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Tuesday, March 10, 2009

Buy Bank of America


Buffett said this Monday morning on CNBC about banking:

BUFFETT: The spreads have never been wider. This is a great time to be in banking, you know, if you just get past the past and they are getting past the past.

Wall Street doesn't buy into it. Wall Street is wrong. Look at BofA's net interest income the last three years:

12/2008 13,106
09/2008 11,642
06/2008 10,621
03/2008 9,991
12/2007 9,164
09/2007 8,615
06/2007 8,386
03/2007 8,268
12/2006 8,599
09/2006 8,586
06/2006 8,630
03/2006 8,776

BAC is trading at $4.79. Does that price reflect the widening spreads that Buffett spoke about?

Look at the calls on BAC. They are way too cheap. The May 5's are only $1.31, and the April 6's are only .59. You have a double and a triple in these numbers within the week. (I'm not advertising the March calls, because I own them.)

For once, Bank of America's advertising is correct.

It's the Bank of Opportunity!

For Wall Street and Main Street!

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