Bank of America Set to Rebound (NYSE: BAC)

NEW YORK - Bank of America's stock looks to rebound as it has been badly bruised over the last week since it was reported that they will not be a dividend raiser. Major banks who are raising dividends also sold off, later in the week as investors applied the new adage of sell the rumor sell the news. Banks stocks have stagnated over the last several months as investors continue to fear them despite recent relief from the Fed over the ability to raise dividends and buy-back stock.

Theoretically a dividend increase should not play into the value of the stock but investors of BAC are wondering why their company never receives any good news.

To read the premium BAC report click here.

Fed Says No To Largest Bank (NYSE: BAC), (NYSE: JPM), (NYSE: WFC), (NYSE: C)

The US government has declined approval for Bank of America (NYSE: BAC), America's largest bank by assets to increase their dividend in the second half of the year. Other US Banks including JP Morgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC) and Citigroup (NYSE: C) have already raised their dividend. Citigroup, which was seen as the most troubled of the largest banks was able to get a 1-cent per share dividend and approve a reverse stock split. The fed is likely requiring BAC to have a higher capital standard as it is the largest bank in the country. Investors may have to wait slightly longer for the unfavored bank to increase its once bountiful dividend. BAC has been paying 1-cent par share since 2009. To read the premium BAC report click here.

Bank of America, Pass or Fail? (NYSE: BAC)

NEW YORK - Bank of America wanted to increase their dividend in the second half of the year but the U.S. government said no. JP Morgan Chase , Wells Fargo and Citigroup have already raised their dividend granted Citigroup's is to a paltry 1 cent a share.

BAC's dividend has been stuck at a penny since 2009. The fed is likely requiring a higher capital standard for BAC since it is the largest bank in the country, or it is worried about BAC's mortgage put-back fiasco.

No Longer a Distant Dream (NYSE: PNC) (NYSE: JPM) (NYSE: WFC)

NEW YORK - Banks are back!, as the U.S. Government has announced the results of the "stress test" for 19 most economically important U.S. financial institutions.

[To see the full PNC report click here

To see the full PNC report PDF version click here]

PNC Financial, received a clean bill of health and plans to raise its dividend in the second quarter of 2011. While, PNC has the second strongest capital ratio behind Comerica Bank, due to weird Basel III rules, the company has less capital under Basel than it reports. Basel only counts 10% of a banks investment in another bank's stock as capital. Therefore only $2.5 billion of the PNC's $5 billion (on the books) investment in BlackRock counts towards capital. This treatment by Basel will likely be hotly contested by banks going forward. Despite this PNC still has one of the strongest Basel III capital ratios.

Wells Fargo announced a dividend raise to 12 cents giving the company a 1.5% yield. There has been speculation surrounding the company since its CFO Howard Atkins left in February.

J.P. Morgan announced that they have raised their dividend to 25 cents a share, giving the company a 2.1% yield.

U.S. Bancorp announced that they have increased their dividend to 12.5 cents giving the company a 1.85% yield.

BB&T said that they raised their dividend by 1 cent. BB&T was one of the few companies to pay a dividend above 10 cents during the financial crisis. However the company has struggled as of late and the company was only able to raise their dividend by a token 1 cent.

Bank of New York Mellon, which has the highest of quality loans among all banks, indicated today that it will raise its dividend but it did not say by how much.

M&T Bank is not expected to increase its dividend due to its already large payout as a percent of earnings. M&T was the only bank to not decrease its dividend since 2007. Though, Hudson City Bancorp has also accomplished this feat, it is expected that they will decrease their dividend this year, as the bank has been hit by problems.

Goldman Sachs and Morgan Stanley have not announced anything yet regarding their dividend. It is speculated that BAC and Citigroup will not raise their dividends until the second half of 2011.

Suntrust Banks announced it will issue $1 billion in stock and it plans to use the proceeds to buy back TARP. A dividend raise is not likely imminent for the company.

