Activist investors may be targeting Too Big to Fail lender Bank of America

Too Big To Fail banks are not known for being the favorite targets of activist investors. That’s why I was shocked to hear that there were growing rumors in activist circles that the nation’s second-largest bank, Bank of America, might be on the move. called target list.

The bearish thinking is that if big banks fail, the entire US economy will collapse – meaning they are largely off limits to activists seeking change in the boardroom.

But that doesn’t mean that under the right circumstances, an activist play against a big bank is impossible, especially if the circumstances encounter something like a financial perfect storm, which brings us to the underperforming BofA. run by disappointing CEO Brian Moynihan.

Here’s what the activist talk says: The bank’s five-year stock chart is weak; of all the major banks, it beats only Citigroup, the perennial basket case in stock performance, and Wells Fargo, and in that case just barely, even though Wells was crushed by the fake account scandal and hyper-government regulation.

But Wells has a new CEO, Charlie Scharf, a protégé of JPM and Jamie Dimon, who has gotten things in such order that the stock has valued about twice the S&P in the past year. CEO Jane Fraser is rebuilding Citi, downsizing non-core businesses and hiring smart people in key positions.

Meanwhile, Moynihan seems to do a lot of nothing. There are no big hires, his inability to use his huge balance sheet is costing the bank deals, and he thinks he deserves to stay for another five years until he’s 70.

A spokesperson for the bank noted that the shares are up more than 60% in the past year.

“Bank of America is one of only four U.S. companies to have earned more than $15 billion annually in each of the past nine years,” the representative added.

Still, I hear some activists are looking at the stock and thinking they could get a decent bounce back if they can get Moynihan to bounce back — or at least get him to announce an earlier-than-expected retirement date.

Stay informed.