[WWW] WWE.com Bradshaw 11.03.03 column - Fleet Boston and more stock picks

http://www.wwe.com/news/commentary/bradshaw/1244373

Fleet Boston and more stock picks

by Bradshaw
Nov. 3, 2003  

Disclaimer: These views are those of John Layfield, aka Bradshaw, and
not necessarily those of World Wrestling Entertainment, Inc.

I hope you got the opportunity to watch me last week on FOX News'
"Cashin' In" with Terry Keenan. I really enjoy working with the FOX
people; it is no wonder they are the No. 1 financial news network.

I was on the show with Wayne Rogers (formerly Trapper John from
"MASH"), Jonathan Hoenig (author of "Greed is Good"), Hilary Kramer
and Jonas Max Ferris. My favorite stock pick was Fleet Boston, which I
will discuss in a minute. First, I got mentioned by Tobin Smith (one
of my favorite guys) on "Bulls & Bears." Actually, my dad got
mentioned. You see, Tobin recommended Ameritrade a few weeks ago, and
my dad liked the recommendation so much he bought the stock. Tobin
mentioned this today when someone else recommended Ameritrade.

I recommended Home Depot the same day, and my dad still chose to go
with Tobin; Tobin says this is because my dad is smart. My dad also
chose to go with Paychex when Meredith Whitney recommended it; I think
it is just because he thinks Meredith is a babe.

Tobin and the rest of the "Bulls & Bears" gang (Brenda Buttner and
Scott Bleier) are going to join SmackDown! on Nov. 11 at the
Continental Airlines Arena. I have seen these guys drink, and I feel
confident they will fit in very well. This is our last show before
Survivor Series in Dallas (my home); should be a great show.

Speaking of Survivor Series, the team I am on will face Team Lesnar,
led by Brock Lesnar, who hit me over the head with a chair last week
on SmackDown! Brock is an NCAA Champion; he doesn't need a chair in
his hands, the violent bastard. I think Brock is what Hitler had in
mind.

What a wild week the market had. GDP (gross domestic product, which is
a way of measuring how the economy is doing) came in at 7.2 percent,
way above estimates. There are a lot of bears (bears believe the
market is going down) who believe the market is overvalued. The thing
is, they are going on the same estimates that thought the GDP would
come in around 5 percent.

The market is not overvalued. It is underestimated. Estimates are a
way to predict future stock prices. The problem is, they are simply
educated guesses, albeit most of the time pretty accurate. These
estimates refer to the companies' future earnings, by which you can
predict what future stock prices should be. However, they are not set
in concrete, just as we realized again by the GDP number. The economy
is roaring ahead.

The only thing the bears had going for them was unemployment numbers,
and now we are starting to see job creation. Job creation is always a
lagging indicator.

When an economy recovers, the last thing that happens is people start
hiring for new jobs. First, because they have just gone through hard
times and had to lay off people, they try to stretch their work force
for all the productivity they can. They increase hours and add an
extra shift. When they have exhausted these options, they hire new
people. That is why job creation is a lagging indicator, not a leading
indicator of an economy coming out of a recession.

Consumer sentiment is up and inventories in companies are low, which
means by basic supply and demand these companies will have pricing
power. Which will make these companies more profitable.

All sign are pointing to resurgence in the economy, which I believe is
already happening.

A company I picked this past weekend was Fleet Boston, which is being
bought out by Bank of America. I picked Fleet Boston so that I could
own Bank of America when they are bought out, because you get the
shares at an arbitrage discount.

Arbitrage is the difference in share price and price being offered by
the acquirer. For example, if Bank of America is offering $41 a share
and Fleet is trading for $39 than you automatically make a couple of
dollars a share when it is bought; however, since this is an all-share
deal, you have to make sure the shares being used to buy the company
are not undervalued, which in my opinion they are not.

Bank of America now becomes the second biggest bank in America at $933
billion in assets; the biggest is Citigroup with just over $1 trillion
in assets. There is no geographic overlay with the purchase. Bank of
America (BOC) had a presence everywhere but the northeast, which is
where Fleet is predominant. The merger makes sense.

Everyone believed a few years ago that Internet banking would create a
lack of need for physical branches; this has not proven to be true.
People still like a local branch near them.

BOC trades at 10 times earnings, which is low, and has a yield of 4.3
percent, which is higher than any money market, I see this as a safe
play for a long-term investor.

Don't forget to watch me on "Cavuto on Business" this Saturday morning
at 10:30 ET on FOX News. Also, please pick up one of my books, "Have
More Money Now." I think you will enjoy it.

I am looking forward to reading Stone Cold Steve Austin's book. There
have been very few personalities in the history of this business that
are anywhere nears Steve's. That should make for a great book.
However, buy mine first, and then his.