Viking Buys BofA Stake as Tepper’s Appaloosa Pares HoldingDakin Campbell
Viking Global Investors LP, the hedge fund run by O. Andreas Halvorsen, acquired a new stake in Bank of America Corp. worth almost $620 million at the end of September as expense cuts allowed the lender to boost profits.
Viking bought 44.9 million shares of the bank in the third quarter, and Moore Capital Management LP, run by billionaire Louis Moore Bacon, took a new position of 4.3 million shares, according to filings this week. David Tepper’s Appaloosa Management LP cut 4.1 million shares, leaving it with 2.2 million shares of Charlotte, North Carolina-based Bank of America valued at almost $31 million, a filing yesterday shows.
Investors are buying into Chief Executive Officer Brian T. Moynihan’s pledge that the “lion’s share” of costs tied to disputed mortgages are done after spending more than $50 billion on litigation, settlements and refunds. The bank will trim $8 billion in annual operating costs by the end of 2014 and $10 billion from troubled loans a year later, Moynihan has said.
“From an operational standpoint they are very focused,” Joseph Morford, an RBC Capital Markets analyst, said in an interview, citing the company’s cost-reduction plans. “There is still quite a lot of room to cut expenses.”
Bank of America was little changed at 9:36 a.m. in New York trading. The stock gained more than 7 percent since the end of September through yesterday to $14.80, making it the 11th-best performer in the 24-company KBW Bank Index over the span. It’s the second-largest bank in the U.S. by assets after JPMorgan Chase & Co.
Viking wasn’t alone. Theleme Partners LLP and Steadfast Capital Management LP bought more than 11.1 million shares in the third quarter combined. Moore Capital’s stake was purchased after the firm sold a previously held position in the second quarter, filings show.
D.E. Shaw & Co., the $30 billion hedge fund based in New York, bought almost 8.5 million Bank of America shares in in the third quarter, bringing its total holding to 11.5 million shares worth about $159 million at the end of September, according to filings.
Adage Capital Management LP, the Boston-based firm run by former endowment managers at Harvard University, bought almost 2.3 million Bank of America shares, bringing its stake to 16.7 million shares worth about $230 million, the filings show.
Bank of America’s total expenses during the quarter slid 6.6 percent from a year earlier to $16.4 billion because of lower costs in the division servicing troubled loans, staff reductions and litigation costs that fell by 31 percent to $1.1 billion. The bank reported $2.5 billion in third-quarter profit.