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Banking, finance, and taxes

B of A: When Your Stock Breaks Under Offering Price (BAC, JPM, MER)

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By Douglas A. McIntyre Updated Published
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Bank_of_america_logoBank of America Corp. (NYSE: BAC) is being taken to the cleaners this morning.  Shares closed down sharply yesterday at $23.77 after closing at $32.22 just the day before.  Bank of America raised right at $10 billion via a security sale of common stock to the tune of 455 million shares at $22.00 per share.  Yet shares are trading well under the pricing level.

Bank of America itself and Merrill Lynch (soon to be B of A) underwrotethe offering.  What is interesting is that shares are down 16% at$19.71 in pre-market trading with about 30 minutes to the open.

It seems that there is pressure as JPMorgan Chase (NYSE: JPM) stillwants $5 billion in a collateral payment from Merrill Lynch (NYSE:MER).   There could be concerns that B of A will be on the hook forthose funds.  JPMorgan wants what it feels belongs to it, and MerrillLynch believes it has put up enough collateral. 

In a side note, Keefe Bruyette & Woods, or KBW, upgraded thisstock on valuations.  The new rating is still only a "Market Perform." Its research is generally given a better reception than this, butconvincing someone about "value" right now is like preaching to thedeaf.

Bank of America’s stock has had a trading range of $18.44 to $52.96 over the last 52-weeks.

Jon C. Ogg
October 8, 2008

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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