The annual meetings of public companies typically are scripted, torpid affairs. Not Bank of America’s. Last year the Reverend Jesse Jackson showed up and caused a scene by loudly urging BofA CEO Ken Lewis to boost lending to the poor. At this year’s meeting, scheduled for April 26 near the bank’s Charlotte, North Carolina, headquarters, Lewis and BofA’s board can expect to hear from a different sort of activist.
Tom Brown, a veteran bank analyst and hedge fund manager known for his public tirades against bank CEOs, has booked a ticket to Charlotte and says he intends to ask some pointed questions of Lewis and company. The 47-year-old founder of Second Curve Capital and publisher of Web site Bankstocks.com has been railing at BofA for months over what he calls its subpar performance and misleading communications to investors. Specifically, Brown has attacked BofA for relying too heavily on big, disruptive acquisitions, such as January’s $35 billion purchase of credit card lender MBNA, and for using pro forma financial results in shareholder presentations -- he derisively refers to such calculations as “Charlotte math.”
These guys are constitutionally incapable of being straight with shareholders,” says Brown, who owns just two BofA shares in a personal account but is contemplating making a bigger purchase through Second Curve and trying to recruit like-minded investors to join his campaign before the meeting. “My plan is to go to the meeting and ask questions of management,” he says. “They need to be honest.”
A spokesman for BofA says Brown is welcome, but he dismisses the criticisms, stressing that the bank follows all federal reporting regulations and is confident that the MBNA deal will succeed. BofA shares have done reasonably well over the past two years, beating rivals Citigroup and J.P. Morgan Chase, keeping even with Wells Fargo and slightly underperforming crosstown rival Wachovia.
This isn’t the first time Brown has targeted a big bank and its senior management. The former Donaldson, Lufkin & Jenrette analyst is perhaps best known for his public tussles with exFirst Union chief Ed Crutchfield, who derided Brown as a “little red-haired boy” in a 1995 speech and had him barred from company headquarters. So far Lewis, 58, and BofA have handled Brown’s criticisms more evenly, but the investor is ready for another fight.
