According to Rochdale Securities analyst Dick Bove, the deal by Bank of America (NYSE:BAC) CEO Brian Moynihan allowing Warren Buffett's Berkshire Hathaway (NYSE:BRK-A) to invest $5 billion in the bank, harms both Moynihan and the giant bank.
Bove said, "He's gone back on his word. That is, I think, a big negative given his credibility is under such question. Now why did he do it? He did it because he needed to buy credibility." Its "a terrible, terrible deal," concludes Bove, "There's no way the bank can make money."
Essentially Bank of America is buying Buffett's endorsement for approximately $300 million annually. That doesn't include the warrants to acquire 700 million shares of Bank of America stock at just over $7.14 a share. Buffett could cash them in now for a nice profit, as the bank is trading at $7.69 a share, as of 12:38 PM EDT.
In response to Bove's criticism, Bank of America's Moynihan released a statement saying this:
"I remain confident that we have the capital and liquidity we need to run our business. At the same time, I also recognize that a large investment by Warren Buffett is a strong endorsement in our vision and our strategy."
My question is why didn't Moynihan just say right out that the bank has the capital and liquidity, not that he was "confident" they did?
Showing posts with label Dick Bove. Show all posts
Showing posts with label Dick Bove. Show all posts
Thursday, August 25, 2011
Wednesday, August 24, 2011
Bove Likes BofA (BAC) (BK) (PNC) (COF) (STT) (STI) (NTRS) (SNV) (FBC) in Banking Sector
What's up with Rochdale Securities analyst Dick Bove?
Approximately a month after recommending investors sell the banking sector he had turned around and recommended a basket of banks to buy, including Bank of America (NYSE:BAC), Bank of New York Mellon (NYSE:BK), Flagstar Bancorp (NYSE:FBC), PNC Financial (NYSE:PNC), Capital One Financial (NYSE:COF), State Street(NYSE:STT), SunTrust(NYSE:STI), Northern Trust (NYSE:NTRS) and Synovus (NYSE:SNV).
Bove's thinking in his turnaround for some banks in the sector is a number of banks are selling below their franchise and liquidation values.
"At this moment liquidity and values are more compelling than the next disaster," Bove wrote in a note to clients. The banks listed above are those identified by Bove as such.
Bove's operating definition of cash liquidation value is cash holdings (cash plus net Federal Reserve funds and repurchase agreements) in excess of tangible common equity.
Still, Bove confirms the issues banks face are still in place, and in that regard nothing has changed. They've apparently fallen quicker than Bove had anticipated.
Either that, or someone got hold of Bove and told him not to be so negative on the sector.
Approximately a month after recommending investors sell the banking sector he had turned around and recommended a basket of banks to buy, including Bank of America (NYSE:BAC), Bank of New York Mellon (NYSE:BK), Flagstar Bancorp (NYSE:FBC), PNC Financial (NYSE:PNC), Capital One Financial (NYSE:COF), State Street(NYSE:STT), SunTrust(NYSE:STI), Northern Trust (NYSE:NTRS) and Synovus (NYSE:SNV).
Bove's thinking in his turnaround for some banks in the sector is a number of banks are selling below their franchise and liquidation values.
"At this moment liquidity and values are more compelling than the next disaster," Bove wrote in a note to clients. The banks listed above are those identified by Bove as such.
Bove's operating definition of cash liquidation value is cash holdings (cash plus net Federal Reserve funds and repurchase agreements) in excess of tangible common equity.
Still, Bove confirms the issues banks face are still in place, and in that regard nothing has changed. They've apparently fallen quicker than Bove had anticipated.
Either that, or someone got hold of Bove and told him not to be so negative on the sector.
Tuesday, April 5, 2011
Wells Fargo (WFC), CDOs and (C) (DB) (JPM) (MS) (UBS)
In what is an extremely dubious case that reportedly will be brought against Wells Fargo (NYSE:WFC) concerning CDOs, which would have powerful negative repercussions on shareholders in Citigroup (NYSE:C), Deutsche Bank (NYSE:DB), J.P. Morgan Chase (NYSE:JPM), Morgan Stanley (NYSE:MS) and UBS (NYSE:UBS), the Securities and Exchange Commission is reportedly about to file civil charges against Wells Fargo for allegedly overcharging investors for mortgage bonds.
Rochale Securities analyst Dick Bove responded to the probability, saying, "The bulk of the shareholders never owned Wachovia stock whatsoever. The first question that came to my mind; who really should be at risk for legal penalties?"
At issue is whether or not Wells Fargo didn't reflect the diminishing value of the underlying loans when it sold collateralized debt obligations to investors. The SEC doesn't think it did, or rather Wachovia did, at the time.
Concerning the repercussions for other banks and their shareholders, Bove concluded, "Those CDOs were sold in a market environment. If the precedent is established that an issuer has to pay up if the value of securities you sell in a market auction goes down in value, then you have a real problem for bank shareholders."
Talk about regulation and federal agencies gone awry.
Rochale Securities analyst Dick Bove responded to the probability, saying, "The bulk of the shareholders never owned Wachovia stock whatsoever. The first question that came to my mind; who really should be at risk for legal penalties?"
At issue is whether or not Wells Fargo didn't reflect the diminishing value of the underlying loans when it sold collateralized debt obligations to investors. The SEC doesn't think it did, or rather Wachovia did, at the time.
Concerning the repercussions for other banks and their shareholders, Bove concluded, "Those CDOs were sold in a market environment. If the precedent is established that an issuer has to pay up if the value of securities you sell in a market auction goes down in value, then you have a real problem for bank shareholders."
Talk about regulation and federal agencies gone awry.
