Housing Bubble Bursting?

[moh malekpour]

The first part of that can be so wrong it is laughable.

1) If the P/E is lower than the industry average then the stock is underperforming? Not always at all

Brad,
Save your laugh for this quiz because you may have to laugh at yourself. I am going to give you or anyone else who has experience in stock evaluation and rating to compare the following P/E of 6 companies from the same industry and tell me which one is outperforming and which one is under performing in comparison to others. I am not going to name those companies but they are the same sector and I will give you the names if you want after you compared and rated them.

1-P/E=0.140
2-P/E=6.284
3-P/E=8.527
4-P/E=9.177
5-P/E=10.478
6-P/E=11.802
According to your logic of rating, the #1 & #2 should be the best performing and #5 & #6 should be the worst performing. Is that what you think?

Buffet is a contrarian investor. He buys under performed stocks. He never buys out performed stocks that are doing well. He buys stocks that are close to oblivion and nurture them. That is a different thing to buy a beat up stock of a company when it is down. but when we rate the current performance of the stock, the stock is under ferforming. Do all beat up stocks rebound? No . It needs Buffet to invest in them and Buffet does a through research and study to do that. He doesn’t buy any under performed stock.

 

[moh malekpour]

S&P More Than Doubles Alt A Mortgage Bonds It May Cut

Brad,
and wha do you think about this article? This is the new

http://www.bloomberg.com/apps/news?pid=20601103&sid=aygOoDr2GA0k&refer=us

Standard & Poor's said it may lower ratings on bonds from 11 different securitizations of home loans made last year, more than doubling the number of its warnings on bonds of so-called Alt A mortgages. S&P said it's considering the move amid higher-than-anticipated delinquencies.

They include more loans with less documentation of borrower income or assets, secondary financing used as down payments, and money used to purchase second homes and rental units, or make speculative property investments. Many Alt-A loans are interest- only or ``option'' adjustable-rate mortgages with minimum payments that can fail to cover the interest owed.

Late payments of at least 60 days, foreclosures and seized property among Alt-A mortgages in bonds have about doubled since mid-2005 to 2.4 percent, matching the rise for subprime mortgages, analysts at UBS AG wrote in a report last month.

A subset of Alt-A loans to borrowers with low credit scores and low equity and documentation is performing about as badly as subprime, according to Citigroup Inc. and Bear Stearns

 

[Brad Ellis]

Moh,

I think Jody Shenn needs to go back to school. Just look at the contradictions:

"Alt-A mortgages are usually defined as ones that fall just short of the typical credit criteria of Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac, and banks that look to their standards to decide which borrowers get the best rates.

They include more loans with less documentation of borrower income or assets, secondary financing used as down payments, and money used to purchase second homes and rental units, or make speculative property investments. Many Alt-A loans are interest- only or ``option'' adjustable-rate mortgages with minimum payments that can fail to cover the interest owed.

Late payments of at least 60 days, foreclosures and seized property among Alt-A mortgages in bonds have about doubled since mid-2005 to 2.4 percent, matching the rise for subprime mortgages, analysts at UBS AG wrote in a report last month.

A subset of Alt-A loans to borrowers with low credit scores and low equity and documentation is performing about as badly as subprime, according to Citigroup Inc. and Bear Stearns.

To contact the reporter on this story: Jody Shenn in New York at "

1) they do NOT fall short of the creidt criteria of Fannie/Freddie (in fact both Fannie and Freddie buy Atl-A loans AND some sub-prime)

2) "They include more loans with less documentation of borrower income or assets, secondary financing used as down payments, and money used to purchase second homes and rental units, or make speculative property investments" (many types of portfolios contain these factors and those things being in a portfolio has nothing at all to do with whether or not it is Alt-A or something else). The only part of this statement that is accurate is the first line.

3) This last paragraph is just stupid and non-sensical. If you have a property that went into default, then got foreclosed on and then became REO by lumping these together you would be counting them 3 times. They are but different stages of loans in the process of going bad. Some get cured during the default notice stage. Others get cured just before foreclosure and those that do not cure become REO. You cannot add them together and I am guessing she or he totally misread the announcement or had no understanding of this.

4) and finally the sub-set of Alt-A loans to borrowers performing like sub-prime. OF COURSE it will perform like sub-prime- it IS sub-prime- and it is not Alt-A at all- it is Alt-B or C or D FOR DUMBELL.

Moh, I really tire of this. You clearly have little understanding of this. That is actually OK- just so long as you do not keep telling the rest of us you know the subject. You do not. The proof of that is the fact that you provided none of the analysis on this article- had you know wht you are talking about you would have alreay known this was silly.

