| Author |
Previous Topic | Next Topic |
|
quasigovy
378 Posts |
 Posted - 04/10/2008 : 07:14:39 AM
|
Hey guys,
Everyone on this site wishes they had bet against Countrywide last year. It looks like Lehman is going to tank now.
If you think about it, it makes sense.
They sold Stated, No Ratio, and No Doc like crazy for years. Not only through Aurora, but many wholesalers were funding with them.
Remeber the No Ratio with cash out for reserves to 100% down to a 620 score fixed income ok? Those loans were not so solid, time to pay the piper!!!!
When they juped into the option arm market they did it with the hybrid (5 year fixed), now those are worthless as well.
Bet against them now and make some nice cash? I am going with a Jan 07 put around $20. |
|
ppulatie
2203 Posts |
Posted - 04/10/2008 : 07:19:45 AM
|
You got it. Lehman is going down next, unless WAMU beats them.
LB has a tremendous derivitive exposure ike BSC. Just a bit different of paper. |
|
|
quasigovy
378 Posts |
Posted - 04/10/2008 : 07:29:27 AM
|
I took my position last week and I am up a decent amount in a short time. Great start for a long term position.
I doubt anyone other than Countrywide wrote more garbage than them over the past few years. Plenty of money to made on this bet I think.
For a long time they were pricing No Ratio the same as stated, the cash out for reserves was the icing on the cake. These guys are going to have to write down many more BILLIONS!! They are screwed. |
|
|
cjamison
29 Posts |
Posted - 04/10/2008 : 07:39:09 AM
|
you have to understand the huge material differences in how those two companies operate... Countrywide failed because the commercial paper market froze up; Lehman will fail for about 7 different reasons, but they have many, MANY more people invested dearly in making sure that doesn't happen. CFC wouldn't have cratered the global economic web by going down - Lehman would.
LEH would have failed the week after BSC if the fed hadn't opened the discount window when they did and allowed dealers to borrow against any investment grade securities. Now Lehman can dump all the ****ty paper onto the fed/taxpayer's balance sheet.
Lehman has a big presence in Asia and other expanding markets - be careful shorting their stock or buying put options, the majority of the real toxic stuff won't be leaked until after the new election in next January. It's all being covered up until then.
I've made a killing over the last 9 months by shorting and buying SKF, the double inverse ETF that tracks the DJ US Financials Index. It bounces cyclically like a ping pong ball between about 100 and 135. Buy around 100, short around 135, keep stops tight on both ends. I'm on my 7th winning trade out of 8 since last July for 341%
Careful picking individual stocks. It's dangerous to try and 'catch the next countrywide'.
-"The markets can remain irrational far longer than you can remain solvent" |
|
|
quasigovy
378 Posts |
Posted - 04/10/2008 : 07:44:07 AM
|
Thank you for the advice, I am going to take a look at that.
I must say that I believe LEH will drop under $30 by July, when that happens the $20 put for Jan 09 will have jumped in price with plenty of time left. I will sell it then I think.
I took the exact same position with Wachovia (WB), that one is looking good too.
|
|
|
cjamison
29 Posts |
Posted - 04/10/2008 : 07:55:55 AM
|
I hope you're right.
I've been frustrated beyond belief by all of the Fed intervention into the money markets, not because I'm "unpatriotic" and want our markets to crash, but because I believe it's the only way to truly purge the mess of the past 5 years and start moving past it. Take our medicine and swallow a nasty pill now, or 'death by a thousand cuts' that devastates our economy like Japan in the '90's... I think that's the last thing anybody wants to see happen.
Disclosure: I'm currently long SKF, SRS, short JPM, COF, MS, XL, was fortunate enough to catch CFC, IMB and FED last year, so I'm playing with their money :D Pissed I missed ABK and MBIA tho... at $30 I figured they "had fallen all they were going to".. argh!!
The easy money has been made shorting financials (IMHO), but keep your eye on companies that have big exposure to unsecured consumer obligations (credit card companies, like COF and Discover). They will bear the brunt of any consumer led recession two fold: people stop buying (less revenue booked), and people stop paying what they owe (defaults and non-performing debt). I think the credit card holding trusts will get crushed like the mortgage industry did, but no government bailout for them.. anyone know a quality BK attorney who's looking for some seed money? :) |
|
|
quasigovy
378 Posts |
Posted - 04/10/2008 : 08:08:42 AM
|
I checked that ETF. I like it but the analysts hate it....
I have been active in Opexa (opxa). I started watching it because I have interest in the lead drug, Tovaxin, which is in phase IIb trials.
www.clinicaltrials.gov search keyword Tovaxin
That is when I noticed it bounces from $1.20 to $1.50 and I have taken the ride a few times.
good luck. |
|
|
PinnaclePeters
1023 Posts |
Posted - 04/10/2008 : 09:15:05 AM
|
JT Marlin is pushing Farrow Tech.
They have a drug called "Parattin" in the third stage of FDA approval.
|
|
|
AndrewSoss
354 Posts |
Posted - 04/10/2008 : 09:26:14 AM
|
quote:
Originally posted by PinnaclePeters
JT Marlin is pushing Farrow Tech.
They have a drug called "Parattin" in the third stage of FDA approval.
lol, if you liked it at $10, you should LOVE IT at $5!! |
|
|
Wupadupa
152 Posts |
Posted - 04/10/2008 : 09:27:47 AM
|
quote:
Originally posted by PinnaclePeters
JT Marlin is pushing Farrow Tech.
They have a drug called "Parattin" in the third stage of FDA approval.
