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Bank of America Is Back Under $8, And Why BAC Shareholders Should Be Selling Into This Strength

Tyler Durden's picture


And BAC retraces 50% from its pop. An 81 year old Buffett should really stick to washing himself while in the bathtub, flying in private jets with Becky Quick, and contemplating ways to have everyone in America pay more taxes, and maybe even consider retirement every now and then, than making "Long-Term" investment decisions.

And some more observations from Alex Gloy from Lighthouse Investments:

Remember those people who “co-invested” with Warren Buffet in 2008 in Goldman Sachs (he bought a convertible bond with 10% coupon, exchangeable into Goldman shares at $125. The shares tanked to $48, making those co-investors lose their shirt).

Today the market cheers again, seeing Buffet’s investment as a sign of confidence. Let’s look at the deal:

Poor shareholders of BAC (but they deserve it). Buffet is taking out 300m of their pre-tax profit indefinitely, plus dilutes some of their upside. And they love it (BAC went from $7 to $8.80 within minutes of the announcement).

The calls (atm at issuance I assume) were worth 2.34 a piece (20% vola, 2% risk-free rate), times 700m = 1.638bn

He paid 5bn for the whole package, so 5bn – 1.638 = 3.362bn for the perpetual cumulative preferred. But the preferreds have liquidation value of 5bn, so he bought them at 67% of par. So his current yield is not 6%, but rather 9%. If BAC redeems after 1 year (at 105%) he will have made 105-67 = 38+6 = 44 over 67 = 65% profit (plus profit from the options).

BAC must have been pretty desperate to offer him such a deal. Maybe his part was also not completely voluntary. Before the Lehman bankruptcy, Berkshire sold a lot of naked, multi-year puts on equity markets at elevated levels, so a melt-down is not in his interest. Also the “chat” with Obama on “job creation” in recent days is suspicious.

Note: All my calculations are just back-of-the envelope and prone to mistakes.


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Thu, 08/25/2011 - 10:39 | 1599435 snowball777
snowball777's picture

My namesake is 81...there is no more long-term for the codger; maybe this move was to spite the heirs.

Senility, bitchez!

Thu, 08/25/2011 - 10:42 | 1599448 slaughterer
slaughterer's picture

Our BAC common model has fair value assessed at $2.05.  We are not buying a penny beforehand.  Sorry Warren, you were too early, as always.  And your $5b preferred purchase increased our fair value target by only .05. 

Thu, 08/25/2011 - 10:44 | 1599475 nope-1004
nope-1004's picture

I'm convinced it wasn't Buffet own money, but Obama bucks (yours and mine) under the name of Buffet.

The entire ponzi plot thickens.  Thugs make headlines today, no one else.  White collar criminals are everywhere.


Thu, 08/25/2011 - 10:48 | 1599498 Fish Gone Bad
Fish Gone Bad's picture

You know Goldman was just salivating at the stock pop.  Time to get the weak hands out and short the shit out of BAC.

Thu, 08/25/2011 - 10:49 | 1599507 redpill
redpill's picture

Fonzi, I mean, Warren, be careful water skiing!  There's a shark up ahead!

Thu, 08/25/2011 - 10:51 | 1599517 Pladizow
Pladizow's picture

What are the odds of this ending flat for the day?

Thu, 08/25/2011 - 11:21 | 1599705 spiral_eyes
spiral_eyes's picture


Thu, 08/25/2011 - 12:01 | 1599890 fx
fx's picture

Tyler, this reads now ever more like  a personal vendetta against BofA on your part. Think about Buffet whatever you like - his investment credentials are undisputable. (and yes, i know, past performance... etc). What about yours? Talk is cheap  - as are most of your articles re. BofA and Buffet. At these levels I'd rather sell a boatload of these silly priced atm and otm puts on BofA then to get out of this stock. 2-3 years from now you (and many others) may well stare in disbelief at a bofA stock price of $20+ (without any reverse splits ond the likes) and kick yourself for letting bias and personal disliking getting in the way of a truly great money making opportunity.

Thu, 08/25/2011 - 12:32 | 1600060 august west
august west's picture

"investment" opportunity? apparently, you're in line to get the same "preferred" terms as Buffet on his "preferred". this is a trade at best, imo.

perhaps someone's bunny  just had a good nose yesterday as well considering the action in BAC.

unfortunately, it appears to me that the news yesterday that Schneiderman, the New York AG was kicked off the settlement panel jumpstarted the financial stock party.

i'm sure the timing is coincidental that Buffet makes this offer now.

personally, i would have regretted not selling the euphoria this morning.

Thu, 08/25/2011 - 10:54 | 1599534 tekhneek
tekhneek's picture

Hell yeah. .25 for a Nov $4 put? I'll take 100.

