The Little Known Way Bank of America Corp Is Topping Wall Street

Bank of America is known for a number of things, but it turns out one recently revealed number will stun you.

May 29, 2014 at 7:00AM


Think you know everything about Bank of America (NYSE:BAC)? It's just a collection of industry-lagging and risky businesses, right? Dead wrong.

The surprising lead
At a recent conference, the head of corporate and investment banking at Bank of America, Christian Meisnner, gave a fascinating update on a little-discussed part of Bank of America that brought in $16.5 billion, or 18% of total revenue, for the bank last year.

One of the most enlightening revelations was a chart comparing the progress of the investment banking arm -- which represents the fees made from other businesses issuing stock, bonds, or buying other companies -- at Bank of America.

In 2013, Bank of America topped peers Citigroup (NYSE:C), Goldman Sachs (NYSE:GS) and others in a big way: 

Source: Company investor relations.

Even while most of the conversation surrounding Bank of America revolves around its more traditional banking arms, it turns out Bank of America was the nation's biggest investment bank last year -- ECM and DCM represent debt and equity capital markets deals, whereas M&A stands for mergers and acquisitions.

Not only did Bank of America lead the five other biggest banks in bringing in revenue through investment banking, but it trailed only Goldman Sachs in the growth of its business in 2013. This impressive lead wasn't simply in one area -- Bank of America said it held a top three position in seven of the eight industry groups that deals fall into.

Yet if you asked anyone what the biggest investment bank was in America last year, few would put Bank of America on the top of the list, and it may be a stretch for some to put it in the top five. Despite vastly overpaying for Merrill Lynch during the financial crisis, that acquisition is starting to bear fruit.


Why this matters to investors
Bank of America is still a commercial bank at its heart, it has nearly 50 million consumer and small-business relationships, versus "just" 5,200 corporate and investment banking clients, but its Wall Street-business is becoming more important.

Some detractors will say this exposes the bank to additional risk, but a Bank of America "bull" (myself included) would argue this diversity allows the bank to weather cyclical slowdowns in certain businesses like mortgage refinancing and fixed income trading.

After years of legal headaches, it's easy to forget Bank of America actually has a collection of successful business lines like its investment bank. The bank hasn't emerged from all its troubles yet, once it does, Bank of America's strongest businesses may (and should) get more attention from investors.

Big banking's little $20.8 trillion secret
The success of the investment banking arm at Bank of America is one secret, but there is an even bigger one which is about to be revealed. But you can cash in from it. It turns out there's a brand-new company that's revolutionizing banking and is poised to kill the hated traditional bricks-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under Wall Street's radar. To learn about about this company, click here to access our new special free report.

Patrick Morris owns shares of Bank of America. The Motley Fool recommends Bank of America and Goldman Sachs and owns shares of Bank of America and Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information