Forget about Investing for the “Long Term” - Temasek’s new investment strategy has changed into “Buy High, Sell Low!!!”
What else could you possibly deduce from the fact that Bank of America’s shares have surged 74% since our dear Ho Ching & company decided to divest of their BoA shares? This fact has been graciously pointed out to us by the New York Times – article appended below.
The world is watching our dear Singaporean SWF. And Temasek is becoming the laughing stock of the world financial community.
A commenter on the NYT blog has said:
Regarding Temasek’s decision to sell BofA shares near the low – perhaps sovereign wealth fund managers are really just government bureaucrats masquerading as fund managers? If anyone is going to take a loss on an investment – I’m glad it’s them.
— Posted by Jay Young
Earlier, David Faber of CNBC noted that Temasek’s loss was one of the biggest losses ever recorded by a single fund on a single investment in Wall Street’s history.
Ho Ching announced her retirement last weekend. This blog post tracks one of the disastrous investments that she will leave behind at Temasek. Good luck, Chip Goodyear. You’re going to need it =)
For Bank of America and Merrill Lynch, Love Was Blind (NYT) “But the merger, in which Bank of America agreed to pay about $50 billion in stock for Merrill, soured at light speed. Back then, the combined companies would have been valued by the stock market at about $176 billion. Today, the combination has a market capitalization of only $39 billion.”
“When you go into a deal, you hope for the best but expect the worst,” says Nancy Bush, a banking analyst. “I think Bank of America did plenty of due diligence; they just ignored what they found. They knew it was there. They just didn’t completely grapple with the fact that it could get uglier. And it did.”
Bank of America CEO Close to the Edge (Reuters) “This guy’s job is on the line, and he knows it,” said Paul Miller, an analyst at Friedman, Billings, Ramsey & Co. “He’s trying to outrun the recession, and praying things will be better in the second half of the year. It’s going to be a slow process, but given the mistakes Ken has made, it will be difficult for him to keep his job during the year.”
Bank of America tumbles on nationalization worries
By Elinor Comlay
NEW YORK (Reuters) – Bank of America Corp shares fell below $5 for the first time since 1990 on speculation that spiraling losses at newly acquired Merrill Lynch & Co might lead to government control of the largest U.S. bank, wiping out shareholders.
Shares fell more than 11 percent, marking the fifth straight decline, as rumors persisted that mounting losses on mortgages and corporate loans might lead to the nationalization of the Charlotte, North Carolina, lender, or even the ouster of Chief Executive Kenneth Lewis. Bank of America and Merrill Lynch ended 2008 with $2.49 trillion of assets.
“Until we get some clarity that even the largest banks will remain in shareholder hands, this downward spiral is just going to continue,” said Nancy Bush, an analyst with NAB Research.
In latest news, Deutsche Bank has hired 12 of Merrill Lynch’s top bankers into its FIG (Financial Institutions Group). This news is the latest in a string of bad news to hit what must now be considered a disastrous acquisition for Bank of America, and a horrendous investment for Temasek Holdings:
Deutsche Bank Significantly Expands Global Financial Institutions Coverage
2009-02-04 01:06:01 -
Deutsche Bank today announced 12 new hires in the firm’s Financial Institutions Group in its Global Banking division. The additions comprise six Managing Directors as well as a number of Directors, Vice Presidents and Associates, focused on banks and asset management client coverage. The new hires will be located in New York, London and Hong Kong.
John Thain has been “ousted” from Bank of America. He is leaving the firm after Merrill posted a US$15b loss in the latest quarter.
Poor John, or poor John? To me, the man has done his job.
He got Ken Lewis, the big talking bozo, to pay through his nose for Merrill Lynch, the bank which now looks like it was a crap asset.
“Lewis has spent some $130 billion on major mergers to build Bank of America, but has raised the hackles of investors who thought he rushed too quickly to buy Merrill. … Read the rest of this entry »
“Merrill was paying typical Wall Street pay… We intend to pay market instead.” – Ken Lewis
Ken Lewis, CEO of Bank of America, has gone on the record making the statement above. And while this statement may seem to make sense to some, it really betrays Ken’s confusion and fundamental lack of understanding about Wall Street and the investment banking business.
Mr Lewis seems to imply that there is a difference between “typical Wall Street pay” and “market pay.” But While Merrill Lynch gives generous pay packets to its bankers and other staff, this WAS market pay – for the investment banking business. That’s why it was typical. Typical Wall Street Market Pay!
But you see, Ken Lewis really didn’t mean to say he intended to “pay market,” because “paying market” means paying “typical Wall Street pay.” What Ken Lewis really meant was this – We intend to pay “commercial bank pay”. After all, that’s what BoA has been, is, and will continue to be, predominantly – a huge lumbering commercial bank, and a second rate investment bank. Acquiring Merrill isn’t going to change that, and here’s why: Read the rest of this entry »
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