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Bank Of America Common Dilution Coming: To Issue 400 Million New Shares
And to think it was less than two months ago that Warren Buffett took a bath to provide the bank with capital it had "absolutely no need for" but was happy to take it anyway. Well, it turns out the firm is preparing to raise just a "little" more capital. From the just released 10Q: "During the third quarter, global economic uncertainty and volatility continued as described more fully in the Executive Summary – Third Quarter 2011 Economic and Business Environment discussion on page 7. Concerns over these and other issues contributed to a widening of credit spreads for many financial institutions, including the Corporation, resulting in lowering of market values of debt and preferred stock issued by financial institutions. The uncertainty in the market evidenced by, among other things, volatility in credit spread movements, makes it economically advantageous at this time to consider retirement of issued junior subordinated debt and preferred stock. As a result of these matters, we intend to explore the issuance of common stock and senior notes in exchange for shares of preferred stock and, subject to any required amendments to the applicable governing documents, certain trust preferred capital debt securities (Trust Securities) issued by unconsolidated trust companies, in privately negotiated transactions. If we pursue the exchange of Trust Securities, we would immediately use the purchased Trust Securities to retire a corresponding amount of our junior subordinated debt that we previously issued to the unconsolidated trust companies. These transactions would increase Tier 1 common capital and, on an after-tax basis, reduce the combined level of interest expense and dividends paid on the combined junior subordinated debt and preferred stock....We will not issue more than 400 million shares of common stock or $3 billion in new senior notes in connection with these exchanges."
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how else to fund those bonuses? not with $5 debit card fees.
This must mean i should buy more BofA shares right? because its supply and demand and so many more people want BAC, so they made more shares right????
hahaha
I dont know how you spin that one
Why not? BAC has never had a capital problem. They've just had to shore up to counter the damage done by planted stories on blogs.
How many shares are you buying?
As many as I can, as soon as my long NFLX ship comes in. Don't call it a comeback!
/sarc
I see dead banks....they don't know they are dead. Happy Halloween!
We should camp out in front of BOA and wait for midnight for their release! Wait OWS protestors booked out all the available campsites nearby. Nevermind.
Buffet must love this.
It's a good thing they bought Countrywide... Ohh wait.. nevermind..
No...Now BofA must buy MF Global...its all part of the dragon eating its tail thing with a Buffet chaser followed by a 2012 election year bonus prize.
BofA will use the Billions to buy out MF Global...and then BofA will be bigger and MF Global "saved".
Between this and their CDO exposure ... How could u not go long.
Warren's shit is senior preferred with a fat dividend. Risk is for the taxpayers.
So there is no liquidity problem...BUT...uncle warrens 5 billion dollar hardon was not big enough.
Rub-a-dub-dub, Warren!
Suck it, Warren...hope this craters to zero taking his White Knight reputation with it.
Get a grip! It is only 400 million shares. Buy the trust preferreds with both hands tomorrow. They are cheap and you get a decent return waiting for them to be called. The stock issue makes a lot of sense. Read page 10 of the 10Q
http://sec.gov/Archives/edgar/data/70858/000007085811000140/bac-9302011x...
And who is going to buy these?
Unicredit, Societe General, PNB Paribas, with ECB money from Fed. back door bailout. I'm sure Fannie and Freddie will take some too.
First, nice handle.
Second, to your question: You and I and everybody else in Amerikka, that's who.
Congratulations, fellow shareholder! It's a bouncing baby turd!
LOL, they are going to stuff it in the retirement accounts of all those people who aren't paying attention and invested in vaguely-titled 401k funds.
"I'll help you out."
- Rick Perry
After the dilution is factored in and the bank depositors wake up and flee, the stock will be found only on the Zimbabwe Exchange.
But will the Zimbabwe Exchange allow anyone to short it?
Let's go back to paper stock certificates so that this junk can show up on Ebay under the wallpaper category.
Both Peter and Paul getting shafted here.
What about Mary?
He he he. It couldn't happen to a better crony capitalist.
BAC 30$(after reverse split)
Worked well for Citi. I'm sure it will work well for BAC
Hey, that's a great idea! 400 million shares issued at $30 would raise a lot more bonus money!
Pension funds and insurance companies.
Buffet: Cold, calculatiing, manipulating, greedy, subversive, and near death.
What's that saying about taking it with you? Oh ya..... "Be sure to run over and fuck as many common people as you can with your excesses while alive, cuz you ain't taking it with you".
What happens when this diluted shit goes sub $5 and mutuals/etc. can't hold penny paper?
it'll reverse split 10:1 like Citi did.
That's why i like silver.No reverse split,no dilution.
But the cute CBC reporter said gold (and I assume silver too) are not backed by anything.
Investments like dollars and BAC are backed by the US Gov't. Ben and Tim will never let you down.
Molon Labe!!
The bankruptcy I am waiting to hear about is of Bank of America but this dilution of current shareholders of BoA will do for now.
I thought they didn't need any funding???
