Bank of America Will Hit $20: Hedge Fund Pro
NEW YORK (
) --
Bank of America
(BAC) - Get Report
has received a rash of analyst downgrades of late, and investor John Paulson dumped the stock in the fourth quarter, but another well-known hedge fund chief says he hopes to ride the bank's shares to $20.
"We didn't buy it for a move from $5 to $8; we bought it for a move from $5 to $20," Second Curve Capital chief Tom Brown told
Bloomberg Television
in an interview on Wednesday. Brown added that he got into the stock at the start of the year. Bank of America shares were up 43% year to date before Wednesday's market open.
Brown has been adding to shares of Bank of America,
Citigroup
(C) - Get Report
and
Zions Bancorporation
(ZION) - Get Report
this year, arguing there will be "as huge capital return to
bank shareholders over the next several years," according to the interview.
Brown's optimism comes even as three analysts have downgraded Bank of America shares in the past nine days. The first to do so was Charlie Peabody of Portales Partners. He was followed this week by Citigroup analyst Keith Horowitz and Sanford Bernstein's John McDonald.
While there appears to be a strong consensus among analysts that Bank of America has plugged a hole in its balance sheet to meet tougher new capital requirements and address litigation over troubled mortgages, analysts now question the bank's earnings potential, since it has sold many of its assets to address the capital issues.
Bank of America shares were higher Wednesday morning after Tuesday's selloff despite the fresh downgrade from McDonald. Shares of other financials were also higher, possibly buoyed by comments from the governor of China's Central bank in a speech on Wednesday that the country will continue to buy European debt. The remarks were reported by
Reuters
.
--
Written by Dan Freed in New York
.
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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
