Bank of America a compelling investment: Pro
Discussing value in bank stocks, with Bill Nygren, Oakmark Fund.
When Baupost, the $30 billion Boston-based hedge fund now managed by Seth Klarman, was founded in 1982, it was launched with a core set of aims. Q4 2021 hedge fund letters, conferences and more Established by Harvard professor William Poorvu and a group of four other founding families, including Klarman, the group aimed to compound Read More
why is bank of america yours? bank of america is the poster child for the housing crisis five years ago. we believe ceo brian moynihan was dealt a bad hand when he took over that company. the countrywide acquisition was a lot more damaging than we realized back then. the job he has done to restore this company to the premier balance sheet in the industry, company’s got a book value over $20 a share, we think they should be able to earn over 10% on that equity soon if not in 2015, by 2016. a stock at 16 and change with earning pos terrible at 2 1/4 and almost all of that money then coming back to shareholders is either dividends or share repurchase, we think it’s a compelling investment. it’s josh brown. i’m long on stock and i totally agree with your bull case. we made it overweight relative to the bank sector because of the things you talked about in terms of real earnings power. what’s the best case, worth case for 2014 and beyond in terms of the speed at which rates rise and what kind of affect that will have on the earnings power on how much they return to shareholders and on what multiple investors will be willing to pay for this.
Nygren’s top tech picks: Oracle, Intel & more
Discussing the outlook for old tech names, with Bill Nygren, Oakmark Fund.
i think it’s more the new management is repositioning the company so that a transition pard mobile is no longer a negative for intel. they’re the leading company in the chip space. they areting more r&d dollars into mobility than probably the rest of the industry combined. we just think it’s a good pet that they won’t have a same type of success in mobility as they had in desktops. will you continue to own microsoft going forward regardless of who takes over as ceo? well, one of the things that oak mart that we look for in addition to companies being cheap relative to their business value is management that’s sorry ended to maximize long-term per share vae. we have not been thrilled with prior microsoft management. we would like to believe that the new management will be more return focused on how they allocate their cash flow. perhaps that will mean increasing share repurchases and increasing the dividend more so than has been done in the past. so, i mean, if not mulally, then who? i mean, who would — what would cause you to sell the stock? let’s put it to you that way. we would sell the stock if they put management in place that we thought had goal other than maximizing long-term per share value. so if they initiated a plan to making a question situations that were not based on the returns they could generate that would cause us to sell it. it’s a name you want to see in that role? no, we don’t. we don’t — we aren’t in the position to suggest to the board who they should hire. they know it much better than we do.