Suck it slow Moynihan. I hope that your retail branch's become empty wastelands devoid of customers and filled with only the soft sounds of crickets chirping in the background and tumbleweeds bumping into wastebaskets. - Proud ex-customer who closed our accounts bc of your $5 bs fee.
Just bought some bac puts a couple days ago, think I'll drink some scotch tonight to celebrate
ok, who wants to make odds on a "deadpool" for who goes out next? BofA, Morgan Stanley, GS, JPM, Citi. It won't be long now. place your bets....
Odds: MS even, BAC 3/2, C 2/1, JPM 4/1, GS 10000/1
www.singledudetravel.com
Give me 20k on citi @ 2/1.
I'll sell 100 k on gs at 10000/1
I'm good for it
Whichever bank Goldman likes the least. There will have to be another 'sacrifice' to prove that people are wrong about the markets not being free. Goldman will release a "See, I told you so" headline 40 seconds after the bankruptcy filing.
...can they just unilaterally retire preferred stock and sub debt??
Of course they can- it's not like they have a Board of Directors who has a clue about credit quality.......
Per Morningstar, they have ~10.4 billion shares out there. What's another 400 million between freinds?
"makes it economically advantageous at this time to consider retirement of issued junior subordinated debt and preferred stock."
Maybe they are going to take part of Uncle Warren's position out so he can get out while the gittin is good
Was wondering after they brought the derivatives onto the balance sheet of the retail entity is Buffett might get nervous about the security of his pref shares and return of capital if BAC melts down.
If there is the potential that depositors are subordinate creditors compared to CDS counterparties, wonder if that also adversely affects preferred shareholders. (Assuming that the retail entity issued his preferrred shares - could be wrong.)
so the 400 million shares will dilute and then they will do a reverse split of 10-1 , so they really are only diluting 40 million shares .......BULLISH
Just one question - who the fuck buys all that shit? Where is all that money coming from? Thin air credit creation on 1:40 leverage or maybe all those peasants pulling their $ from under the mattress and just killing each other to buy it.
I thought they didn't need any more funds. "we have a strong balance sheet" " we are well positioned for long term growth". Oh wait I heard that when I worked at Wachovia. I thought it sounded familiar.
I'd buy some, if I could use it to wipe my ass.
If I buy 1000 shares do I get a "free" toaster?
No toasters, too expensive and unfriendly to evironment, you will get solar toaster or solar clothing drying system. It comprise of 2 m of rope and 2 clips, you may opt for some additional enhancements like clip@2$ a piece or 1.99$ per 1Ft of rope. It is strongly advised that you go for options, it will enhence efficiency of your system. They also offer software which enables you to optimize your energy requirements, YOU FUCKEN SWITCH OFF EVERYTHING, from Microsoft.
I forgot about licence for Microsoft software which last 3 years and after it expires, you'll have to switch to bonfires or pay 600$ for renewal which crashes every 2 weeks so their friends can sell you few new small devices for your computer and all those antivirus programs, and ..... Fuck it! Do you like Microsoft updates every week lurking around your computer?
Its down a whopping 10c after hours. markets are delusional. if only we were still in the twilight zone. im afraid we are now floating around in a worm hole.
Perhaps there are only algo's and no people left in the market.
cramer will announce he's buying for his charitible lust
This is what you do when you have alienated you customers with $5 fees and they flee en mass to credit unions (including myself).
One wonders, just how much in deposits did they lose when their website was overwhelmed with withdrawals??
Well it's down 10 cents since the anouncement. Not much of a haircut (so far).
One of the two big faces of banks in the USA, which once traded over $50, will spill another 400 million shares at $6.xx. Nothing says bullish like that. Where are the fucks who saw BAC at $20 and Citi at $10 (pre-10x reverse split)?
"Yeah, our stock is so cheap compared to book value that we'll dilute it at that cheap price even more."
"Yeah, our stock is so cheap compared to book value that we'll dilute it at that cheap price even more."
POW! That is a fine point. With price under book why aren't they BUYING THE STOCK back with both hands? Especially since they have no capital needs whatsoever.
I thought B of A was "well capitalized"??? Where the fuck is DIck-head Bove???
Wasn't it ironic that Uncle Warren was taking a bath when he made the BAC deal? How's that bath now?
Buffet got common warrants at $7.14 which he probably exercised and took profits on when stock was $8+ the day after he invested.
A stated purpose of this secondary is to retire preferred stock, maybe that includes Buffet's.
Warren Buffet has committed to buy his own company stock at up to 10% above book. Much different than selling at 50% under.
BAC is being kept alive for another day, hoping Europe disintigrates first.
the market is always right and will take care of that piece of sh#t bank
Sounds to me like the smart money is trying to get some dumb money to liquidate their positions in BAC.
And to think it was such a screaming buy at $14.50 Cramer & Bove both suck.
http://www.cnbc.com/id/40949412/
Secret tape from the most recent BAC Board of Directors meeting
http://www.youtube.com/watch?v=odO1_oEmI68