Tuesday, 07 October 2008 06:00

Anecdotal observations regarding Bank of America

This bank is in big trouble. Notwithstanding their own credit issues, a slowing business cycle, and horrible macro conditions, they actually paid $100 billion for acquisitions in the last 5 quarters. This company wasn't even (IMO) worth $100 billion in the last 5 quarters. Talk about subprime borrowing!

Two of those acquisitions were the largest companies in their respective industries, along with the largest problems caused by the Asset Securitization crisis (or one could say caused by them). Merrill Lynch led Wall Street in asset value writedowns, and I don't think they were really all that aggressive in doing so. Countrywide is a gaping radioactive cesspool of liabilities and underwater assets (see the posts below from LAST YEAR). They actually have practically as much in REOs (dollar value) as performing mortgages. This makes them effectively a real estate company - against their will. The legal liabilities appear to be near limitless. What the hell was Ken Lewis thinking when he bought these two companies? Integrating a large acquisition is hard enough, doing 5, with 2 being the largest in their respective (very large) industries during the worst credit and real estate downturn since the Great Depression, as your own credit and earnings metrics deteriorate in the face of nearly $10 billion + worth of legal liabilities seems to be a form of corporate hari kari. Then again, what does a lowly blogger know about the intricacies of high finance and corporate machinations...

Friday, 07 September 2007

2. Bubble, Banks and Builders
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
Reprinted from 10/6/2007 Well, equity prices are rising to record levels, shorts are getting squeezed as companies that seem to be headed towards bankruptcy are gaining 10% per day, and the macro/micr
Sunday, 23 December 2007

3. Opinions on Countrywide's Business Practices and Management
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
Tuesday, 04 September 2007

4. Download a "Window" into Ambac's Problems
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
Two simple, but unflappable tenets that I follow when investing are: 1.) Economic profit must be evident in order for the investment to be worthwhile. Economic profit exists when the re
Friday, 04 January 2008

Monday, 03 December 2007

Last modified on Tuesday, 07 October 2008 06:00