In the Cramer blog post, “How to Survive the Banking Meltdown”, which bank ranked “Almost as Bad as the Worst”?
Almost as Bad as the Worst: National City (NCC), Washington Mutual (WM) and First Horizon (FHN)
FIRST HORIZON NATL CORP
FHN
7.23 1.34 +22.75%
NYSE
Picks & Pans: In “Options Bubble on Financial Trouble,” whose “implied volatility” shot up 101% Monday?
“Keep an eye on Washington Mutual,” sha said. “When I spoke to your producers at about 10:30 a.m. this morning, its implied volatility was up 37 percent. When I left the office to come to the studio here, it was up 101 percent, and again we saw traders selling volatility in the front month.”
In Cramer’s May 15 Sell Block segment, “The Newest Mortgage Offenders,” why did the Mad Money guru slam IndyMac?
IndyMac’s bad loans are skyrocketing, the company keeps diluting shareholders as shares outstanding continue to build up. And it isn’t even saying it can be profitable this year as it remains heavily exposed to the worst areas of the California market, which make up nearly 50% of its holdings.
At one time, IndyMac (IMB) made my Small Cap Watch List (Track at Marketocracy). But that was a long time ago. These days it doesn’t even make it past my initial screens.
In his Friday “Game Plan,” Cramer said banks may bottom soon. But he warned of possible “catches,” including:
The catch here, and there always is a catch, is that if HOV and TOL report poor numbers and the U.S. has lost more jobs, Cramer’s predicting next week would be horrible for the financials. American International Group (AIG - Annual Report), Washington Mutual (WM) Wachovia (WB - Annual Report) and Bank of America (BAC) could sink to multiyear lows.
None of the stocks fare especially well in the models I use. HOV doesn’t even make it past the screens, and Toll Brothers scores among the worst for earnings momentum and return potential.
Bank of America scores poorly for earnings quality, earnings momentum and price momentum. The same applies for Wachovia, which also ranks low for free cash flow. Washington Mutual, by contrast, has a high free cash flow ranking but is also among the worst ranked for return potential.
AIG is the only name on the list that is not a net negative in my models. Its poor scores for earnings momentum and price momentum are offset by high marks for earnings quality and free cash flow.
Disclosure: At time of publication, William Trent has no financial position in the companies mentioned in this article.
With the end of the first quarter approaching, it is time to adjust the names in my Watch Lists. I will price all the new lists as of the close on Friday, June 29.
Today I present my planned updates to the Small Cap Watch List. There was a fairly high level of turnover to the list. 12 of the 24 names from the previous run made it to the current list, which was also 24 names. Performance-wise, the list created in March has returned an unweighted average return of 2.6% through June 28, with 80% of the stocks in positive territory. All of the money-losers from the previous list fell out of consideration.
So without further ado, the names on the chopping block from the previous list are: PW Eagle (PWEI), Insteel Industries (IIIN), Allied Defense (ADG - Annual Report), Hartmarx (HMX), Parlux (PARL), Hansen Natural (HANS), FirstFed Financial (FED), Young Innovations (YDNT), ITT Educational (ESI), Rent-a-Center (RCII), Valassis (VCI), and Travelzoo (TZOO). The castaways include four of the five money losers from the previous portfolio (HMX, PARL, YDNT and TZOO) as well as the biggest gainer (ESI).
The new list is:
I will continue to track both lists on StockPickr.
With the end of the first quarter approaching, it is time to adjust the names in our Watch Lists. We will price all the new lists as of the close on Friday, March 30. Today we present our planned updates to the Large Cap Watch List (Track at Marketocracy).
Though less than the Small Cap Watch List and Mid Cap Watch List (Track at Marketocracy), there was still relatively high turnover in this list. 14 of the original 33 names made the cut for the new list (which was trimmed to just 26 names.) Part of the reason for the turnover was to reduce overlap between the lists. One third of the Mid Cap Watch List (Track at Marketocracy) names appear on each of the Small Cap and Large Cap Watch List (Track at Marketocracy)s, but there is no longer any overlap between small and large.
So without further ado, the names on the chopping block from the previous list are:
3M (MMM); Continental (CTTAY.PK); Mitsui (MITSY); Anheuser-Busch (BUD); ConocoPhillips (COP); Helix Energy (HELX); IndyMac Bancorp (NDE - Annual Report); Barr Pharmaceutical (BRL - Annual Report); Quest Diagnostics (DGX); Public Storage (PSA); ITT Educational Services (ESI); Equifax (EFX); Rent-a-Center (RCII); Kroger (KR); Ricoh (RICOY); First Data Corp. (FDC); Expeditors International (EXPD); and Keyspan (KSE).
The new list is:
With the end of the first quarter approaching, it is time to adjust the names in our Watch Lists. We will price all the new lists as of the close on Friday, March 30. Today we present our planned updates to the Mid Cap Watch List (Track at Marketocracy).
