Deejay, your $7.55 price seven days ago did not last very long, back at $5.42. BAC might have to step in a bit faster than they wanted too, CFC bonds got down graded again today.
Well I was in a training all day and didn't get to sell anything today. I ate some CFC loses and roll them over to July 7.50 puts. My bet is they don't survive pass 3rd quarter, either that or BAC walk from the deal on some excuses. By third quarter, BAC has to be taking some serious hit with their HELOC and even prime loans. It's obviously just a bet...And guys, pull your 401k money, put them in something liek short term treasuries. "SHY" is a good ETF to get into to weather this storm.
...In the filing, Countrywide also disclosed that should shareholders not approve the takeover by Bank of America, the two companies have agreed to restructure their agreement and resubmit it to Countrywide shareholders.
The agreement also includes a provision that calls under specific circumstances for Countrywide to pay Bank of America $160 million should the proposed acquisition fall through.
The deal may fall through yet, but I'm glad the executives worked their retention bonuses in. I was worried they might not be taken care of. Well, I suppose without the green wristbands they'll need something to motivate them.
Laxtosnoco - Retention bonuses??? no, those are legal defense funds for all the upcoming class action law suits.
The BAC deal will excelerate the decline of CFC, BAC now just has a very heavy hand on CFC, and CFC will loose any competive edge they had in the market to begin with. BAC wins either way, by the time the deal does go through, BAC will actually know what exposure CFC has in buybacks of bad loans, and will be able to discount the price further. If the deal does not go through, CFC will be toast, and BAC will obtain at least part of their market share.
One question will be if BAC will be able to influence CFC to lower the yeild on their CDs, at to make BAC's CDs more competitive...
Jillayne - If the deal does not go through, BAC's worries is not the $160 Million, it is the two BILLION in preferred shares it owns in CFC going bad.
Okay, last time this post was updated was January 18th. At that time CFC was at $4.96, today we are at $4.50. Please tell me someone out there is profiting from this short possition......
A 10% drop over nearly 2 months is not the type of action that generally makes people very wealthy on shorting a stock. You'd need to have picked a very long term (say 6months to a year) to even see a return, and that would probably be limited. If you picked a shorter term (say 2 months) and a $5 strike, you could very well have lost money even as the stock dropped.
Shorting is not especially easy to do in other words.
Rosy, I understand what you are saying, but it is possible.
Anyway, I thought I could just short your stock in CFC... How big a window do you want to give me to replace your stocks?
I agree it's possible. I'm just saying the last month and a half was unlikely to make you any real profit. The crash early last year wast the time to make your $$$.
one further thought on the BofA/CFC "deal". Check out the terms:
Shareholders of Countrywide will receive 0.1822 of a share of Bank of America stock in exchange for each share of Countrywide. The deal is expected to close in the third quarter and to be neutral to Bank of America earnings per share in 2008 and lift earnings per share in 2009, excluding buyout and restructuring costs.
BofA is currently trading at 38.09, CFC at 5:15 - or a value of 0.1315 shares of BofA. That is a 28% discount to the purchase price if the deal goes through. If you think this deal is going to happen, you've found a money machine. The market pretty clearly seems to be discounting that as an outcome.
Comments
yup. just hoping no one got burned by what appears to be a now typical form of blatant market manipulation
Hopefully AnySooner was able to ride the wave...
...In the filing, Countrywide also disclosed that should shareholders not approve the takeover by Bank of America, the two companies have agreed to restructure their agreement and resubmit it to Countrywide shareholders.
The agreement also includes a provision that calls under specific circumstances for Countrywide to pay Bank of America $160 million should the proposed acquisition fall through.
http://money.cnn.com/2008/01/17/news/co ... 2008011722
The BAC deal will excelerate the decline of CFC, BAC now just has a very heavy hand on CFC, and CFC will loose any competive edge they had in the market to begin with. BAC wins either way, by the time the deal does go through, BAC will actually know what exposure CFC has in buybacks of bad loans, and will be able to discount the price further. If the deal does not go through, CFC will be toast, and BAC will obtain at least part of their market share.
One question will be if BAC will be able to influence CFC to lower the yeild on their CDs, at to make BAC's CDs more competitive...
Jillayne - If the deal does not go through, BAC's worries is not the $160 Million, it is the two BILLION in preferred shares it owns in CFC going bad.
Shorting is not especially easy to do in other words.
Anyway, I thought I could just short your stock in CFC... How big a window do you want to give me to replace your stocks?
CFC might become a very good long possition pretty soon anyway though, depending on the BAC issue...
I agree it's possible. I'm just saying the last month and a half was unlikely to make you any real profit. The crash early last year wast the time to make your $$$.
And no I don't own any CFC.
BofA is currently trading at 38.09, CFC at 5:15 - or a value of 0.1315 shares of BofA. That is a 28% discount to the purchase price if the deal goes through. If you think this deal is going to happen, you've found a money machine. The market pretty clearly seems to be discounting that as an outcome.