picking up in some areas of the U.S. as government relief programs cushion the credit impact of the coronavirus pandemic.“These measures taken by Congress, by the administration and by the Fed have worked to offset the unfortunate aspects of very high unemployment -- and so far, you’re not seeing delinquencies and things rise,” Moynihan said in a Bloomberg Television interview Tuesday. “We expect to see charge-offs coming later on, as this thing goes on, but the reality is right now you’re not seeing the type of credit damage that you’d expect to see with this amount of downdraft in activity.” Consumer spending is down 2% to 4% this month from a year earlier, and is picking up faster in areas of the country that are reopening, he said. In China, it surged when stay-at-home orders were lifted, but then declined.“That’s what we have to watch in the United States -- there’ll be a burst of activity in some of these places” as people emerge from their homes, but the question is whether they’ll sustain spending on larger purchases such as cars or homes, Moynihan said. While the economy won’t recover to its pre-pandemic size until the end of next year, there are likely to be incremental gains until then, he said.Here are other takeaways from the interview:The lender has granted about 1.5 million payment deferrals. About 35% to 40% of people who asked to delay their credit-card bills ended up paying them anyway, he said.Bank of America has processed 320,000 small-business relief loans with an average balance of $80,000. Of those, 98% are for companies with fewer than 100 employees.High-grade debt issuance will probably have another record month in May after Fed programs stabilized the market, he said. High-yield debt will have a strong month, while convertible bond and equity deals are starting to be done. “The stabilization and the fact those facilities aren’t all used, it’s actually a good thing because that means the market’s doing what they’re doing and providing capital,” Moynihan said.In terms of returning employees to bank offices, “we’ll go back slowly,” he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Thomson Reuters StreetEvents
Edited Transcript of BAC earnings conference call or presentation 15-Apr-20 12:30pm GMT
Q1 2020 Bank of America Corp Earnings Call
- Barrons.com
Powell’s Comments Spark Bounce in Bank Stocks. But This Rally May Not Go Far.
But KBW finds that in the three months following 12 market downturns since 1997, bank stocks’ performances vary widely.
- Kiplinger
Warren Buffett Stocks Ranked: The Berkshire Hathaway Portfolio
The Berkshire Hathaway (BRK.B) equity portfolio still holds many of the storied blue chips that most investors associated with portfolio. American Express (AXP). Coca-Cola (KO). More recently, Apple (AAPL) and Amazon.com (AMZN).But a deeper dive into Warren Buffett's stocks reveals a more complicated picture, not to mention a portfolio that has undergone quite a few significant changes of late.Most notably, Berkshire exited its investments in each of the four major U.S. airlines. The coronavirus pandemic, which put an end to the bull market, also decimated the airline industry. Buffett said as recently as March that he "won't be selling airline stocks," but in early May, Berkshire turned tail, disclosing in filings that it closed out its stakes in United Airlines (UAL), American Airlines (AAL), Delta Air Lines (DAL) and Southwest Airlines (LUV). And Buffett has done plenty more selling on top of that.Berkshire Hathaway held positions in 43 separate companies (across 46 different stocks thanks to firms with multiple share classes) as of the end of the first quarter, down significantly from 49 in the fourth quarter. That's according to its most recent 13F regulatory filing, submitted to the Securities and Exchange Commission on May 15, as well as additional filings in May and April. But the portfolio of "Buffett stocks" isn't as diversified as the number might suggest. Some are new positions so small they equate to a pinky toe in the water. Other holdings are immaterial leftovers from earlier bets that the Oracle of Omaha has mostly exited, just not completely.Still, anyone who wants to know which stocks legendary investor Warren Buffett feels are worth his time and attention need look no further than the Berkshire Hathaway equity portfolio. Just remember: A few of these Buffett stocks were actually picked by portfolio managers Todd Combs and Ted Weschler, who many believe are the top candidates to succeed "Uncle Warren" whenever he decides to step down.Read on as we examine each and every holding to give investors a better understanding of the entire Berkshire Hathaway portfolio. SEE ALSO: 50 Top Stock Picks That Billionaires Love
- Kiplinger
The Berkshire Hathaway Portfolio: All 47 Buffett Stocks
