Michael Price Buys Bank of America in Equity Sale (Update2)
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By Lynn Thomasson and Deirdre Bolton
Dec. 4 (Bloomberg) -- Billionaire investor Michael Price said he bought shares of Bank of America Corp. in its $19.3 billion equity sale yesterday after shunning large lenders.
Bank of America raised money in the biggest U.S. offering of stock or preferred shares since at least 2000 to free itself from government restrictions after accepting funds from the Troubled Asset Relief Program. The Charlotte, North Carolina- based company, the largest U.S. bank, sold securities at $15 each, or 4.8 percent less than its closing price yesterday.
“It’s unusual we buy a deal like this,” Price said in a Bloomberg Television interview in New York, without disclosing how much stock he acquired. “We will probably buy more today.”
Price said Bank of America is the only large U.S. bank that he owns, though he holds smaller lenders including Regions Financial Corp. Bank of America’s price could climb above $20 if profit reaches $2 a share, he said.
The average per-share profit estimate of 25 analysts surveyed by Bloomberg is 96 cents for 2010 and $2.10 for 2011. Bank of America rose 27 cents to $16.03 at 10:18 a.m. in New York Stock Exchange composite trading.
Regions Financial, based in Birmingham, Alabama, climbed 2.4 percent to $5.63. Price’s MFP Investors LLC, based in New York, held 850,900 shares of the bank as of Sept. 30, according to data compiled by Bloomberg.
Price, 58, is known as a value investor who made his name buying shares of beaten-down lenders. Bank of America, whose stock fell 66 percent in 2008, plans to repay $45 billion in U.S. rescue funds. The stock is up 12 percent this year.
Regions, which accepted $3.5 billion in TARP funds, has declined 76 percent since the start of 2008.
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Franklin Resources Inc. bought Price’s former firm, Heine Securities Corp., in November 1996 for more than $600 million. During the 10 years before he sold, his four Mutual Series funds ranked in the top 10 percent of all mutual funds tracked by Lipper, the research division of Thomson Reuters Corp.
Price predicted that General Electric Co. will probably be a smaller, more profitable company in the future as it sells assets. Fairfield, Connecticut-based GE said yesterday it will sell a 51 percent stake in its NBC Universal entertainment unit to Comcast Corp. of Philadelphia, the largest U.S. cable- television operator.
“It’s probably a good opportunity, but I’m not there yet,” he said. “They have a big hole on the credit side.”
GE Chief Executive Officer Jeffrey Immelt said in a conference call yesterday with investors that he sees opportunities to acquire businesses as it invests capital from selling the NBC stake.
To contact the reporters on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net; Deirdre Bolton in New York at dbolton@bloomberg.net
Last Updated: December 4, 2009 10:21 EST
