To read Jim Cramer's RealMoney take on the Bank of America offering, click here.
Bank of America
shook up after-hours trading Tuesday with a $8.25 billion equity offering.
The move came after a mixed day of trading which saw the
Dow Jones Industrial Average
fall 29.23, or 0.34%, to 8,4774.85, while the
nudged down 1.58, or 0.17%, to 908.13. The
rose 2.18, or 0.13%, to 1,734.54.
David Faber, a
business reporter, confirmed on the "Fast Money" TV show that the bank had offered 825 million shares at $10 a share. He also said the bank is mulling a move to swap preferred stock for common.
With the offering, the bank is pretty far along with its capital raising, he said. According to Faber, a bullish case could be made for Bank of America, whose stock was $6 when the stress tests began and is now selling equity at $10 a share and doesn't need any more capital.
The news of the secondary offering broke shortly after the show began when Melissa Lee, the moderator of the show, noticed that BofA shares were down 4% to 6% on seemingly no news.
A few of the panelists suspected an equity offering might have been behind the decline, but it was not until Karen Finerman got wind of the news from BTIG that details of the offering emerged. If true, she said, it would be an end to the bank's capital raise. She also speculated that a preferred-common swap might also be in the works.
Throughout out the show, the bank had no comment, a position that thoroughly frustrated Jeff Macke, who berated the bank for holding back the news.
Lee asked David Trone, an analyst with Fox-Pitt, Kelton, what he thought of the offering. Trone said he thought BofA was a good buy. In general, he said bank stocks are volatile because they are captive to macro-economic data. He said the bigger banks are much better off than their regional and smaller counterparts because of their stronger earnings power, capital markets business and mortgage-refi business.
was the other after-hours story that occupied the panel's attention. Lee wondered whether HP's pessimistic outlook for the year could weigh on the market Wednesday.
Adami said he was impressed with HP's earnings report --- its $5 billion in free cash flow, $1.7 billion in earnings and improved operating margins. He said a good entry point for the stock would be $33.50 to $34. Tim Seymour concurred with Adami's assessment, adding the guidance is "what people wanted to see."
Jim Goldman, a
business reporter at HP's conference call, said the company was optimistic about its earnings report and its restructuring efforts, although it still doesn't know what impact currency will have on its outlook.
Macke, who said the Street will be unmpressed with the report, advised getting into the stock at $30.
Both Adami and Seymour preferred
Lee shifted the discussion to oil, which finished up close to $60 a barrel. Seymour said the API numbers that were released in after-hours are very bullish, indicating a draw on inventory. He said this will reflect well on drillers like
Lee noted the Obama's administration's move to dramatically raise fuel economy standards. Adami said
should benefit although he said the stock has gotten ahead of itself. Finerman agreed, saying the company really got way ahead of itself in predicting a rebound in autos.
Seymour noted that
already has a leg up on its U.S. rivals, with a couple of models that meet the new American fuel and emission standards.
Lee brought in Nishu Sood, a Deutsche Bank analyst, to discuss the implications of today's report of a 13% drop in housing starts. Sood says the housing market hasn't bottomed because the economy is weighing on demand, and that outweighs affordability. He also said job losses - a "terrific proxy" for the economy - is putting downward pressure on demand.
Brian Kelly, founder and CEO of Kanundrum, said he would play the world recover via the base metals. He said China's is buying and stockpiling metals, making
PowerShares DB Base Metals
He said a second derivative of that trade is
World Fuel Services
, which he likened to investing in the gasoline station for cargo ships.
He also liked
United States Gasoline
because the demand for gasoline is outstripping supply.
Lee touched briefly on
, which is up 14% for the year and has been on a torrid run since early March.
Adami expressed doubts about the global demand for farm equipment as well as the credit markets for farmers. At 15 time forward earnings, Deere is a little rich, he said.
In the final trades, Adami like H-P at $33.50. Finerman was for Bank of America, and Seymour was for
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