Thu, 08/25/2011 - 13:16 | 1600356 KingdomKum
KingdomKum's picture

Thanks for the heads-up  -  already up 15%  !

Thu, 08/25/2011 - 11:12 | 1599650 Surly Bear
Surly Bear's picture

Drudge Report has a headline stating Obama called Buffet prior to purchase....

Thu, 08/25/2011 - 11:41 | 1599803 Hugh_Jorgan
Hugh_Jorgan's picture

He was guaranteed to get his money back from taxpayer dollars, duh...

There are still billions from the 2009 stimulus bill that remain unspent (yes the $864B one that had to be passed before yesterday, or life on earth would cease). You can bet that any investment lost to Buffet by buying a favor-stake in BofA will be replaced for the poor struggling Mr. Buffett out of the pockets of our children and grandchildren. But really, all of our banks are SOOOO healthy AND SOLVENT! Really, they're great....

Thu, 08/25/2011 - 12:59 | 1599723 Don Birnam
Don Birnam's picture

Exhibit 1: Becky Quick "calls in" live to CNBC ( minutes after the BAC item crosses on the newswires ), clearly a team player: taking some time off from maternity leave/nursing the impressionable ( just like his mom ) Junior Quick with what appeared to be the residue of a private conversation with The Oracle. What we do not know is if the conversation was cellular via "private number" or familiar in nature. 


Exhibit 2: Excerpt from today's Wall Street Journal:

"The billionaire investor told CNBC he was in the bathtub Wednesday morning, when he got the idea to approach Bank of America CEO Brian Moynihan about an investment in the bank. The Oracle of Omaha said an assistant phoned a Moynihan aide later that morning to pass on his private number so the two businessmen could talk."

Irish Spring, or is Uncle Warren a loofa and body wash kind of chap, Becky ? We await CNBC's "special report" for this actionable information, from the actionable financial news network.


Thu, 08/25/2011 - 13:02 | 1600270 TruthInSunshine
TruthInSunshine's picture



What delicious irony.

Buffet got the idea to go 5 bln long in BAC while in the bathtub, and I got the idea to short BAC while taking a massive dump.

Thu, 08/25/2011 - 12:12 | 1599933 IQ 145
IQ 145's picture

Oh, sour grapes, sour grapes ! But I'm in the money ! "Bank of America leads financials higher"---says the byline. And my 7.37 purchase is now profitable. As for the advice to sell into the rally; HA HA HA; yeah, sell into the rally; go right ahead. ha ha ha. Buffet bailed me out! HA HA HA. Sitting out the Silver market. I may put in a price order for 38.80 or better tomorrow, see if New York is gonna give out some love, or not. Maybe just save the free equity for my short long bond position; I'm going to be piling on that as it collapses; by Thanksgiving all those smart yound farts in the financial center trading departments will have paid for all my Christmas Shopping.

Thu, 08/25/2011 - 10:44 | 1599477 Pladizow
Pladizow's picture

Even Buffet can't polish a turd!

Thu, 08/25/2011 - 10:52 | 1599520 slaughterer
slaughterer's picture

Gotta get mine in for the ZH TIT TRIFECTA

Thu, 08/25/2011 - 10:45 | 1599480 He_Who Carried ...
He_Who Carried The Sun's picture

Sure, you have made more money this year, than Buffet, silly.
I feel sorry for you since you and your few clients miss a great opportunity!

Thu, 08/25/2011 - 11:03 | 1599587 Idiot Savant
Idiot Savant's picture

Plad - Slaughterer - HWC - nice pics gentlemen!! However, my mind is either on sex or business, and I prefer not to combine the two. While pleasant to look at, I find your pics incredibly distracting in this environment. Just my .02.

Thu, 08/25/2011 - 11:07 | 1599620 jm
jm's picture

It's like three racks talking back and forth...

Thu, 08/25/2011 - 11:24 | 1599718 Pladizow
Pladizow's picture

Not because of your request, but due to the recent copy cats - I will be changing my avatar!

Thu, 08/25/2011 - 11:40 | 1599785 Idiot Savant
Idiot Savant's picture

Yeah, it was all good when it was just you Plad. Hell, I looked forward to you posts just so I could see that beautiful set! It's gotten old with so many copycats and everyone using porn avatars. I must admit that you guys have impeccable tastes in tits!

Thu, 08/25/2011 - 12:00 | 1599884 jm
jm's picture

Don't mind me... I thought it hilarious. 

Thu, 08/25/2011 - 12:20 | 1599976 hunglow
hunglow's picture

[Frankenstein, Igor and Inga in front of HUGE castle doors]
Dr. Frederick Frankenstein: What knockers.
Inga: Oh, thank you doctor.

