What an interesting time, my friends. Seriously, we're going to look back on this period and laugh about it (maybe, depends on how much you lost, I guess). Not only has the government become one huge hedge fund as the new cliche goes, but perhaps the oddest thing about this entire episode was the ban on short-sellers.

Well, they weren't totally banned. There was a list of stocks that couldn't be shorted, and they were tied to financial businesses. For instance, General Electric (NYSE: GE), a stock I own, was on the list. Why? You see, even though it makes everything from movies to healthcare equipment, a large chunk of the conglomerate deals with financial transactions. Now, the short-selling ban is gone, and financial stocks are once again subject to the whim of the trading technique.

I hated, absolutely hated, the restriction on short-sellers. It never made any sense (check out Tom Taulli's perspective on this subject).

Look, I can understand and appreciate the fact that the government had to get into the business of capitalism. At some point, there was no choice. If we all could choose, we would choose capitalism over helping a bunch of Wall Street goofballs who became intoxicated on noxious greed and who are laughing at us right now for being bleeding-heart enough to do it. We would. But, there was no choice, sad to say.

Continue reading The short sellers are back - and I couldn't be happier!

The short sellers are back - and I couldn't be happier! originally appeared on BloggingStocks on Thu, 09 Oct 2008 09:35:00 EST. Please see our terms for use of feeds.

If rumors in the financial press are correct today, Bank of America (NYSE: BAC) could announce a deal to buy Countrywide Financial (NYSE: CFC) for about $4 billion as early as today (UPDATE: Rumors of the deal have been confirmed). According to news reports, the boards of directors have been in talks for about a month. Countrywide's market value dropped from $27 billion a year ago to about $4.5 billion as of yesterday on rumors that Countrywide was close to bankruptcy.

Bloomberg reports that Bank of America was looking at a potential loss of $1.3 billion from its stake in Countrywide and instead decided to buy Countrywide at fire sale prices. Bank of America gave Countrywide a $2 billion cash infusion about five months ago in exchange for preferred stock with a yield of 7.25% that was convertible to common shares at $18. With Countrywide's stock closing at $7.75 yesterday and rumors of bankruptcy, Bank of America's cash infusion was looking like a really bad deal. Eric Schopf, fund manager at Hardesty Capital Management, told Bloomberg, "I hope Bank of America isn't throwing good money after bad. They struck a deal that wasn't very attractive. Hopefully they can get it right the second time around."

What does this deal do for Bank of America? The bank gets control over the largest mortgage lender with a lucrative loan servicing business with $1.4 trillion worth of mortgage loans -- the largest loan servicing portfolio as well -- for just about $4 billion in stock. Not bad when you remember that BOA paid $48 billion for FleetBoston Financial in 2004 and $35 billion for MBNA in 2006. In addition, BOA gets instant access to Countrywide's top-notch infrastructure and technology.

Continue reading What does Bank of America get from Countrywide buyout?

What does Bank of America get from Countrywide buyout? originally appeared on BloggingStocks on Fri, 11 Jan 2008 08:11:00 EST. Please see our terms for use of feeds.

An analyst report from Merrill Lynch was clear-cut: Bank of America (NYSE:BAC) is "likely" to make a bid for Barclays (NYSE:BCS). Simply put, it would be a stellar combination. In fact, the deal could see a juicy premium of 25% to 30% (making the price tag a whopping $117 billion).

Basically, Bank of America is running out of room for growth in the US (this is actually the result of federal regulatory caps). Thus, the firm needs to look at non-bank services - such as with its deal to buy US Trust - or push overseas.

And, yes, a Barclays deal would certainly boost Bank of America's global footprint. In fact, Bank of America would be the world's biggest bank (hey, maybe change the name to "Bank of the World"?)

What's more, the deal would provide Bank of America with a extensive investment banking operation. Basically, corporate clients want a global platform - and Barclays would definitely provide that.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.

Barclays in play? originally appeared on BloggingStocks on Fri, 08 Dec 2006 12:35:00 EST. Please see our terms for use of feeds.