Thursday, January 20, 2011
Dick Bove Takes Scalpel to Goldman (NYSE:GS) After Devastating Quarter
Rochdale Securities banking analyst Dick Bove slashed his EPS estimates and price target on Goldman (NYSE:GS) after their horrendous last quarter.
Bove wasn't treating Goldman as an outpatient, he did major surgery on the numbers.
He lowered his full year 2011 EPS estimate from $20.32 to $14.70, and for full year 2012 and 2013, he dropped them from $22.87 and $24.94 to $16.55 and $18.66.
For the price target on the company, Bove lowered it from his previous $214 to a relatively anemic $188, a 12 percent cut.
Goldman ended the trading session Wednesday at $166.49, falling $8.19, or 4.69 percent.
Bove wasn't treating Goldman as an outpatient, he did major surgery on the numbers.
He lowered his full year 2011 EPS estimate from $20.32 to $14.70, and for full year 2012 and 2013, he dropped them from $22.87 and $24.94 to $16.55 and $18.66.
For the price target on the company, Bove lowered it from his previous $214 to a relatively anemic $188, a 12 percent cut.
Goldman ended the trading session Wednesday at $166.49, falling $8.19, or 4.69 percent.
Friday, December 17, 2010
PNC (NYSE:PNC) Acquiring Southern Bank Unlikely Says Bove
Rochdale Securities analyst Dick Bove commented on rumors and speculation surrounding the possibility PNC Financial (NYSE:PNC) may be looking for a southern bank to acquire, especially in the state of Florida.
Bove said he doesn't believe that would make any sense for them, citing BankAtlantic (NYSE:BBX) and Regions Financial (NYSE:RF) as two of the acquisition targets named.
Not suggesting they are being courted by PNC, BankAtlantic did say they were always "open to opportunities."
Bove has a "Buy" rating on PNC, which closed Thursday at $58.42, down $0.14, or 0.24 percent. He has a "Neutral" rating on Regions, which closed at $6.13, down $0.18, or 2.85 percent. BankAtlantic closed at $1.28, up $0.32, or 33.33 percent.
Bove said he doesn't believe that would make any sense for them, citing BankAtlantic (NYSE:BBX) and Regions Financial (NYSE:RF) as two of the acquisition targets named.
Not suggesting they are being courted by PNC, BankAtlantic did say they were always "open to opportunities."
Bove has a "Buy" rating on PNC, which closed Thursday at $58.42, down $0.14, or 0.24 percent. He has a "Neutral" rating on Regions, which closed at $6.13, down $0.18, or 2.85 percent. BankAtlantic closed at $1.28, up $0.32, or 33.33 percent.
Wednesday, December 1, 2010
Bank of America (NYSE:BAC) Shouldn't Suffer from Wikileaks Data Says Bove
Commenting on any potential fallout from data released by Wikileaks, Rochdale Securities' Dick Bove said there shouldn't be anything released that hasn't already been heard, and it shouldn't have much impact, if any, on Bank of America (NYSE:BAC).
Julian Assange has even said in general that he has so much data it's hard to release it in a meaningful manner in a way it could be quickly accessed.
That probably affirms Bove's assertion there won't be anything new in the data, although it's sure to stir up a lot of memories, if that's of any consequence.
Bove speculated saying, "It may be that the executive indicated that Bank of America was fully aware of all the write-offs and bonuses at Merrill...," Bove said. "Or, the data may deal with Countrywide's underwriting policies and some type of collusion between the bank and Countrywide related to the issuance of securities. Possibly the "friends of Angelo" may be revealed including Senator Dodd's relationship with the company."
Bank of America closed Tuesday at $10.95, dropping $0.36, or 3.18 percent. Bove maintains a "Buy" rating on the financial giant, and a price target of $19.25.
Julian Assange has even said in general that he has so much data it's hard to release it in a meaningful manner in a way it could be quickly accessed.
That probably affirms Bove's assertion there won't be anything new in the data, although it's sure to stir up a lot of memories, if that's of any consequence.
Bove speculated saying, "It may be that the executive indicated that Bank of America was fully aware of all the write-offs and bonuses at Merrill...," Bove said. "Or, the data may deal with Countrywide's underwriting policies and some type of collusion between the bank and Countrywide related to the issuance of securities. Possibly the "friends of Angelo" may be revealed including Senator Dodd's relationship with the company."
Bank of America closed Tuesday at $10.95, dropping $0.36, or 3.18 percent. Bove maintains a "Buy" rating on the financial giant, and a price target of $19.25.
Monday, March 22, 2010
Citigroup (NYSE:C) Rises on Analyst Upgrade
Dick Bove Upgrades Citigroup
Rochdale analyst Dick Bove gave Citigroup (NYSE:C) another boost as he upgraded the stock from neutral to buy, citing the government selling its 7.7 billion shares in the company will give it a huge boost.
Citigroup has moved up strongly almost every time mention is made of the government selling its shares and Citigroup removing that weight off of them in order to go forward unhindered.
The target price increase by Bove for Citigroup of $5 a share from $3.75 a share was largely based on this action of the government. Secondarily,
Bove likes how much cash Citigroup now has to offer it some flexibility going forward.
Rochdale analyst Dick Bove gave Citigroup (NYSE:C) another boost as he upgraded the stock from neutral to buy, citing the government selling its 7.7 billion shares in the company will give it a huge boost.
Citigroup has moved up strongly almost every time mention is made of the government selling its shares and Citigroup removing that weight off of them in order to go forward unhindered.
The target price increase by Bove for Citigroup of $5 a share from $3.75 a share was largely based on this action of the government. Secondarily,
Bove likes how much cash Citigroup now has to offer it some flexibility going forward.
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