BofA shares slip into penny-stock territory
November 29, 2011 | 3:08 pm by Aaron Elstein
Crain's NY Business
If Warren Buffett liked Bank of America’s stock at $7 a share, he should be positively thrilled that it can now be had for about 30% less.
Three months after the world’s most famous investor bought a $5 billion stake in the beleaguered bank, BofA’s stock on Tuesday sank to nearly $5 a share. It’s the cheapest price for the shares since March 2009. Stocks that trade for less $5 each are deemed penny stocks in some quarters and shunned by big investors.
Citigroup lifted its share price from the penny-stock basement to a more respectable realm earlier this year by orchestrating a reverse 1-for-10 split of its stock. The bank’s management said a higher stock price would make its shares more attractive to investors, although such attractiveness seems lost on most since the Citi’s stock is down 46% this year.
A reverse split must be looking pretty tempting now to BofA CEO Brian Moynihan, considering his company’s stock is down an eye-popping 62% so far this year. There doesn’t seem to be any particular reason for the stock’s decline on Tuesday, other than the usual worries about Europe’s financial problems spilling into the U.S.
Near the stock’s low for the day, BofA’s Merrill Lynch division issued a press release declaring that “recent financial hardship inspires mass affluent consumers to tighten wallets.” Presumably at least some of these people are feeling poorer because they own Bank of America shares
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