Regular readers know Bank of America has been a huge thorn in my side - first I took a loss on the common stock, then I traded it in for TARP warrants only to have things go from bad to worse! But there's a silver lining; over the last three days BAC-WTA has rebounded about 50% off its lows. Now this isn't a function of a great earnings release or anything like that, rather it's simply a bi-product of the volatility that's been dominating the market.
Anyway, as a result I decided to sell my stake in BAC-WTA for two reasons. First, I'm still underwater on this position so I wanted to lock in a tax loss. Second, I wanted to use the proceeds to buy AIG TARP warrants (AIG-WT), which are still right around their all-time lows and IMO represent a better value at this time. Specifically, I sold the 4,000 shares of BAC-WTA for $3.40 (netting me $13,595) and used the proceeds to buy 2,000 shares of AIG-WT at $6.94 (costing $13,885).
For anyone interested in AIG there's a great analysis here: http://longtermvalue.wordpress.com/2011/05/13/american-international-group-aig/. Bruce Berkowitz has also commented extensively on the company, so you can check that out as well. And lastly, just because I sold BAC doesn't mean I've given up on the company (or banks in general). In fact, Citigroup is another company high on my watch list.
Questions? Comments? Email mevsemt@gmail.com