KeyCorp has still not repaid TARP, meaning dividends are likely not to occur until the second half of 2011.

Fifth Third Bancorp has recently finalized its repurchase of TARP shares but it has not yet announced a dividend raise. FITB has one of the strongest capital ratios among major banks, as it has diluted its shareholder base significantly from capital raises during the last two years.

Regions Financial looks to be the reject of the group as its stock moves lower. The banks has the worst capital ratios, and loan quality among major banks. Shareholders have bid the stock higher in recent months in hopes that another bank will buy the troubled company.

Buffett's Coca Cola Wells 50% full (NYSE: KO) (NYSE: WFC)

NEW YORK - Warren Buffett the legendary investor and CEO of Berkshire Hathaway announced in his regulatory filing today that he has sold all of his: Bank of America, Lowes, Becton Dickinson, Comcast, Lowes and Nalco Holdings. The entire portfolio is now down to 25 stocks with Coca Cola and Wells Fargo making up approximately 50%. Other notable stocks in the portfolio include U.S. Bancorp, American Express and Kraft which all together make up close to 70% of Buffett's stock portfolio.

Most of the sales of Berkshire stock are attributed to the retiring of Lou Simpson, who led Geico for thirty 30 years. The money will likely be given to Todd Combs the new employee of Berkshire and former hedge fund manager who will handle $3 billion in investments.

The sale of Bank of America stock seemed to be separate from the Lou Simpson portfolio. Buffett never liked BAC stock and has been selling it during the recession. Buffett last sold BAC in October 2008 when it traded around $15. Perhaps $15 is the threshold around what he believes BAC is worth.

Buffett says when it comes to banks, that " because leverage of 20:1 magnifies the effects of managerial strengths and weaknesses, we have no interest in purchasing shares of a poorly-managed bank at a 'cheap price.' Instead, our only interest is in buying into well-managed banks at fair prices"

It could be interpreted that Buffett is saying that while BAC is undervalued he would rather be buying Wells Fargo which is fairly valued. This is of course would be a paradox, since if a bank is fairly valued and another one is cheap, the cheaper one would outperform it. What Buffett is actually saying is that stocks like Citigroup and BAC which trade around book are not as cheap as one might think. And that the old metrics that his mentor Benjamin Graham taught him in finding cheap stocks are not always applicable.

Buy U.S. Financials? (NYSE: BAC) (NYSE: WFC)

Allan Edwards my friend and the CEO of The Markets Are Open said to buy U.S. Financials on November 24, 2010 and his fashion he didn't recommend a particular institution. The article from the day is shown below as others like popular television host Cramer at the same time was un-recommending the banks on his show Mad Money on November 23, 2010. Despite this he claims to have recommended the banks all along. This is the trouble with people having dual sided opinions where they recommend both sides. There was really only one opinion. People like to buy stocks that have more value than other stocks. Meaning the banks only had one way to go. Edwards said that people make substandard returns because they try to make money every day. He said "others try to maximize daily returns, I just try to make money." While Cramer and others were so worried about what would happen tomorrow they ignored the actual economic value of the companies.

"Buy U.S. Financials I Am

U.S. FINANCIALS face large headline risk there is the foreclosure scandal, worries of government intervention and sour loans.

But ... I’ve been buying American Financial stocks. I now have 80% of my wealth in U.S financial institutions. This is based on my investment philosophy of being cynical when others are optimistic and being optimistic when others are cynical. And keeping an open mind when others have closed theirs. This is when the strategic opportunities are best seen. People are selling U.S. Financials at impossible levels on fear. Of course these banks have had rough times but the tide is turning and all the major U.S. financial institutions are beginning to show an exceptional amount of profit.

U.S. Financials are the most attractive in the world. Fannie Mae and Freddie Mac have done their job in keeping liquidity in the financial market and the government should also be given praise for this. Franklin Roosevelt created these institutions during the Great Depression to add liquidity to the financial markets. Because of this the large U.S. financial institutions are among the safest in the world. The banks have more equity then they have ever had and full liquidity will eventually return to the markets. Despite this U.S. Banks are getting large discounts to European, and Asian Banks and the market.

