Bank of America (BAC) Back to What It Does Best... Selling-Off

Bank of America Corporation (NYSE: BAC) is trading at new 52-week lows in pre-open trading Tuesday.

Shares last traded at $6.29, down another 2 percent from yesterday's close. The prior 52-week low is $6.31.

Traders are pointing to widening of CDS spreads. Yesterday there were three main worries in the market:

• Possible Equity offering: While the company has denied it many times in the past, rumors continue to swirl the company will have to sell stock to bolster its balance sheet. According to the WSJ's Deal Journal, Jefferies' Layla Peruzzi said, "Our traders and desk strategist think the reality is that the market is forcing BAC into a capital raise and the lower stock price goes, the worse it gets." She said the bank might have to raise between $40 and $50 billion.
  
  
• Mortgage Delinquencies on the rise again: The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.44 percent of all loans outstanding as of the end of the second quarter of 2011, an increase of 12 basis points from the first quarter of 2011, and a decrease of 141 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 32 basis points to 8.11 percent this quarter from 7.79 percent last quarter.
  
  
• Hedge funds continue to blow-out the stock: Goldman Sachs' latest Hedge Fund Survey showed that the stock is still 20 on the list of stocks that "matter most" to hedge funds. Data from Goldman today showed there are 40 hedge funds who own the stock in the 10 to 200 position and 16 funds that hold it as their top 10 holdings as of June 30, 2011. This means one thing to investors - these hedge funds are still sellers of the stock and see it as a source of funds with a YTD return of a negative 44 percent. Until these hedge funds stop selling the stock may never recover.

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