Thu, 08/25/2011 - 10:43 | 1599456 Earl of Chiswick
Earl of Chiswick's picture


Buffett to support EFSF with $70bn loan @10% plus option to buy Finland

Thu, 08/25/2011 - 10:44 | 1599476 slaughterer
slaughterer's picture

very funny! 

Thu, 08/25/2011 - 10:49 | 1599500 Nothing To See Here
Nothing To See Here's picture

4 pair of tits in the first 8 comments or so. Does this say something about a relationship between whores and banks?

Thu, 08/25/2011 - 10:52 | 1599521 orangedrinkandchips
orangedrinkandchips's picture

Nice funbags though!!have to admit!

Thu, 08/25/2011 - 11:02 | 1599588 FEDbuster
FEDbuster's picture

Maybe it's a sign of the times, since B of A is almost "tits up"?

Thu, 08/25/2011 - 12:18 | 1599966 IQ 145
IQ 145's picture

What  part of too big to fail is too complicated for you? Everyday you guys write, TBTF, TBTF this and TBTF that. IT MEANS EXACTLY WHAT IT SAYS. Warren Buffet bailed me out !!! HA HA; that should make a good conversation stopper at the golf club; "so how's your stock trading coming, Jim?" Oh, it's fine, Warren Buffet bailed me out this week" that should get 15 seconds of complete silence.

Thu, 08/25/2011 - 11:00 | 1599565 Oh regional Indian
Oh regional Indian's picture

Crazy eh? Such a tell on the mind-set here. My theory, ZH is frequented by many old guys who probably feel guilty if they go watch porn. This is where they get their kicks. So many requests for larger sized pictures.  Rather strange.

BAC is BACk. The Buffoon is not going to lose sleep if it goes down to $1. Who says he did not hedge this? Ehhhhhh? 


Thu, 08/25/2011 - 11:02 | 1599585 slaughterer
slaughterer's picture

Tits on ZH is tradition just as much as gold is tradition. 

Thu, 08/25/2011 - 11:54 | 1599859 Oh regional Indian
Oh regional Indian's picture

If you say so slaughterer.

Also, tits is a uniquely white/jewish fascination. In most of the east/africa, they were "ONLY" baby feeders.

Then the puritans came and ruined it all.


Thu, 08/25/2011 - 22:52 | 1602697 StychoKiller
StychoKiller's picture

I've seen some of those Indian temple carvings, youse guys are into big round ones too!

Thu, 08/25/2011 - 12:21 | 1599986 IQ 145
IQ 145's picture

I say it. He didn't hedge it. Now go light some cow dung and make yourself some breakfast; nitwit.

Thu, 08/25/2011 - 10:46 | 1599467 TruthInSunshine
TruthInSunshine's picture



Warren Buffett, Amerikranski's ULTIMATE WELFARE QUEEN - stick him in a Sunrise Senior Living Center with 40 days worth of tapioca and Ensure in the fridge.


Warren Buffett's 'bizarre' thank-you note to Uncle Sam


Warren Buffett Gives Uncle Sam A HUGE Wet Kiss In Pro-Bailout Op
Thu, 08/25/2011 - 10:40 | 1599437 DaveyJones
DaveyJones's picture

he shoud have had someone chew on his information for him

Thu, 08/25/2011 - 10:40 | 1599439 unky
unky's picture

This was expected. $5 billion is not enough

Thu, 08/25/2011 - 10:40 | 1599440 AngryGerman
AngryGerman's picture

done and done. just unfortunate he will not enjoy this payoff as he won't remember it...

Thu, 08/25/2011 - 10:41 | 1599442 Irish66
Irish66's picture

Thanks for the laugh

Thu, 08/25/2011 - 10:41 | 1599443 Ancona
Ancona's picture

Now down to just a 13% pop and dropping.

As expected, the devil is in the details, and the details have been published. Looks like desperation to me. BAC is probably locked out of the money markets.

Thu, 08/25/2011 - 10:51 | 1599515 slaughterer
slaughterer's picture

Nice to see AAPL, a "toy producer" that just lost its CEO, outperforming the entire S&P 500 there for just a second.  Things look really fixed. 

Thu, 08/25/2011 - 10:46 | 1599445 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Buffet probably has a backroom deal with the USG for a guaranteed bailout of the bank (or atleast his investment) if things go sour.  What does the USG get out of it?  A CONfidence play for the sheeple.

Thu, 08/25/2011 - 11:16 | 1599676 Jim B
Jim B's picture

I can already hear Warren Buckethead lobbying for a bailout......

Thu, 08/25/2011 - 10:42 | 1599452 Nothing To See Here
Nothing To See Here's picture

Some people challenged Buffet to send a check to the government after he asked for taxes on the rich to be raised.

