Updated from 12:28 p.m. ESTOur story exploring whether investors should believe Bank of America ( BAC) CEO Ken Lewis' declaration of the company's strength elicited some strong reactions from readers. Some questioned decisions that BofA has made or were angry at the company or Lewis. Others were confused about aspects of the article, or angry at TheStreet.com for publishing it. We're giving them a platform to express these opinions, and for us to respond, through our reader mailbag.
"Not too sure what your article is trying to articulate," he writes, adding sarcastically, "I really like the last quote where the stock may be a better buy at $5 than $3." We asked, in the article, if BofA's deteriorated market value is reconcilable with Lewis' statements that the bank is healthy. John S. says yes, it is. "The stock price reflects emotions, not financials," John asserts. "Just like Berkshire Hathaway ( BRK-A), it is still the same company with even better basics."
cents a year in consideration of its share price of less than $4, which is about 5% yield," writes Tommy. "The current dividend yield is only 1% -- far less than its peers. This shows BofA is not healthy at all from the eyes of investors."
Tom A. believes Bank of America's issue with the Merrill acquisition was not the bad assets it acquired, but the brokers and sales staff who have fled for competing firms amid a disordered transition. He says BofA made similar mistakes when acquiring the profitable wealth-management firm U.S. Trust, which services high-net-worth individuals. "What no one seems to see is that they are going down the same path with Merrill that led to the total destruction of their acquisition of US Trust," he writes. He later adds that because sales staff, research analysts and clients left, "BofA got nothing for its money." Jeffrey L., on the other hand, believes the problems with Bank of America are too much leverage, and too little due diligence. As far as he's concerned, BofA is "doomed." "Ken Lewis is in denial," he writes. "Did you believe him when he said he knew everything about Merrill after having done only two days of due-diligence work prior to the acquisition? The bank is doomed to failure. Lewis wins the idiot acquisitions of the years for Countrywide and Merrill, yet his board supports him. As I said, the bank is doomed." Moody's Investors Service on late Wednesday issued a word of caution, putting BofA and Wells Fargo on review for possible downgrade. The rating agency expressed concern about the bank's credit portfolio weighing on capital levels as the recession lingers. BofA shares closed down 9.8% to $3.24 Thursday.