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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (44084)	8/26/2011 4:06:53 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78481

>>might be talking to myself but upon furthur reflection of this berkshire/Bac deal, I dont see how this is possibly in the best interest of shareholderS. If Im a BAC common stock owner, I absolutely pissed about this. considering they said they dont need to raise equity and can borrow from the fed at under 1% why on earth would they dillute existing shareholders and increase their costs of borrowing? I would absolutely stay away from BAC after this.<< It does not matter for how much BAC can borrow short term debt. What BAC needs is the confidence of their customers that they are going to be around, otherwise the stock price deflation can quickly become a real issue in their business dealings. The main asset of any financial company confidence - if their customers loose confidence in BAC, they are dead in 24h. Confidence is what WEB provides to BAC, in exchange for a yield premium on the 5B$ in equity (preferred count as equity for regulatory purposes). From the strictly financial perspective, this deal is of course dilutive for shareholders, but this is not strictly a financial perspective. The advantage of WEB is he is a loan shark that is perceived as a "good guy" and well meaning.. All the more reason to buy Brk.b stock, imo. I believe this is actually a win-win situation even for BAC shareholders too.