Why Invest In Bank Of America

The Financial Select Sector Spdr Etf

XLF offers efficient exposure to the heavyweights in the US financials segment. Its cap-weighted, S& P 500-only portfolio means that its concentrated in large banks and avoids small-caps. For many investors and traders, XLF has been the go-to ETF for financials exposure, though there are more comprehensive funds out there for long-term exposure.

As of Q1 2021, XLF held 76.5 million shares of BAC, making it the fourth-largest fundholder.

A Bathtub A Call Center And A Billion

Buffett was taking a bath in late August 2011, reflecting on his investments in American Express and Geico during difficult periods for both companies, when he had the idea to bet on Bank of America, Fortune reported at the time.

Soon after, the investor picked up the phone and tried to get through to the bank’s CEO, Brian Moynihan. He was initially thwarted by a call-center worker.

“Warren asked to speak to me and of course they don’t transfer everybody who calls the call centers to the CEO’s line,” Moynihan told Bloomberg in 2019.

Buffett eventually got through to Moynihan and proposed an investment in his company. Moynihan replied that Bank of America didn’t need the capital.

“I know, that’s why I’m calling,” Buffett responded, adding that accepting his money would provide stability, a stamp of approval, and a cash cushion.

Moynihan agreed, and the pair signed a deal less than 24 hours after speaking for the first time. Buffett’s cash landed in Bank of America’s account a couple of days later.

The Vanguard S& p 500 Fund

The Vanguard S& P 500 Fund closely tracks the S& P 500 Index, and it is the second-largest mutual fund holder with 152.5 million shares of BAC, or 1.77% of the companyas of the third quarter of 2020. VFIAX is the industry’s first index fund for individual investors. Over 98% of its assets are invested in U.S. stocks covering a diversified spectrum of the largest U.S. companies, mirroring the S& P 500. Bank of America shares represent less than 1% of Vanguard 500’s $221 billion portfolio.

You May Like: Investment Banking M& a Process

Should You Invest Alongside Buffett

To be clear, it’s not necessarily a great idea to buy any stock just because a billionaire did, even if that billionaire is Warren Buffett. However, Bank of America does look like an excellent long-term value investment right now. It’s cheap, it’s a technology leader, and its management team is doing a fantastic job. In fact, I wouldn’t be at all surprised to see Buffett buy even more.

Matthew Frankel, CFP owns shares of Bank of America, Goldman Sachs, Berkshire Hathaway and Wells Fargo. The Motley Fool owns shares of and recommends Berkshire Hathaway and recommends the following options: short March 2021 $225 calls on Berkshire Hathaway , short January 2023 $200 puts on Berkshire Hathaway , and long January 2023 $200 calls on Berkshire Hathaway . The Motley Fool has a disclosure policy.

Romero Mentorings Analyst Prep Program

The Analyst Prep Program teaches the technical and practical skills that investment banks, hedge funds, and private equity & consulting firms look for in a candidate. Students begin with little to no technical skills and develop into fully prepared professionals who can perform as first-year analysts from day one through the programs training and internship.

Recommended Reading: Investment Adviser Registration Fees By State

Although Banks Are Considered Riskier Right Now Bank Of America Has A Very Nice Capital Position And In My Opinion A Safe Dividend

Warren Buffett and his investing team at Berkshire Hathaway have now made not one, not two, but three big investments in Bank of America. First, Buffett purchased more than $800 million worth of shares at prices ranging from roughly $23.51 to $24.23 per share. A few days later, he and the company bought another $400 million worth of shares at prices ranging from roughly $24.10 to $24.30. Last week, Buffett struck again, purchasing another $522 million worth of shares at prices ranging from roughly $24.32 to $25.24.

In just two weeks, the Oracle of Omaha and Berkshire Hathaway collectively invested $1.7 billion, purchasing 71.6 million shares in America’s second-largest bank by assets. Berkshire now owns more than 1 billion shares of Bank of America and 11.8% of total outstanding shares, making it the company’s second-largest holding behind Apple.

Needless to say, Buffett is bullish on Bank of America. I obviously can’t read his mind, but one reason I think he may like Bank of America is because of the company’s strong capital position and safe dividend long term. Let’s dig into both.

Image Source: Getty Images.

Charles Schwab Leading Custodian For Independent Advisors

• Culture The company believes in every firm of every size deserves world-class support and everything they need to grow and succeed by committing millions in resources.
• Services It offers banking, commercial banking, an electronic trading platform, and wealth management advisory services to both retail and institutional clients. It provides industry-leading custody service with no asset management minimum, no custody fees, and no intention to raise them.
• Global M& A Advisor Ranking: N/As
• First-year investment banking analyst average base salary: $73,870/year

Read Also: Should I Invest In Airbnb

Bank Of America Corporate Center

The Bank of America Corporate Center is an 871 ft in , . Designed by and HKS Architects, and best known as the headquarters of the namesake , it has been the tallest building in North Carolina since its 1992 construction, and is the as well as the .

Sometimes locally referred to as the “Taj McColl” after former Bank of America CEO , who was responsible for the tower’s construction, on a clear day the tower is visible to the naked eye from 35 miles away.

