I’m an employee at one of the banks that are having trouble with subprime loans. I’m thinking about putting some money into the employee share repurchase plan, but I’m not sure if I should do it? What are your opinions? Basically I would buy the stock and get 2 stock options, but I would have to hold on to it for a few years.
It wouldn’t surprise me if the shares that the employees are repurchasing are coming from the CEO’s and CFO’s personal holdings. They gotta unload it on someone and the employees are just as good a suckers as anyone. Reminds me of Enron execs telling their employees what a great investment Enron was for their 401(k)'s…mean while they were selling their personal holdings like crazy. Maybe I have just become too cynical.
Not enough info…
No, the employee purchase plan has been around the company for a long time. It isn’t something new. I think most companies have one. What worries me about this subprime loan stuff is that there is little disclosure of what they are doing. I’m worried about an enron happening, but at the same time this would be a very good contrarian bet, buying the stock when everyone is selling. However, if the company goes bankrupt so would my investment. I don’t work for C. But if you worked at C and were given an option to buy the stock and get two stock options for every share you purchase, would you do it?
CFAdummy…I have read some of your post. It seems to me that you would follow the text, letter and advice from CFAI material. Well, here is your answer. CFAI material said that you should invest in asset that has low correlation with your earning power.
Dont sh** where you eat.
how about a mutual fund that is focussed on banks… just generally speaking (will not go into details - the fund is focussed on local banks in my country), would u guys consider investing in such a fund given current market situation…?
yes
ws Wrote: ------------------------------------------------------- > CFAdummy…I have read some of your post. It > seems to me that you would follow the text, letter > and advice from CFAI material. Well, here is your > answer. CFAI material said that you should invest > in asset that has low correlation with your > earning power. The CFA material also says that you shouldn’t give out investment advice without understanding the situation. There are lots of good reasons for participating in employee share repurchase programs and there are lots of people who should. Suggesting that a person should never do that for any bank because of some exogenous problem that has already pillaged the stock and calling that CFA gospel is quite silly.