I'm just shorting shares, I'm always lost on which option to buy cause I have no clue when the move will come. now I plan to keep adding everyday on the open till its all over
No "just" about it, if you sold or were short at the open today you had a phenomenal day on FNM, congratulations! We are sitting at support here though which is why I didn't want to press.
I dont want to pat myself on the back too soon. look at a chart of MBI in the last 8 months, one would think it would be impossible to lose money shorting it, yet somehow I found a way to drop cash there but I learned from it. I think you are right, chasing a short can be so deadly, I started shorting fnm at $25, when was a $7 you get this urges to short more because you are 'sure' they are toast, then it bounces huge. now I only short rallies or do the plan b, which is to short a little everyday, these simple rules saved me this time
Will keep adding. now its time to be a pig but I'm leery of a big rally again, there is no end to average equity fund manager optimism
Now that the earnings report is out of the way, a lot of the 'news risk' is removed. If anything, yesterday's action makes it a little easier to short - there is some heavy resistance up to the intraday high of 7.23. The company's poor "earnings" report and intent to continue with the plan to raise $5.5 billion should continue to weigh on the stock, particularly given its market cap of below $5 billion. The opportunity to short seems almost too good to be true. Maybe the future dilution is already built into the share price? i.e., what if they did raise $5.5 billion at below $4, but the stock remained above $6?
They have like $40b each in preferred + common equity. I doubt $5b will be enough to calm the markets. its more like $15b each and in order for the offering to attract people the treasury will need to be involved(their difficulties in raising just $5b show this). If paulson puts a dollar out of the coffers I expect a bloodbath, either little or no earnings for shareholders for years(because of the preferred dividens) or a massive sharecount increase. Maybe he will be generous but republican hate towards the gses and the need for talking points before an election makes me think they wont be so kind
I agree that $5b is not enough, however even if they raise only $5b, then the dilution will be significant, given the current market cap of < $5 billion. What do you mean by "If paulson puts a dollar out of the coffers " ? What kind of price are you referring to?
According to http://globaleconomicanalysis.blogspot.com/2008/08/fannie-freddie-reality-check-big.html "Freddie Chief Executive Officer Richard Syron today told investors the company will wait for its stock to improve before starting its planned $5.5 billion capital raising." and yet the stock is down over 8% today, after yesterday's decline. When will Syron just give up and call Paulson and ask him to buy the $5.5 billion of stock that no one else will buy?