How is this crap company still listed on the NYSE? US government now allowing mortgage companies/banks to manipulate quarterly results.
Chatter on the Google board for TMA sez that the stock is going to go up 1000% tomorrow alone. I'm done with damn mortgage companies, I've gotten vaporized by them before.
Easy, they made money last quarter (24 million or so ex-items). They have until november to bring their share price back over 1.00 to stay on the NYSE, which they will do w/ a reverse split.
Generally, it does seem that when a stock reverse splits, it deteriorates further afterwards. But assuming there's no more serious negative news (like margin calls they can't meet), I'd say the company is roughly at fair value right now. After they issue the rest of the warrants, there'll be ~ 3.5BB shares out there once fully diluted, and @ 50 cents each, that's a $1.75BB valuation on the company. Valuing their earnings @ 10 to 1, they'd have to earn 175MM / year for the current valuation to hold. Based on last quarter, which was under EXTREMELY difficult conditions, they made almost 100MM annualized ex-items. Once they get the interest rate on their senior subordinated notes dropped to 12%, that's another 69MM they save each year. Keep in mind TMA operates off interest spreads. Since mortgages are coming with higher rates now, any new mortgages they originate will have much higher rates (They'll have to pay more too, but the spread will probably widen). This means further profits. If you want easy money on TMA, short Jan 2010 2.5 Calls for 10 cents each. The current TMA shares reaching 2.5 implies that the company's worth like 9BB. Even at it's peak over a year ago it wasn't even worth a third of that. How could it possibly reach a valuation 3 times that AFTER this collapse?
As far as mortgage companies, wait till the 2nd quarter of next year before you look at them seriously. Most mortgage company numbers will be off because they can not determine true value of their real property assets until real estate gets close to a bottom. Inventory of bank R.E.O's has to be liquidated then you will have true value and thus trade them accordingly. B of A should make a killing, that purchase of Countrywide was a brilliant move for the long hual. Wachovia and Washington Mutual still have some huge losses comming down the pike in my opinion.
these guys got big leverege holding mortgage assets in a period of declining prices. perhaps their underwriting will save them but perhaps it wont, unemployment at 7% and prices down will lead them to losses they do not expect, thats pretty much guaranteed