Now on Mr. Buffet- no Moh, he is an investor only who runs an expensive fund by the name of Berkshire-Hathaway. He buys into companies he perceives as undervalued but with potential. He normally does not have majority positions so he does not usually run them or try to turn them around. That guy would be Sanford Sigaloff. He recently bought large stakes in railroads.

No- I am not going to tell you why but I happen to know. Two weeks ago on the day after he made his moves I made one too- it is up 10% as of today. I also loved his play since my Norfolk and Southern shares went up that day as well even though that was not the railroad he bought into.


And as to the P/e list- that is dumb too but OK- I'll take the two with the 94% cash on cash dividend rate so long as their PEGS are below 1.3. I care not what the P/Es are.

Brad

 

[Brad Ellis]

Moh,

Your quote,

"Buffet is a contrarian investor. He buys under performed stocks. He never buys out performed stocks that are doing well. He buys stocks that are close to oblivion and nurture them. That is a different thing to buy a beat up stock of a company when it is down. but when we rate the current performance of the stock, the stock is under ferforming. Do all beat up stocks rebound? No . It needs Buffet to invest in them and Buffet does a through research and study to do that. He doesn’t buy any under performed stock.

Guess that proves how much you know about Warren Buffet.

Brad

 

[Randolph Kinney]

S&P may downgrade parts of 45 mortgage-backed securities

http://www.marketwatch.com/News/Sto...8B3A5-BC85-417E-8BA2-8EB1B34405DD}&siteid=nbk

SAN FRANCISCO (MarketWatch) -- Rating agency Standard & Poor's said on Wednesday that it may downgrade the lower-rated parts of 45 residential mortgage-backed securities (RMBS) because of rising delinquencies on the underlying home loans. Ratings on 52 subordinate classes from the 45 RMBS transactions sold in 2005 have been placed on CreditWatch with negative implications, S&P said in a statement. Twenty of the classes are underpinned by subprime mortgages and 32 are tied to Alt-A home loans, S&P explained. The affected classes are currently rated A-, BBB+, BBB-, BB+, BB and B, the agency added. S&P said it made the change to reflect "early signs of poor performance of the collateral backing these transactions."

 

[moh malekpour]

Moh,

Your quote,

"Buffet is a contrarian investor. He buys under performed stocks. He never buys out performed stocks that are doing well. He buys stocks that are close to oblivion and nurture them. That is a different thing to buy a beat up stock of a company when it is down. but when we rate the current performance of the stock, the stock is under ferforming. Do all beat up stocks rebound? No . It needs Buffet to invest in them and Buffet does a through research and study to do that. He doesn’t buy any under performed stock.

Guess that proves how much you know about Warren Buffet.

Brad

Brad,
You didn't need to underline the typo. You know what I meant with the last underlined. It should be out performed. You could ask for explanation instead of just finding a typo and jumping to a conlusion but it doesn't matter. Buffet buys under performed companies with potential. He doesn't buy out performed and he is not a herd followers. He is a strologist and he is not a typical joe investors. That is what I meant.

Brad, from your other post

Moh,

I think Jody Shenn needs to go back to school. Just look at the contradictions:


Moh, I really tire of this. You clearly have little understanding of this. That is actually OK- just so long as you do not keep telling the rest of us you know the subject. You do not. The proof of that is the fact that you provided none of the analysis on this article- had you know wht you are talking about you would have alreay known this was silly.

OK. Jody Shenn has to go back to school and I have little understanding of this. May be he shouldn't write for Bloomberg or not write at all. How about the S&P? Are they dumb too? The reporter was reporting the S&P decision and you jumped on him too. This was on Bloomberg news and may be on the other business news . I don't know and I don't care.
Shenn said Alt-A mortgages are usually defined as ones that fall just short of the typical credit criteria of Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac, and banks that look to their standards to decide which borrowers get the best rates. Aren't GSE's supposed to buy prime loans and isn't Alt-A the one that falls just short of prime loans? True that they bought recently non-prime loans but they were not supposed to. I don't see any contradiction there but the important thing is what S&P says about Alt-A not Shenn. Don't try to shoot the messenger

And as to the P/e list- that is dumb too but OK- I'll take the two with the 94% cash on cash dividend rate so long as their PEGS are below 1.3. I care not what the P/Es are.

