Paulson Thinks He Can Make Three Times His Money On Bank of America

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According to Paulson & Co internal documents John Paulson is thinking soon to be CEO-less BofA will be worth three times what he bought it for in two and a half years time. Yesterday, Bloomberg reported JP's been telling his investors Bank of America still has considerable upside and room to double in value.
But according to documents we saw, JP started telling investors in July he got into this trade with the expectation the stock would more than triple by the end of 2011.
As first reported by Chris Gillick in the September issue of AR magazine, Paulson's cost basis for his huge-ass BofA position was $9. Using a conservative P/E multiple of 10, and a 2011 earnings per share estimate of $3, Paulson's analysis estimates $BAC should be worth $30 at the tail end of 2011. In other words, pay no attention to JP taking a mere 8.2 million shares off his 168 million position in the third quarter.
Given that some of you might make your own estimate off of JP $3 EPS prediction here's how Team Paulson does the math via his marketing material:



When asked if JP's bullish view on the bank was realistic Timothy Connolly of Sconset Capital said, "That's entirely possible. In fact if BofA does manage to get out of the weeds they may buyback a boatload of stock and earnings per share could be even higher." If you really think they'll be out the weeds and estimated 15x a $3 EPS, the stock could reach $45 at the beginning of 2012.
Paulson's spokesman declined to comment on the investment. While King Cohen has pretty much given up BofA, we don't expect JP to be selling out of his entire stake any time soon.

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Do you anticipate that at some point the future, in a moment of anger, you'll get the urge to unbuckle your belt, drop trou, and display your ass in the direction of your superiors? Do you hope to keep your job afterwards? If so, just a forewarning: Bank of America is not the company for you. Send a resumé to Citigroup or KKR or wherever. According to court documents, Jason Selch's friend Chris O'Dea was fired after he refused to accept lower compensation. This ticked Selch off. Selch burst into a conference room where executives from Columbia were meeting to give them a piece of his mind. He wound up giving them a piece of something else as well. First Selch asked if he had a non-compete agreement, which on Wall Street is usually a way of threatening to quit and go to work for a competitor. After the executives said he didn't have a non-compete, Selch mooned them, told one of the New York-based executives never to return to Chicago, and left the meeting. Extraordinarily, Selch wasn't fired. Instead he was issued a formal warning. Selch’s boss testified that while 99 percent of employees would have been immediately fired, Selch was one of the one percent who could be granted a one free mooning reprieve. The executive actually fought for Selch to keep his job. When Columbia CEO Brian Banks found out about this incident, he insisted that Selch be fired. The behavior was too “egregious” to allow Selch to continue at Columbia. No free mooning at Bank of America, Banks decided—even if you are in the one percent. The firing meant that Selch lost a multi-million contingent bonus package that would have vested if he had remained at the company a few months more. Because he was fired, Bank of America got the keep the money. Selch sued, arguing that firing him after issuing warning was a breach of contract...Last Wednesday, a three-judge appeals panel upheld the trial court, describing the mooning as “insubordinate, disruptive, unruly and abusive.” BofA Right to Fire Broker Who Mooned His Boss: Court [NetNet]