The fund has been dragged down by housing-related stocks, which Miller started buying 18 months ago. He put money in mortgage lender Countrywide Financial Corp. and builders Pulte Homes Inc., KB Home and Centex Corp. Countrywide's shares have declined 66 percent this year. Pulte has dropped 57 percent, KB Home has tumbled 50 percent and Centex has fallen 58 percent. Miller wrote in today's letter that he values Countrywide's stock at more than $40 a share, compared with its price of about $15 on New York Stock Exchange composite trading today. http://www.bloomberg.com/apps/news?pid=20601087&sid=asPxLba8PmfM&refer=home
We've seen many times stocks trading 90% below the "fundamental theoric price" and during many years... So, CFC can go to $3 if she wants even if some guy values it at $40 (or $20).
CFC was $40 in late 2004 and 2005, the very peak of the housing bubble. Now that housing is in its worst bear market since the Great Depression, what on earth makes him think it is worth peak cycle valuations?? IMO CFC has a great chance of being bankrupt by the end of 2008. I am long the Jan 09 $5 puts and have already sold out enough to pay the initial premium, now free-riding the remainder until the options expire or the company declares bankruptcy. This guy got long housing early in the current decline. It's the equivalent of buying tech in early 2001. Yes you were getting a discount to the bubble highs - but they still had *way* further to fall. Typically a secular bear market in a sector does not end until early dip-buyers get totally creamed and capitulate. Mozilo was trying to spout good news this week. Miller thinks the stocks is the buy. I am not going to sell my CFC puts until Mozilo resigns, gets fired, or arrested, and until Miller finally pukes his position. We need the housing cheerleaders to go into total depression before we see a bottom, just like we needed Joe Battipaglia and Abbie Cohen to finally get their name dragged through the mud before stocks would bottom in 2002/03. Even Peter Lynch has ridden stocks down to bankruptcy. Miller is facing the same fate here IMO.
Talk about being late to the party. What a jerk he wants you to step in and buy and watch your investment decline in value just like his. Analysts and fund managers suck. Much more down side to come for housing stocks. When CEO's of co in housing say that they themselves do not see housing turning around till 2009....you better take notice. The writing on the wall can't get any clearer than that. The stocks in the housing sector have further to fall. And then they will wallow away scratching around the bottom for months before they turn around.
http://www.foxbusiness.com/latest-n...r-buy-financials-housing-stocks_337271_0.html Miller's 'Value Trust' Fund owns 53 million shares or 9% of the company. Ouch! Do you think he might be just a little biased???
I think it went without saying that this guy had to have a vested interest in this "dog" in order to try to prop it up!