John Paulson, the hedge fund manager who made the "greatest trade ever" by betting against the housing bubble, has been bullish on Bank of America since the summer of 2009, when he bought a bunch of preferred shares and converted them to common stock at around $10 a share. The stock has had its ups and downs since then, rising to as high as $19 a share at one point. It's now back down to below $12 a share.
Teri Buhl at Forbes reports that Paulson is a little less bullish on Bank of America's earnings than he was at the start of the year.
John Paulson told investors today he still likes his long trade in Bank of America but has now lowered his outlook on how far robust the bank can book earning per shares in 2012.
Last summer Paulson was telling investors he predicts BofA to score a whopping $3 EPS by the beginning of 2012. Today he changed that target to $2.66 normalized EPS in 2012. If you assume a price to earning ratio of 10 that would equal around $26 dollars a share on $BAC. Paulson’s 167 million shares of this mega bank sits in his Recovery Fund.
The Street will be watching Paulson & Co. third quarter 13-F filings closely to see if recent events, you know the whole $47 bn in ‘put back’ loans bondholder want BofA to assume now, will drive this FORBES billionaire hedgie titian to scale back some of his huge position. If so, it likely means he’s changed his trading thesis —the one that got a room full of investors in a frenzy recently when he said everyone should buy a house NOW because rates are so low and you might not get this opportunity again.
But of course J.P., as his Hampton friends like to call him, will never let it slip that he’s not so bullish until his mega billion dollar hedge fund actually make changes in their Bank of America position. But hey-since he got in with a cost of $9.17, and the stock
Companies mentioned in the post
Bank of America
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