Why did Appaloosa sell its position in Bank of America?
David Tepper’s Appaloosa exited a 0.49% position in Bank of America (BAC) last quarter.
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The bank said its Consumer Real Estate Services net loss narrowed to $1.1 billion for 4Q 2013 from $3.7 billion for the same period in 2012. The year-ago quarter included the settlements with Fannie Mae to resolve outstanding and potential repurchase and certain other claims and $1.1 billion of expense related to the IFR acceleration agreement.
As seen with many of BAC’s peers such as Wells Fargo (WFC) and JPMorgan Chase (JPM), mortgage originations declined 46% in 4Q 2013 due to rising interest rates. The bank saw an improving credit quality as provision for credit losses decreased $959 million from the year-ago quarter to a benefit of $474 million, driven primarily by increased home prices and improved portfolio trends.
JPMorgan is bullish about the stock “due to the benefit from housing market recovery, potential for significant increase in normalized earnings, ongoing improvement of capital levels, relatively attractive valuation, and position as a leading retail and commercial banking franchise in the US.”