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Pros: BofA Settlement Doesn't Signal 'Buy'

Amid reports that BofA just eliminated a major overhang, is the stock a buy?

The Fast Money traders weren't terribly keen on the stock, even after CNBC’s Kate Kelly, said that BofA is close to a $8.5 billion settlement with mortgage investors.

People close to the situation tell Kelly that the bank is very close to signing off on a payment of this magnitude to put charges to rest that the bank failed to service mortgage loans properly, leading to losses for investors who bought securities containing those mortgages.

Considering BofA has been dogged all year by this case, shouldn't the settlement ‘clear the weeds’ for investors?

Traders Joe Terranova and Pete Najarian say, 'No.'

Terranova admits the stock is undervalued but adds that the ghost of Countrywide constantly comes back to haunt this bank. (In other words issues stemming from the acquisition of the mortgage lender continue to vex this stock.)

And until BofA can put Countrywide to rest, he doesn’t think they’ll be able to "do buybacks or increase dividends," two important moves that Terranova says the bank must make to ignite shares.

Trader Pete Najarian adds that if you buy BofA in the wake of these developments, understand – it’s a long-term buy. “This is not a short term trade. Many open issues still exist,” he says.

Trader Steve Grasso owns shares of BofA, and is somewhat more positive. He says “every day we’re cutting through another page of open issues – and this was a big one.”

It’s important to note that these developments were still coming together at the time this post was published with more details expected on Wednesday.







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Trader disclosure: On June 28, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss owns (TWM); Weiss owns (DE); Weiss owns (CMA); Weiss owns (KEY); Weiss owns (QCOM); Weiss owns (NAV); Weiss owns (EMC); Weiss owns (MSFT); Weiss owns (HK); Weiss owns (COP); Weiss owns (AKAM); Weiss owns (ETP); Weiss owns (NS); Weiss owns (VZ); Pete Najarian owns (AAPL); Pete Najarian owns (C); Pete Najarian owns (MSFT); Pete Najarian owns (MS); Pete Najarian owns (MOS); Steve Grasso owns (AKS); Steve Grasso owns (AMD); Steve Grasso owns (ASTM); Steve Grasso owns (BA); Steve Grasso owns (BAC); Steve Grasso owns (C); Steve Grasso owns (D); Steve Grasso owns (HOV); Steve Grasso owns (JPM); Steve Grasso owns (LIT); Steve Grasso owns (LPX); Steve Grasso owns (MHY); Steve Grasso owns (NDAQ); Steve Grasso owns (PFE); Steve Grasso owns (PRST); Terranova Owns (VRTS); Terranova Owns (IBM); Terranova Owns (FCX); Terranova Owns (CVI); Terranova Owns (F); Terranova Owns (AAPL); Terranova Owns (CAT); Terranova Owns (BX); Terranova Owns (HPQ); Terranova Owns (MA); Terranova Owns (PEP); Terranova Owns (MCD); Terranova Owns (JWN); Terranova Owns (TM); Terranova owns (MSFT); Terranova Owns (LULU); Terranova Owns (WFM); Terranova Owns (DAR); Terranova Owns (BJ); Terranova Owns (HAS); Terrnaova owns (DIS); Terranova Owns (XOM); Terranova Is Short (DELL)

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For Joe Terranova
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