Thursday, January 10, 2008

Deal Talk

I like the idea of Bank of America(BAC) acquiring Countrywide(CFC). I like what it does for BAC, and I like what it does for the market. Countrywide has been one of the major sources of uncertainty that has shaken the markets. BAC would be buying a lender with a huge portfolio at a huge discount. I think there will be more turmoil among banks, but this would help things out.

Etrade(ETFC), who's fate has weirdly been tied to Countrywide's, is also trading higher today. I'm not sure that the same result wouldn't happen for them. It makes sense. Etrade has a great brokerage with a big customer base. I wouldn't touch any of these names on speculation, because they could easily fall again, but the prices are very attractive if you're convinced of their long term security.

I'm more intrigued in buying something like Credit Suisse(CS). They have avoided the mortgage mess more so than their peers, and they have a great global reach. They've also just entered into a deal to do business in China. Lots of upside obviously there. I'm still hesitant to pull the trigger on a financial stock, as they probably won't start a recovery for a little while yet.

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