Are Bank of America (BAC) Common Shares Worthless? NO Screams Ken Lewis!

Shares of Bank of America (NYSE: BAC) are rallying over 30% in the closing hour of trading following news that CEO Ken Lewis bought 200,000 shares of common stock yesterday with the stock in free-fall. Lewis also bought Non-Cumulative preferred stock. In addition, SEC filings showed that four BofA Directors bought stock yesterday.

Yesterday, shares of Bank of America were in free-fall on speculation the company would soon be looking to the Fed for more cash, which could be massively dilutive for current shareholders. Some even speculated that current common shareholders could be wiped out.

What does the filing mean? Clearly it is meant to be a vote of confidence for the stock, which has been decimated. Lewis spent about $1.2 million on the common and about $2 million on the preferred. The purchases are meaningful, but not in a "Ken Lewis Is Betting His Life On This Stock" sense.

If you remember, a number of execs at Citigroup (NYSE: C) were loading up on shares in November, right before the company was bailed-out by the Fed. So while notable, following Lewis and the other execs into Bank of America at this point is like playing black or red on the roulette table. Win big or die.

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