Missed the BofA rally? There's still time, says investment exec

Missed the BofA rally? There's still time, says investment exec
Brown says bank's stock still undervalued when compared to earnings potential
MAR 19, 2012
By  John Goff
Thomas Brown, chief executive officer of Second Curve Capital LLC, said it's not too late to purchase shares of Bank of America Corp. and other lenders after U.S. financial-industry stocks rallied this year. The reason to own Bank of America “is not because they're going to become a great banking company, but because the valuation of the company is just too low relative to even their weak earning potential,” Brown said today in a radio interview with Tom Keene and Ken Prewitt on “Bloomberg Surveillance.” Bank of America, the second-largest U.S. lender by assets, jumped 44 percent this year through Feb. 17, leading a 16 percent increase in the 24-company KBW Bank Index. (BKX) The Charlotte, North Carolina-based company finished last week at $8.02, or 62 percent of its tangible book value as of Dec. 31. “If we could just get it back to tangible book value, we've had a pretty good investment,” said Brown, who has held Bank of America shares and is a Bloomberg contributing editor. Brown said it often doesn't make sense for investors to pile into a vehicle such as a mutual fund based on past performance. Retail investors often get lower returns than the mutual funds they buy into because people unsuccessfully seek to “time the market” and they are often “chasing the performance of a manager” who may not maintain past results, he said. “The retail-investor performance in mutual funds is 600 basis points lower, 6 percentage points lower, than the mutual fund itself,” Brown said. “That's an average.” --Bloomberg News

Latest News

NASAA moves to let state RIAs use client testimonials, aligning with SEC rule
NASAA moves to let state RIAs use client testimonials, aligning with SEC rule

A new proposal could end the ban on promoting client reviews in states like California and Connecticut, giving state-registered advisors a level playing field with their SEC-registered peers.

Could 401(k) plan participants gain from guided personalization?
Could 401(k) plan participants gain from guided personalization?

Morningstar research data show improved retirement trajectories for self-directors and allocators placed in managed accounts.

UBS sees a net loss of 111 financial advisors in the Americas during the second quarter
UBS sees a net loss of 111 financial advisors in the Americas during the second quarter

Some in the industry say that more UBS financial advisors this year will be heading for the exits.

JPMorgan reopens fight with fintechs, crypto over fees for customer data
JPMorgan reopens fight with fintechs, crypto over fees for customer data

The Wall Street giant has blasted data middlemen as digital freeloaders, but tech firms and consumer advocates are pushing back.

The average retiree is facing $173K in health care costs, Fidelity says
The average retiree is facing $173K in health care costs, Fidelity says

Research reveals a 4% year-on-year increase in expenses that one in five Americans, including one-quarter of Gen Xers, say they have not planned for.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.