Well, there it is. He just sent 5 billion $ to the government.

Thu, 08/25/2011 - 10:46 | 1599487 Earl of Chiswick
Earl of Chiswick's picture

I think you have that exactly backwards

Thu, 08/25/2011 - 10:56 | 1599542 Nothing To See Here
Nothing To See Here's picture

How so? The gov will bail out BAC before it goes bankrupt. Buffet is doing his (hopelessly futile) part to help the State.

Thu, 08/25/2011 - 10:43 | 1599455 nah
nah's picture


Thu, 08/25/2011 - 10:43 | 1599457 NumberNone
NumberNone's picture

He said he wanted to give away all his money before he died...did he ever specify how?

Thu, 08/25/2011 - 11:07 | 1599616 SheepDog-One
SheepDog-One's picture

Not sure, but I do wish he'd hurry the hell up and die already!

Thu, 08/25/2011 - 12:24 | 1600004 IQ 145
IQ 145's picture

My saviour; my new daddy, Warrenkins; and you can't even say anything nice about hm. He made my stock trade profitable, and I'm sure he's a wonderful, wonderful, old gentleman.

Thu, 08/25/2011 - 11:15 | 1599673 tmosley
tmosley's picture

To the Goober Mint.

Thu, 08/25/2011 - 10:44 | 1599468 HowardBeale
HowardBeale's picture

It's the Buffet to Obama Hail Mary Bluff! If it doesn't work, things are really fucked!

I officially change Buffet's name to Bluffet.

Thu, 08/25/2011 - 10:44 | 1599469 clagr
clagr's picture

A bit off the subject, but can anyone explain why the FAZ (triple short the SPY) is down large when SPY is also down????

Thu, 08/25/2011 - 10:47 | 1599490 HelluvaEngineer
HelluvaEngineer's picture

You mean other than the fact that I believe it tracks XLF or another banking index?  Wait 5 mins and you'll be green.

Edit: sorry, 5 seconds.

Thu, 08/25/2011 - 10:57 | 1599539 Mesquite
Mesquite's picture

> clagr

Suggestion: Keep Coming Back..(And 'Paper Trade' for awhile..)

Thu, 08/25/2011 - 10:44 | 1599472 SheepDog-One
SheepDog-One's picture

Buffet did not reach into his pocket and hand Chanker on America $5 billion he was just the bagman delivery boy delivering a package. Theyre all still believing 'America loves Buffet'...this was just a delivery of a package to make a couple insiders whole.

Thu, 08/25/2011 - 11:02 | 1599580 Spastica Rex
Spastica Rex's picture

Do you think this is part of the larger con that's (not)QE3 this week?

Thu, 08/25/2011 - 11:06 | 1599611 SheepDog-One
SheepDog-One's picture

Yea I do!

Thu, 08/25/2011 - 11:09 | 1599627 Spastica Rex
Spastica Rex's picture


Watching it come together.

Thu, 08/25/2011 - 12:27 | 1600019 IQ 145
IQ 145's picture

Yeah, by time the rally is over, you'll be ready to buy it.

Thu, 08/25/2011 - 10:45 | 1599481 espirit
espirit's picture

Heck, I thought high 5's would be overpriced for that POS.

Thu, 08/25/2011 - 10:46 | 1599486 Silverhog
Silverhog's picture

Check your meds warren.

Thu, 08/25/2011 - 10:46 | 1599488 Justaman
Justaman's picture

Man, I am glad I dumped BRK a couple of years ago.  Uncle Warren is off his rocker.  Must be too much high fructose corn syrup and blizzards in his diet. 

Thu, 08/25/2011 - 10:46 | 1599489 drswhaley
drswhaley's picture

Absolutely right that folks should be selling strength.  Buffett, with dry powder, gets to set terms in these distressed situations.  He gets to use this as very important leverage that the rest of us don't have.

The leverage the rest of us have is that we can cancel any transactional accounts with BAC-Merrill Lynch although I suspect most readers of this website don't get any enjoyment from the BAC customer experience.

Thu, 08/25/2011 - 10:47 | 1599493 Earl of Chiswick
Earl of Chiswick's picture


DAX victim of fat finger

Thu, 08/25/2011 - 10:48 | 1599495 fuu
fuu's picture

Anyone have an update on the CDS spread?

Thu, 08/25/2011 - 12:29 | 1600036 IQ 145
IQ 145's picture

I would never waste five seconds of my life referring to such a thing; and neither should you. Check your notes; it didn't predict anything usable or tradable. Just repeat that to yourself a few times till it sinks in.

