Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Bank of America Corp (BAC): Who’s Left to Buy The Stock?

Owners of Bank of America Corp (NYSE:BAC) stock (like myself) may be starting to worry that B of A optimism has gone too far. A couple of years ago, it was tough to find anyone willing to say a good word about the bank. Today, it seems hard to find anyone who’s saying anything negative.

The about-face may seem at first blush like good news, but it could also spark the concern that — as my fellow Fool David Hanson put it — “dumb money” has rushed into the stock. At the same time, it compels the question: If everyone is already bullish on the stock, who’s left to buy?

Bank of America Corp

The data suggests that there are at least three major groups that could push Bank of America Corp (NYSE:BAC)’s stock higher.

1. Giant mutual fund companies
Fidelity, Wellington, and Capital Research and Management — three of the largest fund companies in the world — all currently have a significant stake in Bank of America Corp (NYSE:BAC). However, each had an even larger stake prior to the financial crisis.

According to the numbers, combined, these investors owned an additional 5% of Bank of America Corp (NYSE:BAC) in early 2006 vs. today. Put another way, if the three were to increase their stakes to what they were in 2006, it would require a total investment of $7 billion.

2. Big hedge fund managers
One of the biggest downward changes in Bank of America Corp (NYSE:BAC) ownership over the past few years came from hedge fund giant John Paulson. At one point, his fund owned north of 2% of B of A’s outstanding stock. That’d be equivalent to a position of around $2.7 billion at today’s prices.

I assume that Paulson feels sufficiently burned by his B of A investing experience, so I don’t expect that he’s going to be diving back in with both feet anytime soon. However, it’s a reminder of just how much big money is sloshing around in hedge funds out there that could end up sloshing in Bank of America’s direction.

3. The public
By my calculations, “the public” — that is, the B of A stock not held by institutions or insiders — owned around 29% of the company in 2006. At the end of 2012, that percentage was at 27%. That may not seem like a huge difference, but that 2-percentage-point difference could represent billions of dollars in buying pressure if retail investors get excited about the bank again.

There’s a flip side
Obviously, there are plenty of potential sellers that could have the opposite effect on the stock. Interestingly, the asset management arms of a lot of B of A competitors — notably Citigroup Inc. (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM), and Goldman Sachs Group, Inc. (NYSE:GS) — have jumped on the Bank of America bandwagon and have been building sizable positions. They could very easily reverse that trend. And avid cheerleaders like Bruce Berkowitz could change their tune.

But investors concerned about who’s left to buy can stop worrying: If the bank continues to execute, there’s still plenty of money that could be thrown at the stock.

The article Who’s Left to Buy Bank of America? originally appeared on and is written by Matt Koppenheffer.

Matt Koppenheffer owns shares of Goldman Sachs and Bank of America. The Motley Fool recommends Goldman Sachs, and owns shares of Bank of America, Citigroup, and JPMorgan Chase.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.