Did the recent financial crisis negatively affect the worst-case scenario valuation for Bank of America? Our prior report on the downside risk to shares of Bank of America concluded that the intrinsic value estimate under a worst-case scenario was $4.85 ("Where's the Bottom? 30% Downside Risk to Shares of Bank of America from Current Levels," Sept. 12, 2011). At that time, BAC was trading at $7.05. Since then, a significant number of macro-economic and company-specific events took place that drove BAC shares as low as $5.03, perilously close to our estimate. In this report, we review the impact — if...
September 12, 2011 Where's the Bottom? 30% Downside Risk to Bank of America Shares from Current Levels Under Worst Case Scenario For those investors who are not making knee-jerk reactions to Bank of America headline news events and subsequently selling BAC shares absent thoughtful research and analysis, many value the stock based on an estimate of the company's tangible book value of equity per share and then multiplying that value by what they believe is an appropriate multiple. In the August 10, 2011, Bank of America's conference call, world renowned investor Bruce Burkowitz provided further support to the notion the market...more