Thu, 08/25/2011 - 10:56 | 1599499 guidoamm
guidoamm's picture

It's ten years ol'Warren is throwing good money after bad... but his shareholders don't seem to have noticed...$GOLD&p=M&b=4&g=0&id=p12561630619



Thu, 08/25/2011 - 10:49 | 1599501 Johnny Yuma
Johnny Yuma's picture

Gap fill time!!! Lol! 

Thu, 08/25/2011 - 10:49 | 1599502 sasebo
sasebo's picture

Buffon probably needs to take a trip to Disney World & get with Goofy & Dopey.

Thu, 08/25/2011 - 10:49 | 1599503 gkm
gkm's picture

Did Moynihan indicate there were any problems with capital?  No.  Did Buffett get a sweetheart deal that the public can't replicate?  Yes.  Did the calendar just tick back 3 years?  Yes.  Kind of scarily eerie.  

Thu, 08/25/2011 - 10:49 | 1599505 Dr. Engali
Dr. Engali's picture

Thank you Warren for another opportunity to add a short position.

Thu, 08/25/2011 - 12:31 | 1600052 IQ 145
IQ 145's picture

Thank you Dr. Engali for being so thiick; after all my profits have to come from people like you.

Thu, 08/25/2011 - 10:50 | 1599512 LehmanRefugee
LehmanRefugee's picture

If BofA has to be resuced by taxpayers Obama can pretty much kiss his re-election goodbye. This move can be best seen as Buffet's contribution to Obama's re-election. It was widely reported that they talked on the phone earlier in the week. Plus the terms of this deal versus the GS or GE deals are ridiculously generous (only 6% div and 5% premium).

Thu, 08/25/2011 - 10:51 | 1599514 vast-dom
vast-dom's picture

Note: MY calculations are that this is the perfect start to a MARKET CRASH. Tomorrow must be BLACK(EST) FRIDAY, Bernank fuckery notwithstanding or precisely because of..........

Thu, 08/25/2011 - 10:56 | 1599540 SheepDog-One
SheepDog-One's picture

Bernank simply cant meet the high expectations of a huge diamond encrusted free money bomb to Wall St. 

Got to admire how the FED simply sat back and let every bit of bad news get pumped by the MEDIA since January DOW >10K with 'This means QE3 expectations are higher, therefore pump stocks'....Bernank has never mentioned QE3 once himself!

People filled in the blanks themselves... '$2.5 trillion QE3 minimum is whats comin' when nothing is coming but more 'we'll sit back and monitor events'. Gonna get ugly fast when reality sets in.

Thu, 08/25/2011 - 22:58 | 1602726 StychoKiller
StychoKiller's picture

Dog, I hope yer right, the $/Toz of AU should shoot up faster that way!

Thu, 08/25/2011 - 10:51 | 1599518 SheepDog-One
SheepDog-One's picture

Never ignore the importance of the 'RoboTrader ultimate dumb money indicator' this morning when the DOW popped +100 on open, he said better get all in here long.

Just sayin'.

Thu, 08/25/2011 - 10:52 | 1599519 DefiantSurf
DefiantSurf's picture

LOL, tumbling faster than a BOJ intervention

Thu, 08/25/2011 - 10:52 | 1599522 Moneyswirth
Moneyswirth's picture

I'm sure this is OT but :


EU clears Berkshire takeover of Lubrizol....



Thu, 08/25/2011 - 11:03 | 1599524 Surly Bear
Surly Bear's picture

As soon as the deal leaked I pulled out my iphone to read via Yahoo! Finanace: BAC:EPS: (1.64) USD, and thought WTF they're gonna split that between an additional 700 million shares? Please, you can keep it.

Thu, 08/25/2011 - 10:53 | 1599526 Stumpy
Stumpy's picture

Gotta love the inverse correlation of gold with stocks right now.

Thu, 08/25/2011 - 10:53 | 1599529 Caviar Emptor
Caviar Emptor's picture

You don't get it. DC has already leaked that it's planning a huge housing bailout to be unveiled in the next few days. One component is paying to allow underwater homeowners to refi at record low rates. It's supposedly going to free up $85 billion into consumer hands immediately. It's one of several fiscal stimulus measures to be unveiled shortly

Thu, 08/25/2011 - 11:05 | 1599562 SheepDog-One
SheepDog-One's picture

'Adjust the rate' for unemployed bankrupt totaly underwater homeowners. Yea that'll fix it, throw more imaginary money into the fire has worked so well so far.

Thu, 08/25/2011 - 11:07 | 1599600 WonderDawg
WonderDawg's picture

Refi? If they don't include principle reduction it won't do shit. Besides, $85 billion = .06% of GDP. Not exactly a game changer.

Thu, 08/25/2011 - 11:10 | 1599640 SheepDog-One
SheepDog-One's picture

Yea, meaningless. And $85 billion from where? Buffet?