The past congressional election dictated that there is unlikely to be oppressive financial regulation. Nor do they deserve it, they have all paid back TARP and the government has made a large amount of profit from the banks. I have never seen such a distortion in the risk reward ratio. I see U.S. Banks everyday which I deem to have no risk that sell as if they have a 50% risk of bankruptcy. Now is the time to buy U.S. Financials."

Wells Fargo #1 For The First Time (NYSE: WFC) (NYSE: BAC)(NYSE:JPM)

NEW YORK - Wells Fargo the San Francisco area bank today became the largest bank in the United States by market capitalization. The bank now has a market capitalization of approximately $800 million more than J.P. Morgan which is the second largest bank by capitalization.

While still not at the record price high it reached in September 2008 just before the crash of $40 a share the shares have had impressive performance. The company has managed to keep shareholder value during the biggest financial crisis since the great depression.

Bank of America and Citigroup have greatly dropped on the list as the two banks struggle with bad loans and capital problems.

Banks rise on BAC's Bad Bank (NYSE: BAC) (NYSE: USB)

NEW YORK - Bank of America the nations largest lender by assets rose nearly 2% as the bank announced that its home loan and insurance division will be split into two. The good bank will be continued to be led by its former boss Barbara Desoer and the new bank will be led by Terry Laughlin. Other premiere banks such as U.S. Bancorp and PNC Financial are rallying on the news. As investors are moving their assets into better quality institutions and banks in general.

Click to see the full BAC , PNC, and USB Reports

How The Top 4 Have Done (NYSE: BAC) ,(NYSE: WFC), (NYSE: C), (NYSE: JPM)

NEW YORK - The top 10 major U.S. financial institutions have all reported in the last two weeks and little correlation can be seen between its stock movement from on the day it reported to how its shares have move since.

Bank of America the largest bank in the U.S. by assets was at $14.54 the day before it reported. It dropped 2% on the day and is now down 7% since it reported on January 21. This makes it the worst performing bank of the top 11 financial institutions since its release date. Investors have focused on its declining net interest income and profitability.

JP Morgan the second largest bank in the U.S. was at $44.45 on the day it reported and it rose 1% that day. Since then the bank is up an overall 1.7%. Investors were pleased with the record quarterly and yearly profit that J.P Morgan recorded.

Citigroup the third largest bank in the U.S. which was at $5.13 on the day before it reported saw its stock drop 6.5% when it released its Q4 results. Citigroup reported disappointing revenue of $18 billion which was $4 billion less than BAC. It also reported profit of $1.3 billion.

Wells Fargo the fourth largest bank in the U.S., was at $32.49 the day before it. When it reported, its shares fell 2.1% but has now risen close to even. Wells reported record profits of $3.4 billion in the quarter as it saw provisions for loans losses fall.

Bank of America Rises (NYSE: BAC)

NEW YORK - Bank of America Corp., the biggest U.S. bank by assets resolved disputed and agreed to pay 2.6 billion dollars to Freddie Mac and Fannie Mae.

BAC stock is up now over 5% in early morning trade on the news and puts the stock up 14% since it released its quarterly three earnings and 4% up since news of the foreclosure scandal.

Bank of America faced $12.9 billion in unresolved putback demands on soured mortgages before today. A putback is a word used on Wall Street for a sour loan a bank may have to buy back.

Allan Edwards CEO of The Markets Are Open commented "this is positive news, but I never considered it when I was purchasing BAC all through the last month... Many people were making to big of a deal of the "putback" scandal considering Bank of America's capital position."

To see the full BAC reportclick here.

Hot Stocks to Start off the New Year: RIM, TEVA, WFR, BAC

The year 2010 was great for the stock market overall, but some stocks lagged the market, waiting for a better 2011. That that the new year is here, it is time for these well managed companies to shine.

