Sell CountryWide!!!

Discussion in 'Stocks' started by NathanGresham, Jul 27, 2007.

  1. I decided to placed a more accurate title for CFC in order for folks not to be enticed to buy a fastly sinking ship. Here is an article that will appear tommorrow in USA today trashing CFC!

    Just getting worse all the time and the major media coverage has only just begun!

    Investing: Reaching for Countrywide now may leave a scar

    By John Waggoner, USA TODAY
    Wall Street has many colorful yet obvious maxims, such as "Buy low, sell high," "Cut your losses short and let your profits run" and "Don't make toast in the bathtub."
    Today's proverb is "Don't catch a falling knife." The metaphorical knife in question is Countrywide Financial (CFC), but it applies to any financial object in free fall.

    Countrywide is a large real estate lender — the second-largest retail mortgage lender in the country. It is caught in two unfortunate developments. The first is the overall slowdown in real estate. Home prices have fallen sharply in several areas of the country, unsold houses are piling up on brokerage listings, and mortgage delinquencies are rising.

    The second is the collapse of the subprime mortgage market. A subprime borrower is typically one with spotty credit who doesn't qualify for a garden-variety mortgage. For such borrowers, the lender might offer a low, fixed rate for two years and an adjustable rate the next 28 years, an arrangement called a 2/28 loan. Usually, the adjustable rate is sharply higher than the initial rate. The lender might also lend the home buyer the down payment, in the form of a second mortgage.

    Countrywide was a leader in subprime lending, primarily through its Full Spectrum Lending Division. But subprime borrowers have had a hard time keeping up with payments. That's particularly true as 2/28 loans made during the housing boom have begun to reset to higher rates. In addition, delinquencies on prime home equity loans jumped to 4.6% in June, vs. 1.8% a year earlier.

    FIND MORE STORIES IN: Freddie Mac | Fannie Mae | Investing | John Waggoner | Funds
    At its conference call Tuesday, Countrywide lowered its earnings guidance for the rest of the year, saying it expected the housing slowdown to last through 2009. The stock price plunged 10% that day. Countrywide was, at least on Tuesday, a falling knife.

    Should you have grabbed it? With the serene certainty of hindsight, we can say no. The stock rose just 2 cents Wednesday and was an active participant in Thursday's meltdown. It closed Thursday at $29.25.

    In general, the advice against buying a stock in free fall is good. It's better, of course, to buy Countrywide at $29 rather than at its high of $45 this year. But companies often take awhile to work out their troubles. In the case of Countrywide, a rotten real estate market isn't the only problem. Bad loans don't appear all at once. Borrowers don't like to default, and they resist doing so. The process can take years to work out.

    Moody's expects overall mortgage delinquencies to soar to a record 3.6% next summer. Adjustable-rate mortgage (ARM) defaults will leap to nearly 10% by mid-2008, Moody's predicts, and subprime ARM defaults could hit 20% by the fall of 2011.

    It's always possible for matters to get worse. "This is going on when employment numbers are strong," notes Stuart Plesser, equity research analyst for Standard & Poor's. An uptick in unemployment, Plesser says, could raise mortgage delinquencies much higher.

    Wallace Weitz, manager of the Weitz Funds, is a big holder of Countrywide stock; it's about 6% of the Weitz Value fund's portfolio. "We have a lot of scars on our hands," he says. He plans to hold the stock, in large part because he thinks the company will emerge stronger from the current crisis, and with fewer competitors. But even Weitz cautions against trying to grab the stock while it's falling.

    "It's a matter of knowing yourself," he says. "There's no sense in dipping into Countrywide if you're going to panic and sell it at $24."

    Sentiment : Strong Sell
  2. The top execs of CFC are still making their exit out of this worthless co. before if goes bankrupt! Here is the latest article from AP./

    Countrywide CEO Exercises Options
    Monday July 30, 11:16 am ET
    Countrywide Financial CEO and Chairman Angelo Mozilo Exercises Options for 46,000 Shares

    NEW YORK (AP) -- The chief executive and chairman of mortgage lender Countrywide Financial Corp. exercised options for 46,000 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing.
    In a Form 4 filed with the SEC Friday, Angelo R. Mozilo reported he exercised the options Friday for $14.69 apiece and then sold all of the shares the same day for $29.59 apiece.