Bank Of America Is A Good Value With Some Gusty Tailwinds To Help It Soar

So, you’ve got some extra money set aside from the most recent stimulus check, or from your tax returns, and you want to invest a chunk of it in a stock that will generate solid gains. You could opt for a few shares of a big-name tech company, or roll the dice on a speculative meme stock. Or you could invest that money in a market-leading company that’s among the top performers in the S& P 500 this year.

Here are two good reasons why Bank of America would be a good place to invest $1,000.

Image source: Getty Images.

Read Also: Best Online Stock Investing Courses

Bank Of America Stock Upgraded To Hold/accumulate

The Bank of America stock price gained 0.679% on the last trading day , rising from $33.89 to $34.12. During the last trading day the stock fluctuated 1.86% from a day low at $33.64 to a day high of $34.27. The price has risen in 7 of the last 10 days and is up by 5.08% over the past 2 weeks. Volume fell on the last day by -9 million shares and in total, 35 million shares were bought and sold for approximately $1.19 billion. You should take into consideration that falling volume on higher prices causes divergence and may be an early warning about possible changes over the next couple of days.

Here’show to buy BAC stockif you’re new to investing.

The stock lies in the middle of a wide and falling trend in the short term and further fall within the trend is signaled. Given the current short-term trend, the stock is expected to fall -4.56% during the next 3 months and, with a 90% probability hold a price between $29.84 and $35.67 at the end of this 3-month period.

What Is Blended Finance And Why It Matters

The world must work together to fight hunger and inequality, provide greater access to healthcare and education, and advance environmental sustainability, among other global challenges.

But it wont be easy or inexpensive.

The United Nations estimates the cost of solving these problems at $6 trillion a year. Government aid and philanthropy, while critical arent enough.

Every year funding falls short by about $2.6 trillion, according to the U.N.

Fortunately, the money does exist. Pension funds, hedge funds, insurance companies, wealth managers and others represent trillions of dollars in potential investments.

To put that money to work on societys toughest challenges, a blended finance approach is needed.

This type of financing brings together philanthropy, government funding and private sector investors with different risk appetites.

For example those willing to take more risk can act as a capital cushion for investors who need to take less risk, but who are interested in financing critical social needs such as clean water and sanitation, affordable housing or renewable energy projects.

Recognizing that high-risk capital is essential in getting such projects off the ground, Bank of America launched a blended finance catalyst pool that will deploy $60 million at a higher risk threshold than typical or business as usual risk thresholds.

What would you like the power to do? ®

Bank of America logo

Learn more: bankofamerica.com/ResponsibleGrowth

Recommended Reading: B Of A Investment Banking

The Power To Drive Change

Take, for example, the WaterEquity fund, which brings together government agencies like the Overseas Private Investment Corporation, foundations, financial institutions and accredited investors to provide funding for clean water and sanitation efforts in the developing world. As part of that effort, Bank of America provided $5 million of interest-free capital as the first money into a fund that ultimately attracted $45 million in additional private capital for water and sanitation projects in South and Southeast Asia. Safe water and sanitation, beyond their humanitarian implications, will boost the global economy by creating healthier and more productive citizens and businesses. Together with other financial services companies, development organizations and non-profits, we can use blended finance to support such projects as affordable housing, clean water and gender equalitychallenges too big for anyone to solve on their own, notes Anne Finucane, former vice chairman at Bank of America.

Is Bank Of America Stock A Buy

The increase in provisions for credit losses is concerning, especially with inflation rising and a possible recession looming. Net charge-offs increased 46% over the first quarter but are down 4% year over year to $571 million, with a ratio of 0.23%. Also, nonperforming loans were down 10% in the quarter and 15% year over year, with a ratio of 0.41%. This is obviously something to keep an eye on over the next few quarters.

The other metric to watch is loan activity. If the economy does fall into recession, will average loans contract or continue to grow? Rising interest rates should continue to boost net interest income, and as a bank that gets 40% of its revenue from consumer banking, it should help revenue, even if loan growth slows.

Bank of America is pretty cheap right now, with a price-to-earnings ratio of about 10, down from 17 a year ago, and a price-to-book ratio right around 1, down from 1.7 a year ago. It also has a pretty good dividend yield of 2.53% with a low 22% payout ratio.

For these reasons, Bank of America looks like a decent buy right now. Banks, in general, should perform well in this rising-rate period, as long as the economy does not go into a deep or long recession — a big if, but one to consider.

Also Check: Can I Invest In Sequoia Capital

Settled $228 Million Lawsuit Claiming Involvement In Kickbacks And Inflating Insurance Costs Forced On Homeowners

On March 14, 2011, members of hacker group Anonymous began releasing emails said to be from a former Bank of America employee. According to the group, the emails documented alleged “corruption and fraud”. The source, identified publicly as Brian Penny, was a former LPI Specialist from Balboa Insurance, a firm which used to be owned by the bank, but was sold to Australian Reinsurance Company QBE.

On April 7, 2014, Bank of America and QBE settled a class-action lawsuit stemming from the leak for $228 million.