THE RIP ON FARROW TECH IS NOW $3.00!!!!
|
|
|
isitfree
706 Posts |
Posted - 04/10/2008 : 09:30:54 AM
|
| R-E-C-O!!! |
|
|
RGK2394
1100 Posts |
Posted - 04/10/2008 : 09:32:53 AM
|
quote:
Originally posted by Wupadupa
quote:
Originally posted by PinnaclePeters
JT Marlin is pushing Farrow Tech.
They have a drug called "Parattin" in the third stage of FDA approval.
THE RIP ON FARROW TECH IS NOW $3.00!!!!
RECOOOOOOOOOOOOOOOOOOOOO!!!!!! |
|
|
AndrewSoss
354 Posts |
Posted - 04/10/2008 : 09:36:02 AM
|
This analysis is so naive. You don't think that the market knows that they were writing No Ratio to 100% w/ a 620? You don't think that it's at all priced in?
It's total herd mentality. It's like the people who buy Best Buy stock in September because "OMG they make most of their money in Xmas season!!!!!"
I'm not saying LEH is a good buy/short or not, I really have no idea, but to say that they are a good short in March 08 because they wrote risky paper the last 5 years is pretty naive. It's the exact menatality that smart investers use to bet against and make money. |
|
|
isitfree
706 Posts |
Posted - 04/10/2008 : 10:06:49 AM
|
quote:
Originally posted by AndrewSoss
This analysis is so naive. You don't think that the market knows that they were writing No Ratio to 100% w/ a 620? You don't think that it's at all priced in?
It's total herd mentality. It's like the people who buy Best Buy stock in September because "OMG they make most of their money in Xmas season!!!!!"
I'm not saying LEH is a good buy/short or not, I really have no idea, but to say that they are a good short in March 08 because they wrote risky paper the last 5 years is pretty naive. It's the exact menatality that smart investers use to bet against and make money.
"What do you mean, you're gonna pass. Andrew, the only people making money passing are N.F.L. Quarterbacks and I don't see a number on your back." |
|
|
cjamison
29 Posts |
Posted - 04/10/2008 : 10:07:22 AM
|
Quasi,
The ETF (SKF) is an analyst's worst nightmare due to its volatility. Look at its ATR over the past 90 days. Analysts by definition are employed to serve the long-term investor, either long or short. This ETF routinely moves 5%+ in a day; I'm surprised there's even any coverage. It's only meant to be a hedging or short term trading tool - I'd never try and hold this thing for long. Trade it cyclically and take profits liberally.
And boys: it's an ETF. I'm not pushin' a penny stock :) Just sharin! |
|
|
cjamison
29 Posts |
Posted - 04/10/2008 : 10:12:32 AM
|
... and with respect to Lehman, no I'm not saying they'll fail miserably due to the "no ratio paper they wrote that they're not even holding anymore... I'm saying they're gonna fail because of the ungodly gearing and leverage they've employed in crappy derivatives. All it's going to take is One IB to go bust, and the tidal wave is going to wreak havoc. How many do you think the Fed can save?
Do a little digging into where the most recent "earnings" Lehman manufactured on their unaudited Quarterly report came from. Shuffling the deck chairs on the titanic :)
Grab a lawn chair and watch the fireworks |
|
|
clydesnodgrass
51 Posts |
Posted - 04/10/2008 : 11:14:25 AM
|
It blows me away that everyone says because a loan was higher risk that it will definitively be bought back or go into default...
...the other 97% of the country that isn't in default is still paying their mortgages on time... that same 97% didn't just walk away from their house when things got tough because everyone else was doing it.
If the media would stop making such a big deal about it, stop bringing it up (which obviously isn't going to happen), then maybe the rest of the world would stop thinking it's a viable alternative. Just because values crashed, didn't mean that you automatically got out of having to pay your mortgage. I have four homes (had six at one point), three of which are undervalued and over securitzed, you don't see me walking away (as much as I'd like too). |
|
|
quasigovy
378 Posts |
Posted - 04/10/2008 : 11:25:17 AM
|
quote:
Originally posted by AndrewSoss
This analysis is so naive. You don't think that the market knows that they were writing No Ratio to 100% w/ a 620? You don't think that it's at all priced in?
It's total herd mentality. It's like the people who buy Best Buy stock in September because "OMG they make most of their money in Xmas season!!!!!"
I'm not saying LEH is a good buy/short or not, I really have no idea, but to say that they are a good short in March 08 because they wrote risky paper the last 5 years is pretty naive. It's the exact menatality that smart investers use to bet against and make money.
What does my January 09 put have to do with a short in March '08 ?????? I have taken a position I do not expect to pay off until as late as Sept.
I say this stock (LEH), now at $40, will have to test at least half way to the $20 low of March between now and then. If it goes below $30 anytime between now and Sept I will make good cash.
Is that "Naive".
|
|
|
Ryan Robertson
192 Posts |
Posted - 04/10/2008 : 12:10:40 PM
|
Lehman bought Billions in bulk delegated loans from companies like First Magnus that had 0% chance of performing. I reviewed dozens of the files and it turned my stomach. The guides were loose but the delegated UW was worse.
I've spoke with Carl Peterson ALS's VP of Credit Policy and he admitted the exposure was high but the execution was the problem.
|
|
|
UPINARMS
109 Posts |
Posted - 04/10/2008 : 12:26:32 PM
|
I have had a fairly large short on Lehman for a while now. I was one of the lucky ones that shorted Countrywide on Mach of 2007 (http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1750651).
Here is a huge reason to jump on Lehman if you are thinking of it.
http://www.youtube.com/watch?v=tebO2v3qBVY
Copy and paste link if it doesnt work. |
|
|
quasigovy
378 Posts |
Posted - 04/10/2008 : 6:22:42 PM
|
There is no way all of that junk has been "priced in".
Not a chance. That stock will test its lows within 3 months. |
|
|
| |
Previous Topic | Next Topic |
|
Search for: 
