is it a good time to buy Washington Mutual that are rumors it might be acquired? or, should we wait until the govt decides their rescue plan? thx.
I won’t be buying anyone whose credit rating was just downgraded to E. I didn’t even know that level existed. I don’t think there’s enough info out there right now to speculate on a potential acquisition. Besides, once the short ban is lifted, WM is liable to plunge back down into the abyss.
If you want to speculate my suggestion would be to short ahead of earnings at the end of October… oh wait…
pick up an FMD or ETFC if you want to speculate on financial stocks. FMD has had a HORRIBLE fall from grace-once flying over $70.00 and now at a paltry $3.00. FMD is a securitizer of student loans and once the ABS market froze, guess what, ZERO (0) securitizations and nearly all their revenue vanished. once the first securitization is complete, look for a HUGE run up
there were threads like this about lehman, and Freddie, and Fannie, and…this is a wipeout.
Very true, look at what happened with Lehman…why pay full price now for a going concern when you can pick up the pieces in chapter 11 for pennies on the dollar…
jimjohn - i suggest you stay away from stocks at this point in time if you’re asking questions like this. If you are not informed about the developments in the credit markets and bank balance sheets, stay out. You get guys here in the past talking about getting bargains on LEH, FRE, FNM etc and how they will pay off in the long-term. I will tell you that WM is insolvent and no one will buy them.
FMD - didn’t all of senior mgt leave recently?
FMD is done. their model was hit with a perfect storm…sub prime lending, securitization funding source, equity traunch exposure… this stock has been a roller coaster for years, the ride is over.
cfa_gremlin Wrote: ------------------------------------------------------- > jimjohn - i suggest you stay away from stocks at > this point in time if you’re asking questions like > this. If you are not informed about the > developments in the credit markets and bank > balance sheets, stay out. You get guys here in > the past talking about getting bargains on LEH, > FRE, FNM etc and how they will pay off in the > long-term. > > I will tell you that WM is insolvent and no one > will buy them. Second - I think all these stocks are toast. Why would anybody buy anything that there are tons of people chomping at the bit to short but the govt says they can’t until next week?
> > I will tell you that WM is insolvent and no one > will buy them. Do you have any basis for this assertion? Supposedly there are a lot of interest in the deposit base and a well-capitalized bank (+bailout) should make this a no-brainer for the likes of JPMorgan and Wells Fargo, in my humble opinion.
yes, there is some interest in the deposits and the branch network, but there is no interest (read: strong aversion) to their loan portfolio. Why would any buyer pay anything, when there is a good chance this thing goes under, and they can pick up assets (of their choosing) for very little. Look at what happened with Lehman (WM is close on thier heels). Equity holders will be wiped out, even if JPM picks up some pieces here. WFC might have some interest but there is geographic overlap. USB might also have some interest. btw, wouldn’t consider WM well capitalized, it holds one of the most toxic loan portfolios around.
Plus, what good is the deposit base if everyone starts taking their money out? Not saying a run on the bank is imminent, but I’d be pretty nervous if I had an acct with wamu, esp over the 100k limit for FDIC coverage.
It will be nearly impossible to pick up WM’s deposit base in bankruptcy court. Who in the right mind would leave their checking/savings account in a bankrupt company? There will be a run on the deposit. If WM goes under, there will be very little value in its assets. JPM was willing to offer $8 when the TPG deal occured. With a bailout in the works (i.e. ability to offload some of the bad loans), the deal would be highly accretive. This would be an absolute steal for prospective banks, assuming the bailout does materialize. In a perverse scenario: Company could remain independent and off load all its toxic loans. Company is selling for a fraction of its book value (which already assumes heavy writedown). if the bailout does occur (supposed 60-65 cents on the dollar), the company would book GAINS as it sell assets into the government trust. P/BV is 0.17, if they sell assets for even 50 cents on the dollar, you could see significant upside… For what it’s worth, even the rating agency has commented that WM is well-capitalized until 2010 (recent press release).
“Supposedly there are a lot of interest in the deposit base and a well-capitalized bank (+bailout) should make this a no-brainer for the likes of JPMorgan and Wells Fargo, in my humble opinion.” I don’t care about their deposit base. Their loan portfolio, if marked to market, would wipe out equity, and eat into their debt. Their insolvent. The bailout, assuming the govt doesn’t buy assets at par, is going to wipe WM out. “For what it’s worth, even the rating agency has commented that WM is well-capitalized until 2010 (recent press release).” LOL - you pay attention to Rating Agencies?
swtxlady Wrote: ------------------------------------------------------- > For what it’s worth, even the rating agency has > commented that WM is well-capitalized until 2010 > (recent press release). Who said that? They were just downgraded to E by Moody’s. E! Moody’s: “We believe WaMu’s capital is insufficient to absorb its mortgage losses.”
- Why would anyone in their right mind listen to those morons 2. All is takes is a little uneasiness from a few depositors to spark a run on the bank…
salvaNJ Wrote: ------------------------------------------------------- > 1. Why would anyone in their right mind listen to > those morons Yeah, good point, not exactly a stellar track record. I think Moody’s (really all of the ratings agencies’) new logo should be a cracked rearview mirror. > > 2. All is takes is a little uneasiness from a few > depositors to spark a run on the bank… The more I think about it, given the news making the rounds about wamu, it’s almost surprising that hasn’t happened already. I thought 2 weeks ago when they were losing 20% a day off their stock price that all of the news agencies were being awfully quiet about it to avoid triggering a run on the bank.
> I don’t care about their deposit base. Their loan > portfolio, if marked to market, would wipe out > equity, and eat into their debt. Their insolvent. > The bailout, assuming the govt doesn’t buy assets > at par, is going to wipe WM out. You have absolutely no clue what you are talking about. Hate to sound rude, but common!.. First, because of the illiquid market, ANY firm (Goldman, Wells Fargo, Capital One, GE, etc), will be wiped out if they’re forced to mark-to-market their books. Spreads on non-Treasuries are insane. Second, your assertion that unless the government buy at par will wipe out the equity is mathematically wrong. The equity is assuming the value of the books is worth 17 cents on written down book (i.e much lower than par). In other words, any bailout above 17 cents will net a gain for the company. > > “For what it’s worth, even the rating agency has > commented that WM is well-capitalized until 2010 > (recent press release).” > > LOL - you pay attention to Rating Agencies? When people say “FWIW” … it’s meant as a side note.
> > Who said that? They were just downgraded to E by > Moody’s. E! > > Moody’s: “We believe WaMu’s capital is > insufficient to absorb its mortgage losses.” S&P… if you have bloomberg, it’s easy to find.