There Could Be $20 Trillion Of Asset Growth In Esg Over The Next 20 Years

The top three groups that care about ESG are women, millennials, and high-net-worth individuals, according to the note.

“Based on demographics, we estimate over $20 trillion of asset growth in ESG funds over the next two decades,” the analysts wrote. That’s equivalent to the size of the S& P 500 today.

Recommended Reading: Teton Advisors Inc Investment Management

A Potential For Your Money To Grow

One key goal of investing is to provide the potential to keep up with the cost of living. If youre too protective of your cash, you might not earn enough to keep up with inflation, or the increase in prices over time.

Say, for instance, you stashed $1,000 in a savings account. After 10 years, with a 1 percent interest rate, youll have about $1,105. However, if annual inflation averages 2.5 percent, as it has recently, you would need at least $1,280 after 10 years just to keep pace with rising prices.

Investing your $1,000 instead could potentially lead to a better result. Its important to know that different types of investments carry different risks. For example, stocks are generally considered riskier than bonds but have historically earned greater returns . Investing for 10 years or more gives you some time to potentially recover from any downturns, so you may feel comfortable with a fund that invests in stocks. If you put your $1,000 into a fund that seeks to track the performance of the stock market, and you hypothetically get a 7 percent annual return, you could have the potential to nearly double your money in a decade, ending up with $1,967.

Its Okay To Start Small

Perhaps you assume that investing requires lots of money, and you have other important financial priorities such as maintaining those retirement contributions and creating an emergency fund that can cover at least three months of living expenses. Other needs include a plan to pay off balances on credit cards and buying life insurance, especially if you provide most of the financial support for your household.

Still, holding off on investing for longer-term goals until these needs are fully met could be counterproductive. If you delay working toward longer-term goals until you have your entire emergency fund or youve paid off all of your high-interest debt, you could miss out on important opportunities for potential growth, says Chris Vale, senior vice president of products and solutions at Merrill.

Most people have the potential to pursue multiple goals at once, which means you dont have to choose between saving and investing. Understand the difference between them and use them as they are appropriate to your needs. If progress toward your short-term financial goals permits, you may be able to invest a small amountas little as $25 to $50 a month.

Also Check: Invest In Apartment Buildings Profit Without The Pitfalls

Q: Why Are There So Many Opportunities In Private Markets

A: The private markets can provide a lot of investing options since there are many more private companies than public ones. Also, private companies are often staying private for longer than before, so by the time a company finally does go public, much of the equity appreciation has sometimes already occurred. To capture those returns, you need exposure to private companies.

There are also many opportunities in private credit, which is lending to private companies. Many large institutions have become much more conservative in financing small- and medium-sized companies that make up the middle market. Individual investors are taking up the slack, providing capital to these companies through special lending funds. Weve noticed increased interest from clients in this strategy because it may provide a steady source of income and attractive total returns. Of course, there are risks with private equity investments, including loss of capital.

So Is Bank Of America Stock A Good Buy

While investors would no doubt like to have bought Bank of America stock back when Buffett was loading up in midsummer 2020, the stock still appears to have some room left to run. Bank of Americas above-average dividend yield and good valuation already make it worth taking a look at, but additional factors seem to be supporting the long-term growth of the companys share price. Americas slow recovery from the coronavirus pandemic should continue to unleash both consumer and business spending and loan activity. Additionally, interest rate spreads are likely to increase, which is another catalyst for banks as a whole.

To top it all off, one of the most successful investors in the world owns 12.6% of the outstanding shares of Bank of America, meaning those who buy the stock now are in good company. Just be sure to talk with your investment advisor to ensure that a purchase of Bank of America shares matches your own personal investment objectives and risk tolerance.

Daria Uhlig contributed to the reporting for this article.

Data is accurate as of Jan. 21, 2022, unless otherwise noted, and subject to change.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

You May Like: How To Become Financially Independent By Investing In Real Estate

Bank Of America To Invest $100 Mln In Deposits To Minority

NEW YORK, Oct 4 – Bank of America Corp plans to deposit an additional $100 million into banks that focus on minority communities, the company said on Tuesday.

The program doubles Bank of America’s earlier pledge to deposit $100 million in minority depository institutions, or MDIs, that are mostly owned by minority individuals. The second-biggest U.S. lender has expanded its racial equality initiatives in recent years, making $42.5 million in equity investments in 22 MDIs and Community Development Financial Institutions, and taking equity stakes of less than 5% of each lender.

For the smaller lenders, the influx of deposits “expands their capacity to make loans” for housing or businesses, D. Steve Boland, Bank of America’s chief administrative officer, said in an interview. “What we would hope is our example draws in others” to make similar moves, he said.

The deposits will probably range from $1 million to $10 million, Boland said. Optus Bank, Southern Bancorp and City First Bank are among the lenders that will receive deposits.

“MDIs are a critical resource to minority and underserved communities,” providing banking services, creating jobs and helping businesses, Boland said separately in a statement.

U.S. banking giants have expanded their racial-equity pledges in the years after 2020, when the killing of George Floyd, a Black man, by a police officer sparked global protests.