NEW YORK (
Bank of America
's decision to sell its remaining stake
is a bullish sign for the fund giant, according to a report from Ticonderoga Securities Thursday.
Ticonderoga analyst Doug Sipkin argues the move by Bank of America increases the likelihood BlackRock will buy back shares, since it will make such a move less expensive by increasing the percentage of the "float," or shares available for trading.
Still, Sipkin notes BlackRock must be careful not to buy back too many shares or it would become ineligible for inclusion in the Standard and Poor's 500 index. BlackRock's board has authorized a buyback of 5.1 million common shares which, the company noted in a press release Thursday, does not include the preferred shares it will buy back from Bank of America.
BlackRock will buy back $2.545 billion worth of its shares from Bank of America, which acquired the stake in 2009 as part of its purchase of Merrill Lynch. Bank of America has been selling off the stake ever since the crisis, part of a strategy of selling off assets to focus on what it considers its core businesses and improve its capital position.
Written by Dan Freed in New York
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