Or is the USA federal budget now entirely printing and handing out free money? People can think that ends well all they like.

Thu, 08/25/2011 - 12:34 | 1600073 IQ 145
IQ 145's picture

I'm ready to believe anything similar to this; it's an election year; and they will stop at nothing. DO NOT SHORT THIS STOCK MARKET. Now, you can't blame me.

Thu, 08/25/2011 - 23:00 | 1602729 StychoKiller
StychoKiller's picture

Think the Republicons will go along with ANYTHING proposed by the Obamatron?  I predict MORE gridlock ahead!

Thu, 08/25/2011 - 10:53 | 1599530 Johnny Yuma
Johnny Yuma's picture

Gold establishing long rejection tail today. Hasn't Roubini heard of a retracement? He's Tweeting like it's the end of the trend. Maybe it is but if things continue as they are, Gold should go higher. Gold futures have retraced half way back from it's blast higher.

Thu, 08/25/2011 - 10:56 | 1599547 DefiantSurf
DefiantSurf's picture

Roubini has met the enemy and it is him

Why does anyone even talk about this assclown?


Thu, 08/25/2011 - 10:55 | 1599536 Cruel Aid
Cruel Aid's picture

Didn't JP Morgan buy the Great Depression market, for a short term bump, before the big crash.

History repeats.

Thu, 08/25/2011 - 10:56 | 1599538 Cinfultreat
Cinfultreat's picture

Stupid blog site making stupid opinionated statements again on envelope math.  Maybe Tyler is just trying to 1 up himself and make a real news segment this time.

Thu, 08/25/2011 - 10:57 | 1599550 SheepDog-One
SheepDog-One's picture

Maybe youre just a dick.

Thu, 08/25/2011 - 11:01 | 1599577 Cinfultreat
Cinfultreat's picture

I love TD, just being sarcastic.

Thu, 08/25/2011 - 10:58 | 1599554 DefiantSurf
DefiantSurf's picture

nice ass! Stupid comment GFY

Thu, 08/25/2011 - 11:00 | 1599566 TradingJoe
TradingJoe's picture

Everyone is entitled to an opinion, so do you! It just does not have to be here!

Thu, 08/25/2011 - 10:56 | 1599546 Cursive
Cursive's picture

Thank God for ZH.

Thu, 08/25/2011 - 10:57 | 1599551 R Man J
R Man J's picture

Maybe it was a $5bn donation (charitable). No heirs?

Thu, 08/25/2011 - 12:37 | 1600088 IQ 145
IQ 145's picture

Oh, he has heirs, alright ! His daughter collaborated on an UN-authorized biography. Many things are easier to understand after you read this.

Thu, 08/25/2011 - 10:58 | 1599552 TradingJoe
TradingJoe's picture

As I was saying all the time for a week or so KEEP YOUR COOL, most of it is NOISE! ZH helps sort through the NOISE, but you need to do your own home work too!

Thu, 08/25/2011 - 11:03 | 1599569 DefiantSurf
DefiantSurf's picture

C'mon feel the noise

Girls rock your boys

its gonna be wild wild wild

Thu, 08/25/2011 - 11:01 | 1599576 Mesquite
Mesquite's picture

Nice buy op on FAZ...Thanks...

Thu, 08/25/2011 - 11:02 | 1599584 66Sexy
66Sexy's picture

i hope buffet gets fucked

Thu, 08/25/2011 - 11:03 | 1599598 DefiantSurf
DefiantSurf's picture

hope is not a plan, short that fucker

Thu, 08/25/2011 - 11:03 | 1599596 SPADOC4
SPADOC4's picture

Buffet pony's up 5 large to BAC = more debt for BAC. Commercial lending is dead, so where/how are they going to make the monthly on this?

BAC common goes up on news of more debt in a weak lending environment.


Sorry, I don't get it. The game is rigged.

Thu, 08/25/2011 - 11:04 | 1599599 MoneyWise
MoneyWise's picture

Told ya, buy BAC, sell GOLD, but

you were enjoying the ride on the Gold train


it gets off the rails :)))))

Thu, 08/25/2011 - 11:06 | 1599609 DefiantSurf
DefiantSurf's picture

So over cocktails at the 19th hole on Martha's Vinyard, the O let you in a little secret?


Thu, 08/25/2011 - 11:40 | 1599798 orangedrinkandchips
orangedrinkandchips's picture

COCK is the operative word here....

Thu, 08/25/2011 - 11:10 | 1599636 Eireann go Brach
Eireann go Brach's picture

This is very suspicious considering the old fuck met with Obama recently, I bet he is a frontman on this deal with Obama's/govt money so to instill confidence in the bank and indeed the financial system, but it proves that B of A needed funds after all and this move will untimately end up backfiring!

