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Originally Posted by aceventura3
I just looked a LEND the shares opened at $8.03 on 3/10/03, the company went public in February '03 at $7.31. Today the price is $17.42.
My only question is - why didn't you tell me about this stock 4 years ago? Did you see it is up$1.32 this morning or over 8%. You should start a contrarian investment fund.  |
RE: your post #26:
Here's today's trading range on stock symbol, "LEND", ace"
ACCREDITED HOME LE (NasdaqGS:LEND)
http://finance.yahoo.com/q?s=lend&x=60&y=16
Day's Range: 14.93 - 18.15
....and here is the problem:
The financial "community" in the US sold and "packaged" sub-prime mortgage into MBS's...mortgage backed securities. In order to make it "attractive" to investors to assume the risk associated with buying these "junk" credit reting level
investment "vehicles", the issuers (the crooks at the big brokerage houses), described below....inserted clauses that gave MBS buyers the right to force the sub-prime lenders like LEND and NEW and NFI, to buy them back from the investors if too many of the individual mortgages conatined in a given MSB, defaulted due to non-payment of monthly mortgage payments, during an initial period of a yera or two after the MBS was purchased.
LEND is down today, because stock market participants are finally asking who will buy the MBS's currently being packaged from newly issued sub-prime mortgages.
Weighing against these now failing lenders are returns of formerly sold MBS's accompanied by demands for refunds by the investors who bought them. Difficulty in obtaining new funds to lend on future mortgages sold to home buyers increasingly viewed as poor risk.
Less mortgage and re-fi business due to shrinking numbers of homes sold......
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http://www.iht.com/articles/2007/03/...berg/bxatm.php
Around the Markets: Goldman and Merrill almost "junk," their own traders say
By Shannon D. Harrington Bloomberg News
Published: March 5, 2007
NEW YORK: Goldman Sachs, Merrill Lynch and Morgan Stanley, which earned a record $24.5 billion in 2006, suddenly have become so speculative that their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds.
Prices for credit-default swaps linked to the bonds of the New York investment banks this week traded at levels that equate to debt ratings of Baa2, according to Moody's Investors Service.
For Goldman, Morgan Stanley and Merrill, that is five levels below the actual Aa3 rating on their senior unsecured notes, and just two steps above noninvestment grade, or junk.
Traders of credit derivatives fear that a slowdown in housing markets, coupled with the rout on global equity markets, will hurt the companies. Since 2005, Merrill has financed two mortgage lenders that subsequently failed, and bought a third, First Franklin Financial, for $1.3 billion.
Subprime mortgages, which refer to loans taken out by buyers with poor or limited credit histories, typically charge rates at least two or three percentage points above safer prime loans.
They made up about a fifth of all new mortgages last year, according to the Mortgage Bankers Association in Washington.
But at least 20 lenders have shut down, scaled back or been sold this year. Countrywide Financial, the biggest U.S. mortgage lender, said last week that borrowers were at least 30 days past due at the end of last year on almost a fifth of its subprime loans.
Credit-default swaps were conceived by Wall Street to protect bondholders against default and pay the buyer face value in exchange for the underlying securities should the company fail to meet its debt agreements. An increase in price indicates a decline in the perception of creditworthiness; a drop means the opposite.
The swaps on the debt of Goldman, for example, have risen to $32,775 per $10 million in bonds, up from $21,500 at the start of the year, according to prices compiled by CMA Datavision in London. The price touched $35,000 on Wednesday, the highest level since June 2005.
<b>And it is likely that Goldman's own traders were among those pushing the price higher.</b> Goldman and Morgan Stanley were among the top five banks on credit-default swaps in 2005, a group that represented 86 percent of the market, according to Fitch Ratings. Lehman, Merrill and Bear Stearns were among the top 12.
Contracts tied to Morgan Stanley, Merrill, Lehman Brothers Holdings and Bear Stearns are also trading at 19-month highs, and their price increases were larger than an index that measures credit risk for investment-grade companies in North America.
<b>By contrast, default swaps for Deutsche Bank in Germany, which has little exposure to the U.S. housing market, are near a record low at €9,800, $12,935.</b>
A Standard & Poor's index of investment bank stocks has fallen 7.5 percent this year. Merrill shares have dropped 12 percent, while Morgan Stanley has fallen 9.9 percent and Bear Stearns is down 9.4 percent.
Nonetheless, last year was the best ever for the five biggest Wall Street firms, whose combined profit rose 33 percent to $132.5 billion.
"There's been a little bit of a reappraisal of the financial sector, with a strong desire to get away from subprime exposure," said Scott MacDonald, director of research at Aladdin Capital Management in Stamford, Connecticut.
Merrill equity analysts last week cut their recommendations on Goldman, Lehman and Bear Stearns shares as well as that of European banks Deutsche Bank and Credit Suisse Group to "neutral" from "buy" because earnings would probably decline next month.
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......added to the above, new "vicious cycle" is the fact that more than 40 percent of recent new home sales were to investors and second home buyers, the liquidation.....foreclosures of individual homes and unsold inventories of home builders, and your "intrinsic value", formula, IMO, is as unpersuasive as your "productivity" argument as an answer to what will replace the support for GDP growth in the coming years, that was the wealth effect from pumping $4.7 trillion into creation of the new mortgage debt that fueled the housing bubble.
The answer, ace, is that the replacement "stimulus" and the replacement jobs to offset the decline caused by the unwinding of the housing boom, just ain't there, and the liquidation that is coming will not be orderly, and will not behave as your "intrinsic value" assumptions would need it to.
There will be huge numbers of formerly employed and prosperous home equity withdrawing, and spending.....former homeowners filing for BK, and looking for the cheapest rental housing that they can afford, and the oversized houses that were recently built in great numbers....the second homes, the homes demanded by now gone flippers, the homes purchased by unqualified, sub-prime buyers with fraudulanlty obtained "no doc" , "low doc", and no down-payment, interest only mortgages, will end up sitting vacant, a new blight on the American landscape, to join the still un-lit, excess fiber optic network buildout of the last malinvestment in America, the internet stock bubble.
Non-productive malinvestment, ace....not the stuff that facilitates a "productivity miracle", like the one that would be needed to make your idea of what will stimulate our economy, now that the housing bubble has blown up.....