Bank of America
The volatile Dow
That's what happens when a once-venerable bank is beaten to half of its book value under the weight of litigation and a black box balance sheet.
The irony comes into play because of how it got here. Bank of America is missing opportunities today because of the opportunity it pounced on a few years ago.
In 2008, Bank of America bought a troubled Countrywide to boost its mortgage business. At Countrywide's height in 2006, it financed a fifth of all U.S. mortgages. And B of A was able to buy the company for the seemingly rock-bottom price of $4.1 billion in stock.
Today, Bank of America is still trying to get out from under the litigation and toxic loans from the Countrywide purchase. Its attempt to be the major player in the mortgage space has backfired, and caused Bank of America to have to forego prime opportunities.
As Wells Fargo
While the others feast, B of A has shuttered its correspondent lending business, is fighting with Fannie Mae over putbacks, and is looking to slim down its operations under Project New BAC.
Wells Fargo and JPMorgan are reaping the rewards of well-timed wise financial crisis acquisitions --- Wachovia for Wells, and Washington Mutual for JPMorgan. Bank of America was the first to act with Countrywide, but it pulled its trigger too soon.
All that said, I do believe Bank of America shares, though risky, have some value in them. I give a thorough run-down of Bank of America's prospects in our Bank of America premium report. Just click here to continue reading.
Anand Chokkavelu owns shares of Bank of America, Wells Fargo, and JPMorgan Chase. He also owns long-dated options on Bank of America, and warrants on 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. 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.