Thu, 08/25/2011 - 11:11 | 1599648 SheepDog-One
SheepDog-One's picture

If this was the big Obama/FED plan to lend credibility to the BK banking system, wow what a fart in a hurricane.

Thu, 08/25/2011 - 12:42 | 1600111 IQ 145
IQ 145's picture

Of course; it's psychology. Uncle warren is a power broker, and potentially, a king-maker. that's exactly what he did, lend credibility to the banking system; and to the incumbent. (remember Clinton's famously cynical comment about politics, "it's the economy, stupid") You say it didn't work. The market says, it did work. Who should we listen to?

Thu, 08/25/2011 - 11:10 | 1599643 Rockfish
Rockfish's picture

BAC now 7.83, WB job was to provide an exit for those in club and for WB heavy lifting a better yield than he could get in Treasuries. Mission accomplished.

Thu, 08/25/2011 - 11:13 | 1599658 SheepDog-One
SheepDog-One's picture

Whole thing just a backdoored bailout for a few insiders who were in trouble. This was QE3.

Thu, 08/25/2011 - 11:12 | 1599652 phuckingphed
phuckingphed's picture

Why does Buffett get the inside scoop from Obama and likely a sneek peak of Bernanke's speech before the public? Isn't this a form of insider information?

Thu, 08/25/2011 - 11:13 | 1599663 SheepDog-One
SheepDog-One's picture

Yep, welcome to the New World Odor.

Thu, 08/25/2011 - 11:59 | 1599876 Stumpy
Stumpy's picture

The timing of it is just absolutely stinky.

Thu, 08/25/2011 - 12:45 | 1600133 IQ 145
IQ 145's picture

now, now. let's not have any more of that unjustifiable paranoia. Let's just say it's all part of the re-election campaign; and get it right the first time. You scratch my back, I'll scratch your back is not exactly a new concept in politics or finance.

Thu, 08/25/2011 - 11:18 | 1599685 long-shorty
long-shorty's picture

Added to our BAC effective short position this morning (all via options). This is the same Warren Buffett who bought Solomon Brothers. And this deal is a huge screwjob for BAC shareholders (on the upside) and does nothing to protect them on the downside. I bet they will still need to issue shares, and maybe even do a preferred-common conversion, before all this is said and done. If BAC were liquidated tomorrow, I think many people, like me, believe the resulting "book value" would be a negative number. There is a significant chance that counterparties start to pull exposure soon.

Thu, 08/25/2011 - 12:48 | 1600166 IQ 145
IQ 145's picture

"If BAC were liquidated tomorrow---" Jesus Christ what's it going to take for you to understand this simple statement. Too Big To Fail. It's not exactly quantum mechanics, is it? I hope you enjoy watching the value of your options evaporate like water in the Nevada Desert.

Thu, 08/25/2011 - 11:20 | 1599694 DefiantSurf
DefiantSurf's picture


 "and its gone, poof! next"

Thu, 08/25/2011 - 11:21 | 1599700 geminiRX
geminiRX's picture

I took a gamble and bought some Nov 7.50 puts. Did well with that strategy with Wachovia a couple years ago - lets see if I can lucky twice. That hyperparabolic bounce just looked too irresistable.

Thu, 08/25/2011 - 11:23 | 1599713 A. Tad Askew
A. Tad Askew's picture

Clearly, the only way Buffett can justify the purchase is if someone gave him a "get out of jail free" card.  Somebody guaranteed that he wouldn't lose money on the trade. 

He has traded on insider information for years....

Thu, 08/25/2011 - 11:23 | 1599714 Sneeze
Sneeze's picture

Meanwhile the BAC shares bought at average volume over the last week by those in the loop get dumped today at a 20% profit hidden by massive dumb money volume. 

Thu, 08/25/2011 - 11:26 | 1599727 laomei
laomei's picture

and now that they have feasted on the poor, they begin to feed on each other.

Thu, 08/25/2011 - 11:34 | 1599771 Doyle Hargraves
Doyle Hargraves's picture

$5 Billion is just a bridge loan to bankruptcy, BAC is so far gone, $50 Billion wouldn't help. This is Buffets cost in the end of acquiring Merrill when the Ch 11 trustee divies up the the plunder. Unfortunately for Warren, Merrill is probably worthless, this will end badly...for him!

Thu, 08/25/2011 - 11:35 | 1599777 bankruptcylawyer
bankruptcylawyer's picture

at least we know qe3 is going to come tomorrw, but what you don't know is how the market will react AFTER the announcement. before the announcement, much like august 9, a ramp up just before . ...

Thu, 08/25/2011 - 11:41 | 1599807 how to trade ar...
how to trade armageddon's picture

Keep your eye on the fresh economic data, from August. Tuesday we learned ICSC week-on-week department store sales down another 1%. Today we learned new unemployment claims up some 4% week-on-week.

