Bank of America shares surge after execs buy stock
Bank of America Corp.'s stock led a sharp rebound in hammered financial issues today, after some of the bank's senior executives and directors disclosed that they bought shares Tuesday.
At the very least, the purchases suggest the execs don’t believe the bank is in danger of being nationalized, which would wipe out common shareholders.
From Bloomberg News:
Lewis bought 200,000 shares of the bank yesterday at prices ranging form $5.98 to $6.06, while director Robert Tillman also bought 200,000 shares for $5.77 to $5.78, according to a filing today.
Temple Sloan Jr., lead director of the bank, bought 41,800 shares. Buyers also included William Barnet III, Jacquelyn Ward and John Collins.
The company declined to comment on the stock purchases, spokesman Scott Silvestri said.
The stock was up $1.58, or 31%, to $6.68 at the close of regular trading today.
The average big bank stock rebounded 15% today, and the rally in financial issues helped boost the broader market. The Dow Jones industrial average gained 279.01 points, or 3.5%, to 8,228.10 after slumping 4% on Tuesday.
Traders said financial issues got a boost in part from "short covering" -- buying by traders who had previously borrowed the shares and sold them, betting on falling prices. As the stocks turned up some of the shorts rushed in to close out their bets.
Bank of America shares had plunged 29% to $5.10 on Tuesday, bringing the year-to-date decline to 64%, after the company last week got another $20-billion capital infusion from the government and a Treasury guarantee of $118 billion of its bad loans.
The latest round of federal help stoked Wall Street fears that Bank of America and other struggling financial titans were heading for full government control.
The British government on Monday in effect nationalized Royal Bank of Scotland by saying it would take up to a 70% stake in the ailing lender.
-- Tom Petruno
Photo: BofA CEO Ken Lewis. Credit: Lawrence K. Ho/Los Angeles Times