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Originally Posted by host
ace, if a private equity fund decides to buy a bankrupt company that cannot sell it's loans because of the increasing defaults of the loans it is already responsible for....a bankrupt company that recently obligated itself to a new, $213 million debt that is owed on top of the offer for outstanding shares, a bankrupt company that has delayed the filing of it's financials for more than three months, and of it's annual report for at least that long, a bankrupt company that lost it's auditor ten weeks ago, over "going concern" reservations by that auditor (concerns that the company ran a high risk of not being able to continue operations due to it's financial circumstances)....does that make a convincing case (especially since there has been no public disclosure...this year of Accredited Home's finances) that the subprime and Alt-A mortgage crisis, and the housing valuation decline that it aggravates....is somehow mitigated?
I don't think so....and we'll have to wait and see if this $400 million + $213 million debt to Farallon Capital "purchase" of Accredited Home (stock symbol LEND) actually happens, or not.....Did you read anywhere that Lone Star's offer is not contingent upon due dilligence, since Accredited Home has not filed any financial reports with the SEC for it's 1st qtr or it's annual report?
There is no good news for the housing market, or for those who finance it:
http://calculatedrisk.blogspot.com/ |
You are correct that the deal may never close, time will tell. But if the past financials prove to be close to accurate and if the current situation was born out of panic, Lone Star is getting a fair deal based on intrinsic value. I point this out to support the point that when speculation is taken out of prices the market will begin to respond based on fundementals. This is going to be true in the realestate market.
People who bought LEND at $13 based on fundemental analysis (establishing a floor for the stock price) and today sell at $15, made about 15% in about 60 days. And those large institional investors who were selling when the stock was in the $40's, most likely did equally well on an annualized basis. Those reacting to headlines got burned.
Good to see you back on this topic.