The bulls' only hope is a clear QE3 signal out of Bernanke. No QE Lite or QE Twist can help them here, they need QE Classic. They're not going to get that yet. It's not too late to add to your puts.


Thu, 08/25/2011 - 11:48 | 1599840 Downtoolong
Downtoolong's picture

Once again, we see big bank management giving a better deal to an outside financier than what their current shareholders own. Given that BAC is still up on the day over 10%, few BAC shareholders probably realize they are worse off in the long run than they were yesterday. But that is the truth of it. That is the great deception of these kinds of deals, and why I must respectfully accept that Wall Street type salesmanship is the most effective there ever was. Too bad for most investors that it’s all they’ve really got to offer.

It all gives me a great idea for a new video game. I’m going to call it Grand Theft Finance. Perhaps  the thirteen year olds playing it will gain some understanding of just how corrupt and destructive our financial markets have become.

I wonder how many shares of Berkshire the top execs at BAC own?

Thu, 08/25/2011 - 12:52 | 1600193 IQ 145
IQ 145's picture

Now you're making sense. Copywrite your name, and get to work on your game. A video game like that could be a money maker. On second thought; maybe I'll just copywrite your name, and farm out the programming.

Thu, 08/25/2011 - 12:06 | 1599909 oklaboy
oklaboy's picture

bullshit, this is a set up. They are going to put al lof the TOXIC mortgauges in a RTC style sell of, remove them from the balance sheets, gaurantee the lossees, and ump them on the market, furthur cratering thee RE market, there bye reducing property tax intake, which they will have to raise property yax rates to cover the shortfall caused by the dump, creating another crisis, and the eventual downfall of the US. Why do you tink last week Obamster went to Buffet for advice? Buffet giving the gubment a big wet kiss on raising taxes? Buffet knows what they are gonna do, and will profit from it. Don't think he is a senile old 81 year old, he is wired to the gubmint.

Thu, 08/25/2011 - 12:22 | 1599990 FreeNewEnergy
FreeNewEnergy's picture

Thanks, Billionaire Buffet for making my day.

Knowing that by continuing t not pay my (inherited) mortgage over the past 25 months I helped you throw $5 billion into the worthless POS that is Bank of America.

I hope you had a nice bath, Warren, because you're about to take another one.


Thu, 08/25/2011 - 12:23 | 1599996 optimator
optimator's picture

I'm not that interested in the 'chat' he had with B.O. before doing it.  I'd be very interested in the chat B.O. had with his bosses before the call!  I can kind of imagine what was said.

Thu, 08/25/2011 - 12:25 | 1600008 tahoebumsmith
tahoebumsmith's picture

Just another day in pair..of..dice. The Pit boss has extended the lines of credit another 5 bililion. Play on bitchez, just remember when the Casino burns to the ground you both lose. Reminds me of March 2009 when the tables were empty and the place was about to be torched,  the Pit Boss said the economy had fallen off a cliff and then he recieved a huge loan from "somebody" to get the casino rolling again. This was followed up by the President's speech advising everyone that now was the best time to buy stocks... Poof... And the rest was history... Free markets





Thu, 08/25/2011 - 12:42 | 1600113 Doyle Hargraves
Doyle Hargraves's picture

Buffet-"$5 Billion on BAC's next roll...ahh shit! crapped out, guess I will take Merrill and run!"

Thu, 08/25/2011 - 12:29 | 1600038 Common_Cents22
Common_Cents22's picture

You know Buffett got some guarantee from the govt to backstop BAC.   It's the Taxpayer Put.

Thu, 08/25/2011 - 12:55 | 1600208 IQ 145
IQ 145's picture

Nonsense, I'm sure he's just a lovely old gentlement who like to help out struggling Banks.

Thu, 08/25/2011 - 13:26 | 1600417 bgilliam83
bgilliam83's picture

Guy belongs in a cell with Madoff

Thu, 08/25/2011 - 14:14 | 1600741 ThirdCoastSurfer
ThirdCoastSurfer's picture

Is it any wonder that,  unless you're the likes of Buffett, buy-and-hold is dead as an investment strategy ? 

Getting kicked 700 million shares down the line and paying 6% for the privilege is an outrage! 

Thu, 08/25/2011 - 14:30 | 1600845 Pancho Villa
Pancho Villa's picture

Buffett has a great investment record, but I don't know. He kind of seems to be slipping a bit. First we find out that one of his trusted aides has been frontrunning him. Then he comes out with flakey statements about how multimillionaires aren't paying enough taxes. I get the sense that he feels he is going to die soon and has kind of given up on financial matters.

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