Bank of America Corporation (NYSE: BAC) was doing very well earlier and it hit $10.00 for the first time since August 1, 2011 earlier this morning. That was before the sell-off. While Bank of America trades at a handy discount to book value, the bank did not request to the Federal Reserve that it be allowed to boost its dividend nor that it could buy back more stock.
Now there are rumors that the bank is going to conduct a large secondary offering. Again, these are just trading desk rumors as of now. If this is true, it sort of flies against what the bank has been saying about its finances. That would also lower its book value per share, at least on a static basis. The bank already got a Warren Buffett endorsement for the preferred shares and that did not help the stock for a while.
If this is true, it may have some investors wondering why they chased BofA shares up as a double from the December lows. BofA shares are down 2.6% at $9.55 on more than 600 million shares.
JON C. OGG