Research in Motion (NASDAQ: RIMM) (TSE: RIM) has been knocked all over the place even with excellent quarterly reports and 40% revenue growth. With the launch of the long-awaited PlayBook, the stock is a candidate for some real profits. Currently, without the PlayBook, RIM earns more money than UPS (NYSE: UPS), has a much larger growth rate, and trades at less than half the market cap. To read the full report click here.

Teva Pharmaceutical (NASDAQ: TEVA) has investors worried about its monopolistic Copaxone drug. The new year should bring clarification on competitors' generic copies. At the end of 2010 Teva tried to get a concentrated version of its Copaxone approved, but it was quickly denied by the FDA. This could be good news if the FDA does not want to approve other similar drugs. To read the full report click here.

MEMC Electronic Materials (NYSE: WFR) is getting ready to earn some cash this year. Earlier in 2010 insiders purchased large amounts of shares. Most investors see the stock as a solar play - which it is - however it is essentially a play on oil. As the oil price moves up, companies will turn to clean energy such as solar. If oil once again reaches its 2007 highs, MEMC has large earnings power that could boost the stock to its 2007 highs as well. To read the full report click here.

Bank of America (NYSE: BAC) Of the large banks in the United States, Bank of America has lagged the rest. The company has been the center of negative attention, from Wiki Leaks to poor earnings. Last quarter the company earned over $3 billion, which was overshadowed by a $10 billion writedown of goodwill. The company trades just pennies over book value and is poised for a solid year of earnings. The bank may even be ready to start paying its once bountiful dividends once more. To read the full report click here.

The Last Week Of The Year, SIRI, AMZN, F, INTC, BAC

The final trading week of 2010 is upon us, and what better time than to highlight a subset of the most interesting stocks of the year.

Sirius XM Radio (NASDAQ: SIRI) has had a very strong year and is seen as a great turnaround story. Since the depths of the great recession, the stock is up 3100%. As the market for satellite radio grows, contrary to naysayer belief, Sirius may continue to thrive in the new year.

Amazon.com (NASDAQ: AMZN) has seen continued increased demand for its specialty of online retailing. The strength of the business along with its cloud business has been reflected in the stock price. Amazon is in rapid growth mode, and the popularity of its affordable EC2 Elastic Compute servers are just beginning to catch on. As more users see the benefits of online shopping, Amazon will continue to rise.

Ford (NYSE: F) has had a miraculous year with CEO Alan Mulally at the helm. This is the true turnaround story of the decade as America is once again believing in its own automobiles. With the IPO Of General Motors (NYSE: GM) the auto sector is in full drive.

To read the full Ford report click here.

Intel (NASDAQ: INTC) was beaten left and right this year even as its earnings far surpassed investor expectations. With the new wave of chips coming and Intel entering the mobile phone market, the new year will surely be entertaining. Intel's power-saving Atom processor is catching on for mobile and other low power applications. Only AMD (NYSE: AMD) stands in Intel's way for desktops and laptops. Intel will have a tough fight entering the mobile market, however the tech giant has a ton of experience. It is the competition for mobile chip makers.

To Read the full Intel report click here.

Bank of America (NYSE: BAC) was one of the worst performing banks of the year. The company earned over $3 billion dollars in the last quarter, however it was overshadowed by a $10 billion goodwill write down. With the economy improving and housing prices starting to rise again, the largest bank in the United States can once again reclaim its title. The current valuation at around one times book value will make this stock extremely attractive both fundamentally and historically in the new year.

To read the full Bank of America report click here.

Captain Bank of America, BAC, JPM, WFC, USB, PNC

Bank of America (NYSE: BAC) leads the financial sector higher after lagging for almost 8 months. The banking sector has taken hit after hot and entered oversold territory long ago. All of the negative news surrounding housing, credit cards, wiki leaks and more has finally come to a stand still as investors pour their money back into America's top banks with highest earnings potential in the new year. Bank of America led the pack rising 2.54%, JP Morgan (NYSE: JPM) followed suit, up 2.44%, Wells Fargo (NYSE: WFC) was up 1.17%, US Bancorp rose 1.24%, and PNC Financial jumped 0.78%.


