Julian Assange might be saying he’s got the goods on Bank of America , but Dick Bove’s not buying it.
The Wikileaks founder has been spreading word that he has documented misbehavior by BofA executives that he will disclose after the New Year.
Getty Images
Bank of America flag
While the nature of the bank’s misdeeds remains undisclosed, speculation of what exactly Assange has got tucked up his sleeve has caused some gyrations in the BofA stock price.
But anyone getting themselves upset over the possibility of another significant data dump from Wikileaks is worked up over nothing, says Bove, of Rochdale Securities.
“It may just be the case here that the sound is greater than the fury,” the analyst wrote in a note to clients. “It is highly questionable that Mr. Assange has new information about Bank of America.”
Bove, it should be noted, has a “buy” rating on BofA shares with a gaudy $19.25 price target, representing a 44 percent gain from current levels.
Of all the possible damaging scenarios for the bank, Bove says the worst is the notion that memos could exist showing BofA knew it was creating toxic securities for investors buying into the subprime mortgage market. The collapse of loans to less-than-desirable borrowers capsized high-yielding securities packaged to investors, an event that in turn crushed some of Wall Street’s biggest names including Merrill Lynch and Countrywide Financial, which BofA ultimately absorbed.
“This is the issue that created problems for analysts in the early 2000s and it is the issue the U.S. Senate attacked Goldman Sachs about,” Bove said. “Again, however, there are risk sections in the prospectuses related to these offerings that cover just about everything one can imagine.”
Addressing other possible areas of attack, Bove said information on departed management no longer would be relevant and CEO Brian Moynihan hasn’t been around long enough to attract any dirt.
The mergers with Merrill and Countrywide already have been addressed through fines and bad PR for BofA’s coddling of former Countrywide CEO Angelo Mozilo.
Should the leaks contain information about BofA customers – a la the State Department leaks – Bove reasons that would backfire on Wikileaks by exposing Assange to confidentiality lawsuit claims.
And underwriting lapses essentially would amount to picking at scabs as “the bank is paying tends of billions already for lapses in its underwriting standards.”
Ultimately, it appears the market is leaning more toward the Bove tack than the Assange threats. BofA stock is up nearly 22 percent since its Nov. 30 closing price and is easily outperforming its peers.
Questions? Comments? Email us at NetNet@cnbc.com
Follow Jeff @ twitter.com/JeffCoxCNBCcom
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @ www.facebook.com/NetNetCNBC