As with the Small Cap Watch List (Track at Marketocracy), we were surprised at the amount of turnover in our screens. Only 7 of the original 29 names made the cut for the new list (which comes in at only 24 names.) Part of the reason for the turnover was to reduce the overlap between the Small Cap and Mid Cap Watch List (Track at Marketocracy)s. Now there is only one-third overlapping names rather than two thirds. Furthermore, given the level of outperformance we saw in the first quarter (actually just two months) and the fact that much of those gains were achieved early, perhaps the turnover is warranted.
So without further ado, the names on the chopping block from the previous list are:
Silgan Holdings (SLGN - Annual Report); Middleby (MIDD); Olin (OLN); Vector Group (VGR); Sanderson Farms (SAFM); Tesoro (TSO); Downey Financial (DSL); Waddell & Reed (WDR); Gamco (GBL); Apria Healthcare (AHG); Quest Diagnostics (DGX); ITT Educational Services (ESI); Equifax (EFX); Delhaize Group (DEG); Papa John’s (PZZA); Rent-a-Center (RCII); Cato Corp (CTR); Dassault Systemes (DASTY); Ingram Micro (IM); Energy East (EAS); South Jersey Industries (SJI - Annual Report); and American States Water (AWR).
The new list is:
With the end of the first quarter approaching, it is time to adjust the names in our Watch Lists. We will price all the new lists as of the close on Friday, March 30. Today we present our planned updates to the Small Cap Watch List (Track at Marketocracy).
Frankly, we were surprised at the amount of turnover in our screens. Only 9 of the original 29 names made the cut for the new list (which comes in at only 24 names.) Still, given the level of outperformance we saw in the first quarter (actually just two months) and the fact that much of those gains were achieved early, perhaps the turnover is warranted.
So without further ado, the names on the chopping block from the previous list are:
Silgan Holdings (SLGN - Annual Report); Steel Dynamics (STLD - Annual Report); NVR (NVR - Annual report); Middleby (MIDD); Vector Group (VCG); Sanderson Farms (SAFM); Downey Financial (DSL); Waddell & Reed (WDR); Wilshire Bancorp (WIBC); Harrington West (HWFG); Gamco Investors (GBL); Apria Healthcare (AHG); Papa John’s (PZZA); Cato Corporation (CTR); Meredith Corporation (MDP); CSG Systems (CSGS); Energy East (EAS); Dynamics Research (DRCO); Ingram Micro (IM); and Dade Behring (DADE).
The new watch list will be:
Shares of Large Cap Watch List (Track at Marketocracy) member IndyMac Bancorp are rising in premarket trading after the company issued a press release with the following update:
IndyMac Bank - Investor Relations - Press Release
Indymac’s exposure to subprime mortgages is small, and the Company’s credit performance statistics are reflective of prime/Alt-A mortgage lending.Indymac has been inappropriately categorized by many media sources as a subprime lender, and we wish to clarify our position as predominantly a prime/Alt-A lender with the following facts:
1. Based on the definition of subprime established by the Office of Thrift Supervision (OTS) for our regulatory filings, only 3.0 percent of Indymac’s $90 billion in mortgage loan production in 2006 was subprime.
2. Indymac’s asset-backed securitizations (ABS) classified as subprime total $6.8 billion(1) and represent only 4.4 percent of our total $156 billion portfolio of loans serviced as of December 31, 2006.
3. We do not rank among the top 25 subprime lenders in the country in any current industry survey, nor are we part of the ABX Index of the top 20 subprime issuers.
4. Subprime mortgages generally include those loans where the borrower’s FICO score is 620 or below. In contrast the averageFICO score on Indymac’s 2006 loan production was 701.
Of course, one can forgive the confusion with the shares down by a third since the beginning of the year and the company having to frequently cut its guidance, as we reported two weeks ago:
According to an Associated Press article:
In January, the company forecast 2007 earnings at about $4.15 per share. At the time Wall Street was looking for profit of more than $5 per share, but analysts have since revised their estimates and now expect, on average, profit of $4.32 per share.
IndyMac did not specify a per-share earnings target on Thursday.
But that is not quite true. The 10-15% ROE range, applied to IndyMac’s $2.0 billion in equity, implies a net income range between $200 and $300 million, or roughly $2.75 - $4.00 per share.
So be it prime, subprime or what have you, it seems fair to call this company (and its shareholders) “suffering.”
William Trent currently has a short position in put options related to Office Depot (ODP).
Small Cap Watch List (Track at Marketocracy) and Mid Cap Watch List (Track at Marketocracy) member Downey Financial (DSL) reported that its Assets Fell in February:
Downey Financial Corp., the parent of Downey Savings and Loan Association in California and Arizona, on Wednesday said its assets fell 2 percent in February, compared with the prior month.
The shares held up fairly well today, though they were down nearly 10% in the last five days. While part of the decline was likely due to subprime spillover effects, one wonders whether the market was anticipating the news.
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