Edited by Jhoe, 02 December 2009 - 05:18 PM.
Bank of America - raising capital to pay back tarp $45 billn
#1
Posted 02 December 2009 - 05:13 PM
#2
Posted 02 December 2009 - 05:45 PM
Just announced--BOA (I call them BAC, I speak in ticker talk) will pay back tarp by raising capital. The govt has approved them to do this, which is apparenly a large part of the process. If I recall, back when a number of banks repaid TARP few months ago, the ones that did so took action only after being govt approved to repay.
In any case, I'm posting this b/c IMO this is what has dragged on the financials, namely the banks for 1-2 months. Now if BOA is talking about raising 45 billion in capital, and plans to use equity markets to do so, you're looking at roughly 3 billion shares. Unlikely they do this entirely through a common stock offering though, and no word on exactly how that happens just yet.
This willl probably begin the domino effect that I suspected, and will slowly end the poor price action in banks and likely turn them higher once the threat of equity offerings are confirmed or denied, or complete.
I wont be trading this news, for BAC or any bank, but I suggest caution on the short side. Last time banks raised capital the typical dillutive effect was not enough to bring down stock prices or cause a selloff, other than short term drops. Also, I suspect some "pumping" will occur before JPM or GS raise capital, if they indeed proceed with offerings as well.
Semi high-five to Merideth Whitney, Uber Super Duper bear of self-titled analyst firm. She called this around a month ago, come to think of it, pretty close to the time that banks started to weaken as a group.
Bye Bye shorts...... Up we gooooooo
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#3
Posted 02 December 2009 - 05:54 PM
I wont be trading this news, for BAC or any bank, but I suggest caution on the short side. Last time banks raised capital the typical dillutive effect was not enough to bring down stock prices or cause a selloff, other than short term drops. Also, I suspect some "pumping" will occur before JPM or GS raise capital, if they indeed proceed with offerings as well.
Thanks for this info! Last time, when banks were diluting shares, there were tons of bank shorts floating around. However, this time, I dont think there are much short covering demand around. Look at BAC, only 0.78 % short percent of float.
#4
#5
Posted 02 December 2009 - 06:23 PM
#6
Posted 02 December 2009 - 06:55 PM
#7
Posted 02 December 2009 - 07:54 PM
http://us.cnn.com/vi...er.deustche.cnn
Edited by arbman, 02 December 2009 - 07:54 PM.
#8
Posted 02 December 2009 - 08:53 PM
From a pure technical analysis basis, BAC needs to break above 16.50 on massive volume for a reversal. Then there's the gap fill above that.
+1
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#9
Posted 02 December 2009 - 09:03 PM
#10
Posted 03 December 2009 - 06:58 AM
Edited by Jhoe, 03 December 2009 - 07:02 AM.