Dumb Things Companies Do

News is out that Bank of America might cut its nearly $10 billion stake in Blackrock, to which I say its about time. In the Summer of 2009, Bank of America did a roughly $10 billion secondary, selling their own shares for a little over $10. Back then shares of Blackrock were trading higher yet they chose to hold onto that stake and sell their own shares.

1 comment:

PJ said...

They had no choice about issuing own shares, the government wanted them to raise new equity to improve their capital ratios. Selling Blackrock shares would have taken an asset off their balance sheets and failed to relieve failure risk.

They should have done both, but that might have spooked the markets.