John Paulson, the billion-dollar badass who shorted the mortgage market before its utter implosion (but whose fund was also implicated in the since-settled SEC investigation of Goldman Sachs) is ratcheting down his expectations for Bank of America.
John Paulson told investors today he still likes his long trade in Bank of America but has now lowered his outlook on the bank’s earning per shares in 2012.
Last summer Paulson was telling investors he predicts BofA to score a whopping $3 EPS by the begining of 2012. Today he changed that target to $2.66 normalized EPS in 2012. If you assume a price to earning ratio of 10 that would equal around $26 dollars a share on $BAC. Paulson’s 167 million shares of this mega bank sits in his Recovery Fund.
Buhl wonders whether the revised estimate has anything to do with the nasty letter BofA got last week from bond investors who’re asking for at least some of their money back on $47 billion in potentially faulty mortgages. We’ll add that ongoing investigations by the Securities and Exchange Commission, the FBI and all 50 states’ attorneys general could be reasons to forsee some “earnings headwinds.”
mtaylor [at] observer.com | @mbrookstaylor