3 Reasons to Sell Bank of America

The following video is part of our "Motley Fool Conversations" series, in which senior analyst Anand Chokkavelu, CFA, discusses topics across the investing world.

Although he's bullish on Bank of America for those who can understand and tolerate the risks, here are three reasons Anand sees for either selling or staying away from Bank of America shares:

  1. Adverse macroeconomic events could precipitate the need for a dilutive capital raise.
  2. Assessing B of A's true balance sheet strength is made next to impossible by ongoing litigation, unknown regulatory mandates, and its heavy derivatives exposure.
  3. The complexity of Bank of America and the largest banks have proven difficult to manage, even if management attempts conservatism.

In the video below, Anand explains.

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Anand Chokkavelu owns shares of Bank of America, Citigroup, Wells Fargo, and JPMorgan Chase. He also owns long-dated options on Bank of America and warrants on Citigroup, Wells Fargo, and JPMorgan Chase. The Motley Fool owns shares of JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup. The Fool owns shares of and has created a covered strangle position in Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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