To read the full report click here.

Bank Shares Lead the Way: BAC, WFC, JPM, C

Bank of America (NYSE: BAC) is leading the banking sector higher today on much higher than average volume. The stock is currently up more than 5%.

Citigroup (NYSE: C) is up just over 1% while JP Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC) are up 1.25% and 1.15% respectively.

These stocks have all faced high selling pressures as the year 2010 comes to an end. The spike in buying may set the tone for the new year.

The Weak and the Meek Separate, PNC, BAC, RF, JPM, C

NEW YORK - Strong U.S. Financial are beginning to separate from the weaker financial institutions which have rallied with the stock market since it hit its lows in March 2009.

The strongest institutions, PNC Financial, U.S. Bancorp and Wells Fargo stocks continue to move higher as other banks decline. The banks which are severely weakening are Marshall & Ilsley and Regions Financial which are down nearly 30% in the last month. Investors have rapidly switched into the banks with the strongest amounts of capital such as U.S. Bancorp, PNC, BAC, JP Morgan & Chase and Wells Fargo and switched out of the more speculative names. Stocks such as Bank of America and Citigroup which are profitable and well capitalized have not seen as much of rise in their stock price due to extra bailout packages they took from the government which can limit their ability to increase their dividends.

Stocks such as PNC Financial which has the second highest tier 1 common ratio in the businesses only behind Comerica Bank and is eagerly awaiting to redistribute capital to its shareholders.

But there is more... The stocks of the companies which have to pay back TARP are caught in perpetual loop. As their share prices go down the potential for dilution to pay back tarp increases which intuitively would cause its share price to go down further. For instance RF owes the government $3.4 billion at $7 a share the stock would only be diluted by 25% to pay back $3.4 billion but at $5 a share it would be diluted by nearly 40%. If the stock drops to $1 it would be diluted by 75%. This may not prove to be a problem if the shares increase in the future and RF pays the government back with more expensive shares. However, the government may not be forgiving to the bank and may force them to raise the capital at a inopportune time. This is what makes the stock unattractive regardless of the underlying fundamentals which are not very good either.

We continue to recommend, PNC Financial to see the full report click here.

Bank of America (NYSE: BAC) Poised to Pop?

The entire banking sector has endured the wrath of short sellers since April. Bank of America (NYSE: BAC), the worst performer among the major banks hit a low of $11.03 at the end of October. The stock is down substantially from it's 52-week high reached in April of $19.86. Is it time for BAC to make a come back?

With recent changes in Washington, rumors have been floating that banks could begin to raise their dividends once again. Bank of America currently pays a 1 cent dividend - the company used to boast a 64 cent payout. It may take time for the payout to reach that amount again, however the US banks are well capitalized and are earning profits. Bank of America could easily up its dividend exponentially. A 10 billion dollar goodwill write down scared investors into thinking that the bank reported a major loss. However the bank would have reported a large $3 billion profit if it weren't for the one time loss. Each quarter Bank of America gets financially stronger, yet the stock price continues to fall. The question is, when will investors notice?

Top Traded Stocks of the Day: CSCO, C, SPY, BAC, F

The stock with the highest trading volume of the day was Cisco (NASDAQ: CSCO) with 553 million shares traded. Cisco took a large 16% hit today as investors were unimpressed with the poor results from the quarterly report. Citigroup (NYSE: C) usually the top traded stock of the day came in second today with 381 million shares traded. The SPDR S&P 500 ETF (NYSE: SPY) was next followed by Bank of America (NYSE: BAC) and Ford Motor Corp (NYSE: F). Each stock had 158 million, 130 million, and 94 million shares traded respectively.

