Tuesday, April 08, 2008

I Want My Buyback Back..... Washington Mutual Edition Part II

They really should have hired Homer or Paris Hilton to run the company.... No joke! After attending the conference call back in Jan 07 ( see Flashback January 2007 ) even the dumbest outside Wall Street could have predicted this outcome. Here is more from Mish . Mish has done another update WaMu Raises Cash, Skeptical Eyebrows

Denke Homer oder Paris Hilton hätten das besser hinbekommen....... Traurig aber wahr! Jeder der wie ich im Januar 2007 ( siehe Flashback January 2007 ) sich den Call angetan hat konnte genau das vorhersehen. Voraussetzung natürlich man arbeitet nicht an der Wall Street......Hier gibt es mehr von Mish . Hier ein weiteres lesenswertes ein Update WaMu Raises Cash, Skeptical Eyebrows von ihm.

On Jan. 3, 2007, the company entered into an accelerated share repurchase agreement with a dealer, buying back $2.7 billion of its common stock ( Stock close to $ 40 )

Fast forward April 2008 Washington Mutual Gets $7 Billion From TPG-Led Group
Wahington Mutual the largest U.S. savings and loan, got $7 billion from a group of investors led by David Bonderman's TPG Inc. after losses on subprime loans ate up capital and erased 74 percent of its market value.

Washington Mutual sold 176 million shares at $8.75 a piece, 33 percent below yesterday's closing price on the New York Stock Exchange, and preferred shares, the company said in a statement today
It will be interesting to see how long this infusion will last......
Bleibt abzuwarten wie lange diese Kapitalspritze vorhalten wird......
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Blogger shankar said...

Right on target with your question - How long will it last?

This decision may come to haunt TPG. It is betting on recovery in the next 12-18 months. It may (to its detriment) find that $8.75 was an unusually high price to pay for WM.

In short-run, WM may go down to $7-8, followed by another (false) pop in late summer. After that it will be a toast. Like Warburg Pincus, which I think, will not recover its investment in monoline insurer, neither would TPG. (That's my thinking.)

I think most PE firms are equating the current downturn to a shallow recession. However, most housing busts last much more than that. Add to that severe credit crunch, depreciating dollar (and hence a lack of investment by foreigners) and the aging population make a case for something much more vicious.


1:31 PM  
Blogger jmf said...

Moin Shankar,

"I think most PE firms are equating the current downturn to a shallow recession"

I agree.

Nice to see how the "smart money" is dumping their money in broken companies like WAMU :-)

The best part is that they are somewhat "committed" ( like a poker player with a big pot ) to make the next infusion......

10:13 PM  
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