Sorry, I am too dumb and din't get your clever answer to my dumb questions, could you please clarify which two you picked. Each one has # at the front and you can identify it with # so a dumb person like me can understand it

Since you claim to know everything, please tell me what does the following rating for a comany from Fitch mean to you:

Long-term Issuer Default Rating (IDR) at 'BBB-';
Long-term senior debt rating at 'BBB-';
Short-Term Issuer at 'F2';
--Individual at 'B/C';
--Support at '5'.

 

[moh malekpour]

Traders are advised to learn subprime lesson

http://www.ft.com/cms/s/a38b16e0-f3...uid=34c8a8a6-2f7b-11da-8b51-00000e2511c8.html

When the bubble in US subprime mortgage lending burst earlier this year, the turmoil in a relatively small market seemed a world away from the whizzkids who worked in global financial markets.

But a financial stability report from the Bank of England on Thursday argues that traders in London, Frankfurt or New York could learn from what has been unfolding in towns such as Albuquerque

Banks need to own loans temporarily before they can distribute them, creating a “warehousing” effect. If something nasty occurred that made it difficult for banks to get rid of these assets, they might end up holding risks for which they would be ill-prepared – in the same way the sub-prime shock has left some financial groups unexpectedly holding these assets on their books as their price tumbled.

Such potential risks could be large: the Bank notes that “warehousing” has recently been so frenetic that it has helped to trigger a near doubling in the size of banks’ balance sheets this decade.

The Bank says such concerns remain hypothetical. They were an assessment of what might happen if something went wrong and there was no sign of a meltdown in the corporate credit world. But this desire is creating a growing sense of unease among some regulators.

 

[moh malekpour]

Home builder Ryland Group swings to loss

http://www.latimes.com/business/la-fi-earns26.2apr26,1,6379908.story?coll=la-headlines-business

Home builder Ryland Group Inc. said Wednesday that it lost money in the first quarter because of the weakening housing market.

Calabasas-based Ryland reported a loss of $24.4 million, or 58 cents a share, contrasted with a profit of $90 million, or $1.86, a year earlier.

Facing a shortage of new-home buyers, the company moved to reduce its land inventory and it reported charges including one for $65.5 million to forfeit options to buy land and write down the value of lots and homes it owns.

Without those charges, Ryland said, it would have earned 70 cents a share. Analysts had expected the company to report a profit of about 48 cents a share excluding the charges, according to Bloomberg News.

Ryland announced results after the close of regular trading, during which its shares rose 10 cents to $45.80. Shares fell to $44.68 in the after-hours market.

The company said that it didn't expect to achieve the annual earnings of $3.75 to $4.25 a share it predicted in January and that it wouldn't offer a new forecast "as a result of the uncertainty of current market conditions

 

[moh malekpour]

Friedman Billings Has First-Quarter Loss on Mortgage Writedowns

http://www.bloomberg.com/apps/news?pid=20601087&sid=aVpS4zKPraHs&refer=home

Friedman, Billings, Ramsey Group Inc., the investment bank that's trying to sell its money-losing subprime mortgage unit, posted a first-quarter loss because of writedowns tied to home loans.

The loss, the Arlington, Virginia-based company's third in four quarters, was $185.9 million, or $1.08 a share, compared with a profit of $26.6 million, or 16 cents a share, in the year- earlier period, Friedman Billings said today in a statement distributed by PRNewswire

 

[Randolph Kinney]

Subprime woes hits Countrywide

http://www.marketwatch.com/News/Story/Story.aspx?guid={B67E0FB2-40A4-4E65-99EE-D810FAB3C6D9}&siteid=nbk

NEW YORK (MarketWatch) --Woes in the subprime market amid the overall housing slowdown subtracted 22% from Countrywide Financial Corp.'s first-quarter earnings, the mortgage giant said Thursday.

Countrywide Financial said earnings drooped to $434 million, or 72 cents a share in the three months ended March 31, from $684 million, or $1.10 a share in the year-ago period.

Revenue fell to $2.4 billion from $2.8 billion.


Analysts surveyed by Thomson Financial forecast earnings of 77 cents a share and revenue of $2.58 billion, on average.


The Calabasas, Calif. lender cited adverse subprime and housing market conditions.

"While the company's core operations delivered what was otherwise a strong quarter, earnings were impacted by charges relating to our subprime activities as well as increases to our loss reserves and related asset valuation adjustments stemming from higher delinquencies and softer housing markets" Chairman and Chief Executive Officer Angelo Mozilo said.


Mortgage banking revenue from subprime operations, which include both production and investment activities, declined approximately $400 million from the fourth quarter.


The company has made policy and product guideline changes to reduce exposure to future subprime losses, "and as a result management anticipates that both subprime production and investments will return to profitability in subsequent quarters, absent a material worsening of market conditions."