Indian Banks Reign Supreme, BCS, PNC, BAC, IBN

NEW YORK - Indian Bank stocks are being valued at a premium compared to American and European Banks of greater size.PNC Financial has a market capitalization of $2 billion less than ICICI Bank despite having double the amount of assets, and earnings power.

How can Indian Banks be valued so high? The Future I guess... But the Indian economy is 1/14 the size of the American and in twenty years at the current growth rate of each country it will be 1/4 the size. If the Indian Banks are to grow with the economy at a linear rate it would mean by 2030 their largest banks will be 1/3 the size of Bank of America by assets at the present date. Despite these facts, ICICI bank currently has 1/4 the valuation of BAC. ICICI has half the valuation of Barclays despite being 1/20 the size and having 1/8 the profitability.

Furthermore, Indian banks have inherit risk due to their large contingent liabilities on their balance sheet. They have hedges that are sometimes 400% the size of their balance sheet. U.S. Banks such as PNC Financial have showed better growth than ICICI and are currently double the size but have a lower valuation. The Indian economy and its banks have a bright future but their banking stocks valuation seem a little stretched. Ignorance is bliss for investors who would rather invest in rosy and no headlines instead of making an investment. The valuations will need to change in the future.


To read our report on BAC click here and PNC click here.

India Stands For Quality Financial Institutions (NYSE: BAC) (NYSE: WFC) (NYSE: PNC)

NEW YORK - The major U.S. Financial institutions rallied over 10 % this week but they remain at depressed levels. According to the financial markets, the "I" in India stand for Quality when it comes to financial institutions. ICICI Bank, India's second largest lender has a market capitalization of $33 billion despite having contingent liabilities that are twice the size of its balance sheet meaning it has excessive leverage. PNC Financial, the United States sixth largest bank is twice the size of ICICI Bank but its valued $2 billion under ICICI. The reasons for this are unexplainable, PNC has twice the earnings, twice the equity and has better growth in terms of Return on Equity (ROE) over the last year, a key metric in evaluating financial institutions. ICICI Bank had a pretty miserable ROE of 8% in the last year, despite this the company's valuation has soared. It is explainable that the Indian Banks are not growing quickly and it is likely because people in India are extremely poor. At the current growth rate India's economy will be 1/3 the size of today's present U.S. Economy in twenty years. Investors are overvaluing population and undervaluing GDP in arriving at their valuations. GDP is the most important figure. The population could be 10 billion but if everyone makes $1 its banks will not have much success.

Bank of America which is 20 times the size of ICICI has a valuation of only 4 times as much.

Going forward the valuations will need to change dramatically in relation to U.S. and Indian Banks. It is not possible that banks in a country with inherit risk, and without spectacular growth in the banking system can continue having valuations of 1/4 the market cap when they are 1/20 the size. Either the U.S. Banks will go up in value or the Indian banks will decline.

U.S. Financials Are Back In Style (NYSE: BAC) (NYSE: WFC) (NYSE: JPM)

NEW YORK - The largest financial institutions in the United States have foregone a three day rally where the six largest banks in the U.S. have rallied over 10%. Wells Fargo the fourth largest bank in the U.S. is up 13% since Tuesday. Despite these gains U.S. Banks remain cheap. ICICI Bank of India trades at one fourth the valuation of Bank of America despite having large contingent liabilities and being one twentieth the size. It also trades higher than PNC Financial which is double the size. The valuation simply did not make sense and the banks are undergoing a large and dramatic revaluation.

The prices of stocks are often shaped by large institutions, who often invest by the flavor of the month and this caused some financial institutions to be valued at extremely depressed or impossible levels. The second reason the banks traded lower was due to the Obama administration, who constantly blamed the banks for the financial crisis. With the Republicans winning in a landslide over the Democrats it has given assurance to bankers that there will not be extra punitive for the purpose of making punitive measures. Lastly, because of this election win, banks are likely to be able to pay dividends again due to a more forgiving but stronger government.