Recent buys – BAC and CAT

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I recently bought 211 shares of BAC at $14.90 and $14.63. The market react to the weak labor market posed a great opportunity to average down on my BAC position. As stated at the beginning of the year, I’m long with the financial sector. The FED has kept the interest rate down for so long hoping to boost the economy but it really hasn’t been working as well as they thought. Everything has its cycle. I believe the time is this year to buy into the cash hoard financial sectors. 

BAC is not a dividend aristocrat, due to the financial meltdown 2009, but prior to that it was paying $1/share, just like WFC, I have no doubt that they will eventually raise to the previous level. Aside from a great balance sheet, earning $0.38/share per quarter, right now it’s only paying $0.05/share 1/7 of earning. That poses a high probability for the chance the company will prop up the dividend payout. 

Financial sectors are heavily regulated. People would view it as it deter growth. I beg the differ. It’s just means that big brother is watching. The FED and the SEC are making sure banks don’t make the same HUGE mistakes prior to the 2009 financial meltdown. That bring more confident to shareholders. 

Financial sectors have exposure to oil stocks – unlike WFC which rely 15% of loaning business financing sector, BAC doesn’t have oil exposure, so it hasn’t been affected by the low commodity price. 

4 Comments

  1. Thanks for sharing your recent buys with us. You don’t really read anything about BAC among the dividend bloggers. It’s an interesting buy indeed. As you know I have only one American bank, WFC and three Canadian, TD, BNS and RY. If I was to consider another American bank it would be USB. In October I’m looking at the industrial names first like CAT and EMR.

    • My second biggest holding would be WFC. I like it, because it has the biggest return on equity. During the financial crisis, it swallowed Wachovia. Before 2008, WFC didn’t even have a branch in the east, now with Wachovia, it’s become the biggest retail bank. I won’t buy more WFC as it has fully recover and with 15% exposure to oil and gas, I’m afraid that it would face some challenge ahead.

      With bac, I bought it at $7.xx, and added more until today (I sold the position when I bought my 4-plex), regardless what my account says, I have made so much money on bac, and it is still 1/3 of what it worth prior to 2008, BAC and C are the only 2 big banks left that have a lot more room to run. We will see. I’m long financial sector. As I have BAC! WFC! COF! v! gs, pfg, ge (believe or not, it is a financial company among other thing), JPM

      I’m also long Canadian banks CM! RY! BMO! TD! BNS

      I don’t know about next year, but this year should be great for financial sector.

      It is difficult to continue to invest in something where the price keeps yo yo. But that is how it’s going to go as we entering the bear market. What we should look at is whether the companies that we are investing will survive another crash. Bac just happen to have tons of cash, as the FED but a very vigorous standard in US banks now, I’m big supporter on oversight. The financial sector is now a lot safer than prior 2008 cash for sure. It probably would take another 20 years for people to forget about the financial crisis, as people will tend to forget.

  2. Thanks for sharing your buys Vivianne. It’s always nice adding to the portfolio. You know what’s best for your portfolio so do it up. Lots of quality companies on the pull back but always so light on capital… 🙂
    Take care my dear.

  3. WRI,
    Thanks for sharing! Great purchases btw! Your portfolio is looking nice…Keep up the great work!
    keep in touch
    LOMD

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