So is Brandes. www.gurufocus.com Search for them. QUOTE]Quote from dsq: bank america is looking real stupid for buying a 2 billion dollar stake when cfc was at 18...thats a 66% loss in about 3months-who's the genius at bac that tried catching this falling knife. [/QUOTE]
Most likely these smart managers are just early. There will be a turnaround and these stocks can take off like a rocket. [/QUOTE]
I am exiting 2/3 of my put position here. Although I think there is a good chance CFC is going bust, the put premium is now pricing in a 50/50 chance of bankruptcy, making it no longer the low risk/high reward proposition it was for all of 2007. It is now a coin-flip 1:1 risk/reward trade, not as appealing. I may be early but it has hit my initial price target, and I think this is a sound point to book some profits for shorts.
EXCERPT FROM LA TIMES ARTICLE The LATimes this morning quotes Weiss Research, which rates the condition of lenders, as saying Countrywide Financial "is on a collision course with bankruptcy," adding that it "exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year." ...More: The Egan-Jones Ratings Co. says Countrywide is "withering" and "might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks." (Here's one big problem with investing $4 billion in Countrywide today: the entire company is valued by investors this morning at just $3 billion; if you give them $4 billion, what do they give you? The entire company, and then what, an IOU?).