When folks think of the Berkshire Hathaway (BRK.B) portfolio and its collection of holdings, most of which were selected by Chairman and CEO Warren Buffett, the companies that most readily come to mind are probably American Express (AXP), Coca-Cola (KO) and, more recently, Apple (AAPL).But a deep dive into Berkshire Hathaway's equity holdings reveals a more complicated picture.Berkshire Hathaway held positions in 47 separate stocks as of June 30, according to the most recent regulatory filing (Aug. 14) with the Securities and Exchange Commission - down from 48 in Q1 of this year, as he dumped USG Corp. (USG). But the portfolio of "Buffett stocks" isn't as diversified as the number might suggest. In some cases, BRK.B holds more than one share class in the same company. Some holdings are so small as to be immaterial leftovers from earlier bets the Oracle of Omaha has yet to completely exit.And perhaps most importantly, Berkshire Hathaway's equity portfolio is actually pretty concentrated. The top six holdings account for almost 70% of the portfolio's total value. The top 10 positions comprise 80%. Banks and airlines, to cite a couple of sectors, carry quite a load in this portfolio. Then there's the fact that several Buffett stocks actually were picked by portfolio managers Todd Combs and Ted Weschler.Here, we examine each and every holding to give investors a better understanding of the entire Berkshire Hathaway portfolio. SEE ALSO: All 30 Dow Stocks Ranked: The Analysts Weigh In
- Kiplinger
All 47 Warren Buffett Stocks Ranked: The Berkshire Hathaway Portfolio
When folks think of the Berkshire Hathaway (BRK.B) portfolio and its collection of holdings, most of which were selected by Chairman and CEO Warren Buffett, the companies that most readily come to mind are probably American Express (AXP), Coca-Cola (KO) and, more recently, Apple (AAPL).But a deep dive into Berkshire Hathaway's equity holdings reveals a more complicated picture.Berkshire Hathaway held positions in 47 separate stocks as of June 30, according to the most recent regulatory filing (Aug. 14) with the Securities and Exchange Commission - down from 48 in the first quarter of this year, as he dumped USG Corp. (USG). But the portfolio of "Buffett stocks" isn't as diversified as the number might suggest. In some cases, BRK.B holds more than one share class in the same company. Some holdings are so small as to be immaterial leftovers from earlier bets the Oracle of Omaha has yet to completely exit.And perhaps most importantly, Berkshire Hathaway's equity portfolio is actually pretty concentrated. The top six holdings account for almost 70% of the portfolio's total value. The top 10 positions comprise 80%. Banks and airlines, to cite a couple of sectors, carry quite a load in this portfolio. Then there's the fact that several Buffett stocks actually were picked by portfolio managers Todd Combs and Ted Weschler.Here, we examine each and every holding to give investors a better understanding of the entire Berkshire Hathaway portfolio. SEE ALSO: 50 Top Stocks That Billionaires Love
- Yahoo Finance
American Express CEO to employees: Plan to work from home for the rest of 2020
American Express CEO Stephen Squeri lays out his vision for how employees will return to work after COVID-19 quarantines lift.
- Kiplinger
Every Warren Buffett Stock Ranked: The Berkshire Hathaway Portfolio
The Berkshire Hathaway (BRK.B) equity portfolio still holds many of the storied blue chips that most investors associated with portfolio. American Express (AXP). Coca-Cola (KO). More recently, Apple (AAPL) and Amazon.com (AMZN).But a deeper dive into Warren Buffett's stocks reveals a more complicated picture, not to mention a portfolio that has undergone quite a few significant changes of late.Most notably, Berkshire exited its investments in each of the four major U.S. airlines. The coronavirus pandemic, which put an end to the bull market, also decimated the airline industry. Buffett said as recently as March that he "won't be selling airline stocks," but in early May, Berkshire turned tail, disclosing in filings that it closed out its stakes in United Airlines (UAL), American Airlines (AAL), Delta Air Lines (DAL) and Southwest Airlines (LUV).Berkshire Hathaway held positions in 43 separate companies (across 46 different stocks thanks to firms with multiple share classes) as of the end of 2019, down significantly from 49 during the fourth quarter. That's according to its most recent 13F regulatory filing, submitted to the Securities and Exchange Commission on May 15, as well as additional filings in May and April. But the portfolio of "Buffett stocks" isn't as diversified as the number might suggest. Some are new positions so small they equate to a pinky toe in the water. Other holdings are immaterial leftovers from earlier bets that the Oracle of Omaha has mostly exited, just not completely.Still, anyone who wants to know which stocks legendary investor Warren Buffett feels are worth his time and attention need look no further than the Berkshire Hathaway equity portfolio. Just remember: A few of these Buffett stocks were actually picked by portfolio managers Todd Combs and Ted Weschler, who many believe are the top candidates to succeed "Uncle Warren" whenever he decides to step down.Read on as we examine each and every holding to give investors a better understanding of the entire Berkshire Hathaway portfolio. SEE ALSO: 50 Top Stock Picks That Billionaires Love
- Reuters
FOCUS-Tech firms sweeten deals for U.S. banks cutting costs in crisis
Top technology services firms are offering payment deferrals, discounts of up to 20% and other sweeteners to some U.S. banks to keep their business as the pandemic forces Wall Street to cut tech budgets, according to executives involved in the talks. Large Wall Street banks are widely expected to reduce overall budgets and discretionary tech spending, which includes areas such as technology consulting services, business analytics, research and design and process management projects.