    The stock sale was conducted under a prearranged 10b5-1 trading plan, which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.

    Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

    Countrywide is based in Calabasas, Calif.

    As the execs head for the exits some dope still buys! Crazy! When the hedge/institutional money is gone, this stock tanks! AHM was halted this morning after lossing 38% premarket. NEWC is not a pinksheet and most other mortgage lenders are tanking acorss the board. Find you favorite to short and make $$$$!:)
  3. Brandonf

    Brandonf ET Sponsor

    A little late to the party, but still probably profitable. Another one in the same situation is CORS.


  4. For someone that purportedly "makes a living" from trading WHY is it you come across as a 12 year old?

    "Some dope buys" You mean like "a few" 3 point OTM puts for chump change with 3 weeks to expiration? Pertaining to the stock, every tick has a buying component. I personally don't consider specialists, the guys most capable of humbling me, as dopes.

    Worthless? Perhaps but presently priced at $28.98 per share. There's 593 million of 'em (at last count).

    Bankrupt? A little DRAMAtic.

    Shares at pre-arranged intervals would take a little wind out of your sails if not for cogitive dissonance. Or is it delusions of grandeur? I get confused.

    Hmmm, while you're on a roll, you might consider a pleated skirt and some pom pom's.
  5. You act like a idiot and cannot leave it alone can ya? The more you type the more uniformed you prove yourself to be. AMH is onlhy the beginning son, get a clue. Actually you only play this card to be a smart alec punk. I can tell you do not believe half of what you write. I have made more money buying puts on this puffed up excuse for a co. than you make in a year.

    The company execs are selling ALL the equity they have in the co. They did a very toxic C/D back in May for 2 billion that could be the final blow next year. You are clueless and I wish you would just stop responding to my posts. I have tireed of your childish, pathetic chiding and worthless lack of insight.:)

    P.S. I didn't actually call you any names, just said "you act like". Just giving you back what you dish out amateur.
  6. A little late to the party, but still probably profitable. Another one in the same situation is CORS.

    And Novastar, and Accredited Home and the list goes on and on.

    Housing stocks to still have plenty of downside, Toll Bros., KB homes, etc!

    Good Luck, buying puts on IBM for tommorrow will make pleny of $$$$$!:)
  7. Bought my first stock in 1968. Been eating my own cooking since 1983. Paid some tuition. Paid some taxes. I have socks older than you. Literally. Nice Sweedish wool ones purchased in 1976. Comfy.

    Believe? I'm only concerned with the PRICE of a paper negotiable financial instrument. It's apparently you with the "belief systems".

    Mister market does care about the identity of shares' owners. Shares are shares. Ax buys wholesale, sells retail. No different than eggs or fish.

    I highly doubt your "few" contracts, trading at what....a $1.30 have made you more than I make in a year. But we can pretend, can't we? Kinda like playing dress up. Grab dad's suit coat, hat, and brief case. Better yet, waddle around in mom's high heels.

    Leave it alone? I have an agenda. Twas.......... you that wrote you were finished talking to me. Yet, here you are. Consequently, I'm going to respond to your posts on a public forum whether there's a dialogue or monologue. Of course, neither has bearing on the outcome.

    Futhermore, I am going to ensure you eventually become cognizant of the notion there is ALWAYS somebody on the other side of the trade.

    See ya tommorow!
  8. Hey genius, I sold my Aug 27.50 puts today for an over 100% gain. Not bad for holding a week. I had a substantial number. Actually I was trying to get into another housing lender(you know those mortgage co.'s that used to exist). but I will wait untill tommorrow and further studies tonight.

    CFC hit a low of 28.07. 57 cents off of strike. It will hit the strike this week. I have proved you wrong and this discourse is over. Nate:)

    P.S. Your a moron.
  9. Just curious... how much money is that exactly? (serious question from newbie)

    Also, how do you get your hands on an article that is not yet published?
  10. thanks for the info,nathan; keep us posted here.

    #10     Jul 31, 2007