For Immediate Release
Chicago, IL - April 12, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
Bank of America Corporation
(
BAC
),
BlackRock Inc.
(
BLK
),
MetLife Inc.
(
MET
),
The Bank of New York Mellon Corporation
(
BK
) and
Dell Inc.
(
DELL
).
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free Profit from the Pros newsletter:
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Here are highlights from Wednesday's Analyst
Blog:
BofA's $8.5B Settlement Deal Opposed
Bank of America Corporation
's (
BAC
) $8.5 billion mortgage settlement deal is facing opposition from
New York's attorney general (
AG
), Eric Schneiderman. According to the AG, the compensation that
BofA is giving to the investors is inadequate compared to the
losses incurred by them. This forced him to file papers in the New
York State Supreme Court justice department for permission to
intervene in the case.
The objection to mortgage settlement deal comes after the case
was transferred from the federal to state court in late February.
Earlier, in August 2011, New York AG had raised objection against
the deal and won the approval of the federal court judge to
intervene and take part in the case. But, with the settlement deal
again transferred to the state court, he has to file for the
permission to participate in the case again.
BofA's settlement deal requires the consent of New York State
Supreme Court before the company can proceed with the distribution
of the compensation among the investors.
The Story Behind
In June 2011, BofA had reached an agreement to pay $8.5 billion
for its legacy Countrywide Financial Corp. mortgage repurchase and
servicing claims. The settlement took place between 22 investors
who suffered significant losses for their investments in mortgage
backed securities (MBS) that were sold by Countrywide prior to the
housing market failure. BofA acquired Countrywide in 2008.
The agreement basically covered most of BofA's legacy
Countrywide- issued first-lien MBS repurchase exposure. It
represented 530 trusts with original principal balance of $424
billion and total current unpaid principal balance of about $221
billion.
The group of investors, including
BlackRock Inc.
(
BLK
), PIMCO,
MetLife Inc.
(
MET
) and the Federal Reserve, had alleged that prior to the financial
crisis, Countrywide had sold securities that were tied to
bad-quality loans. The loans were not even well-managed by
The Bank of New York Mellon Corporation
(
BK
), which was the trustee for these MBS. Therefore, these investors
sought a buyback relief in MBS that were offloaded by
Countrywide.
Conclusion
The acquisition of Countrywide substantially increased BofA's
mortgage exposure compared with its peers. Following the collapse
of the housing market, mortgage repurchases claim risk for the
company grew manifold. This has significantly drained the company's
bottom line over the last several quarters.
Now, with the new objections raised by the New York AG, there
might be a delay in getting the approval. However, if the New York
AG participates in the settlement deal, the investors will have a
chance to get a better deal from BofA.
Currently, the shares of BofA have a Zacks #3 Rank, which
translates into a short-term 'Hold' rating. Additionally, we
maintain our long-term "Neutral" recommendation on the stock.
Dell on a Shopping Spree
Dell Inc.
(
DELL
) is on an acquisitions spree. After acquiring Clerity Solution --
a provider of application modernization services -- in April 2012,
the company has recently acquired software company Make
Technologies Inc. Financial details were not disclosed.
Make Technologies provides software and services that modernize
traditional applications used by cloud-based systems. The
cloud-based products from the company have the capacity to cut
cost, reduce risk and re-engineer applications.
This looks like an ideal combination, as it is likely to result
in single vendor solutions for any modernization activity. It
should therefore open up growth opportunities for Dell's core
application modernization software and services.
Acquisitions have helped drive significant growth at Dell.
Earlier in February, the company agreed to buy Virginia-based
backup and replication software maker, AppAssure Software and
followed this up with the acquisition of California-based SonicWall
in March.
Last year, the company completed the acquisition of storage
solution provider Compellent Technologies Inc. This acquisition has
enhanced its portfolio in the automated data transfer and
management, tiering and thin provisioning segments.
Although Clerity is a very good takeover by Dell, we are unclear
about the extent to which the acquisition will be financially
accretive. But we believe that the continued enhancement of the
enterprise solutions portfolio would generate higher revenue, going
forward. We also think that the positive impact of all the
acquisitions may not be evident for some time, as the new units
would take time to gel with the existing capabilities.
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BANK OF AMER CP (
BAC
): Free Stock Analysis Report
BANK OF NY MELL (
BK
): Free Stock Analysis Report
BLACKROCK INC (
BLK
): Free Stock Analysis Report
DELL INC (
DELL
): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
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