- Bloomberg
Goldman Sounds the Death Knell for High-Yield Savings Accounts
(Bloomberg Opinion) -- Goodbye, high-yield savings accounts. We hardly knew you.For years, the oxymoronic products were a resounding success for both consumers and financial institutions alike. After getting almost zero interest from big U.S. banks, individuals who parked their excess cash with the likes of Ally Financial Inc., Barclays Plc, Goldman Sachs Group Inc.’s consumer bank, Marcus, or HSBC Holdings Plc’s HSBC Direct were suddenly bringing in a comparatively bountiful 2% or more around this time last year. At that point, the Federal Reserve had raised its short-term interest rate for what would be the final time this cycle in December 2018. The rest is history. First, the Fed felt compelled to lower interest rates three times from July through October to offset the economic impacts from the Trump administration’s trade wars. That, as I noted in an October column, brought prevailing high-yield savings rates dangerously close to the fed funds rate. And yet, in early 2020, Marcus users could still lock in that 2% magic number by opting for a no-penalty certificate of deposit.Then the coronavirus happened. This chart says it all: As it’s plain to see, there’s now a chasm between the fed funds rate and the going rates on some top high-yield savings accounts. The banks have so far moved lower gradually, likely to avoid sticker shock that would cause their customers to take their deposits elsewhere. But even with online banking’s cost-saving advantages over more typical brick-and-mortar institutions, they can’t defy gravity forever. Eventually, rates will have to head closer to the zero lower bound. These savings accounts will still hang around but will hardly seem to fit the moniker of “high yield.”Marcus announced the cut to its savings rate on May 8 with this message:“Effective today, the rate on our Marcus high-yield Online Savings Account has been adjusted down to 1.30% from 1.55% APY. We understand that this isn’t welcome news. During this unprecedented time, please know that the rate on our Marcus Online Savings Account remains highly competitive with an APY that’s still 4X the national average. You can rest assured that we continue our commitment to providing value and helping your money grow.”“For a guaranteed return, consider adding a fixed-rate No-Penalty CD. You’ll earn a high-yield rate with the flexibility to withdraw you balance beginning 7 days after funding. Our 7-month No-Penalty CD currently earns 1.55%.”The marketing is top-notch. First, it’s transparent about being bad news, but then quickly pivots to play up that Marcus still provides comparatively more interest than accounts at Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. The announcement also wastes no time suggesting a no-penalty CD to make up for the lost interest (and, in a benefit to Goldman, create a “stickier” deposit). Marcus is a relatively new venture for Goldman, and it seems reasonable to assume the investment bank will operate it with Chief Executive Officer David Solomon’s “evolutionary path” in mind. Goldman is looking to diversify away from historically volatile trading revenue, much like its Wall Street rival Morgan Stanley. If it means running Marcus with tight margins to keep customers in the fold, so be it.A bank like Ally, on the other hand, may have less flexibility. Heading into this year, it was fresh off of an upgrade by S&P Global Ratings to BBB-, one step above junk. That upswing didn’t last long; it was one of 13 banks that S&P put on negative outlook earlier this month. Analysts said it “could be more sensitive to the economic fallout from the Covid-19 pandemic than the average U.S. bank. We attribute this sensitivity to Ally's sizable concentration in auto lending that may face heightened risk of financial distress in the current economic environment.” Also a risk: “Ultra-low interest rates will weigh on net interest income,” which accounts for more than 70% of Ally’s net revenue.Ally, for its part, also knows how to sell itself. “People don’t want to hear messages that are depressing and that add to their anxiety,” Andrea Brimmer, chief marketing officer at Ally, told the Financial Brand in an article published last week. “They want to hear optimism and they want to hear about purposeful ideas that make them feel like the world is going to kind of get back to normal.” The theme of a campaign promoting its savings options: “Is your money not sure what to do with itself?”Whether Ally, Barclays, Marcus or HSBC are the answer to that is an open question. As it stands, these interest rates barely cover the market-implied inflation rate over the next 10 years. That’s somewhat by design, of course — the Fed cuts rates in part to encourage borrowing and purchases of riskier assets, both of which boost the economy more than parking cash in a high-yield savings account. Stocks, however, seem increasingly detached from the current economic reality. In that sense, Ally’s focus on being unsure might resonate with individual investors.Future interest rates on high-yield savings accounts are on equally shaky ground. While there’s not much in the way of precedent, it’s safe to say they’ll continue to offer more than the rock-bottom rates on money-market funds. Banks will probably do whatever they can to delay going below 1%, a round number that could be the last straw for some individuals. Other than those parameters, though, anything is possible; such is life at the zero lower bound.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Motley Fool
These Are the 5 Best Warren Buffett Stocks You Can Buy Right Now
All you have to do is check out the stocks owned by Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). Warren Buffett either personally picked or approved the purchases of every stock included in Berkshire's portfolio. Here are the five best Warren Buffett stocks that you can buy right now, ranked by market cap in descending order.
- SmarterAnalyst
Buffett’s Berkshire Shaves Off 84% Of Its Goldman Sachs Stake
Billionaire Warren Buffett’s investment conglomerate Berkshire Hathaway (BRK.A) divested 84% of its holding in Goldman Sachs (GS) in the first quarter of the year.Berkshire reduced its ownership in the investment bank to 1.9 million shares from 12 million shares, SEC filings disclosed late on Friday. Shares in Goldman Sachs have plunged about 33% in the first three months of the year as the coronavirus pandemic pulled down financial markets and led to large losses at some of the biggest corporates.In addition, Berkshire shed its holdings in the insurer Travelers Cos (TRV) and oil company Phillips 66 (PSX), the filings showed.The Goldman divestment comes after Buffett earlier this month said that the banking system was not his main worry during the coronavirus pandemic. At the same time, the investment guru announced that Berkshire sold off all of its holdings in the U.S. four largest carriers - American Airlines Group Inc (AAL), United Airlines Holdings Inc (UAL), Delta Air Lines Inc. (DAL), and Southwest Airlines Co. (LUV) - as air travel was shut off in an effort to contain the fast spread of the coronavirus pandemic.“Overall the banking system is not going to be the problem," Buffett said at a May 2 shareholder meeting. “If problems become severe enough in an economy, even strong banks can be under a lot of stress, and we'll be very glad we've got the Federal Reserve system standing behind them.”Against this, five-star analyst James Fotheringham at BMO Capital on Thursday raised Goldman Sachs to Buy from Hold and ramped up the price target to $276 from $205, citing the bank’s strong capital position, relatively small loan book, limited reliance on spread income, and ongoing expense/funding initiatives leave."GS is well-positioned versus most of the moneycenter banks,” Fotheringham wrote in a note to investors. “From a credit perspective, we expect GS can withstand the $8 billion (pre-tax) of expected cumulative credit losses (both on and off balance sheet 1Q20A-1Q22E).”Fotheringham added that GS shares trade at a very steep discount to his estimated pro forma Tangible Common Equity (TCE) in 1Q22E. He forecasts a cumulative net loss rate of 5.6% (1Q20A-1Q22E) for loans on balance sheet, and estimates GS’s pro forma adjusted TCE/TA will remain above 5%, even after maintaining dividend payments and resuming share repurchases in 2021.Overall, the rest of Wall Street analysts are cautiously optimistic about the bank’s stock. The 16 analyst ratings are divided into 9 Buys and 7 Holds which add up to a Moderate Buy consensus. The $212.87 average price target sees shares gaining 24%, if the target should be met in the next 12 months. (See Goldman Sachs stock analysis on TipRanks).Berkshire is still a major holder in other financial firms, including Wells Fargo (WFC), American Express (AXP), Bank of America (BAC), PNC Financial (PNC) and JPMorgan Chase & Co (JPM).Related News: Carl Icahn Initiates Position in Delek US Holdings, Boosts Occidental Petroleum Is Royal Caribbean Cruises (RCL) Stock a Buy? This Analyst Says Yes Nike Warns Virus Store Closures To Have “Material Impact” On Q4 More recent articles from Smarter Analyst: * IBM Is Said To Make Far-Reaching Job Cuts Across The U.S. * Twilio To Power New York’s COVID-19 Contact Tracing Initiative; Shares Jump 7.5% * NBA In Talks With Disney To Reopen Season At Disney World In July * GM Delays Some Production Shifts At 3 U.S. Truck Plants - Report
