Monday, April 14, 2008

Pure Comedy Again From Wall Street Finest "Wachovia Offers Deep Deep Value"

You just cannot make this up..... I assume the the value on Wachovia after today's blockbuster news including a net loss, slashing the dividend, massive dillution etc is even getting deeper......I´ll bet that news like fail to change the view from "Wall Street Finest" that ranked Wachovia at number 6 pointing to the dividend yield of 9.5 percent and the low pe...... For more details see Wachovia presentation

Es wird Zeit für eine neue Folge aus dem Tolllhaus mit dem Titel "Was machen Wall Street Finest eigentlich beruflich ?........ Evtl. waren Förtsch, Prior und co doch nicht so übel........ Mal gucken ob sich die Sicht der Dinge nach der heutigen Granatenmeldung von Wachovia geändert hat. Dort werden so nebensächliche Dinge wie eine massive Kapitalerhöhung die den Wert erheblich verwässern wird, eine drastische Kürzung der Dividende, ein Nettoverlust usw angekündigt. Denke die Dividendenrendite von 9,5% ( siehe Nr. 6) sowie das angepriesenen niedrige KGV dürfte wohl zukünftig nicht mehr zum "Deep Value Play" von diesem selbsternannten Experten gehören..... Für noch genauere Infos siehe Wachovia Präsentation

WSJ

Wachovia Corp. said it will raise $7 billion in capital through stock sales and cut its dividend by 41%, a consequence of its ill-timed move into becoming a major mortgage player, as it posted a first-quarter net loss caused by $2 billion in "market-disruption" losses and sinking credit quality.

The infusion represents Wachovia's second dip into the capital trough this year. In January and early February, Wachovia pocketed a total of $8.3 billion in capital by issuing preferred stock and other securities to investors

Credit-loss provision were increased to $2.83 billion from $177 million as net charge-offs soared to 0.66% of average net loans from 0.15%. Nonperforming assets, those loans near default, ballooned to 1.70% of loans from 0.42%. Net interest margin, the difference between interest earned on loans and paid on deposits, dropped to 2.92% from 3.06%.



Citi, UBS & co: deep, deep value FT Alphaville
Not for the faint-hearted. Lehman is making the case for shifting away from growth stocks and towards value. Which means financials.

Just as Meredith Whitney gets going on her latest round of predicting outsize writedowns....

The result is a very European-heavy, financials-heavy list of names. Here’s their top 20:

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Carolina dreamin'Commentary: Wachovia ignored the risks in Golden West deal

Wachovia Corp.'s struggles today can be traced back to a single, mistaken deal: the purchase of Golden West Financial Corp. in 2006. Two years ago, the Charlotte, N.C.-based Wachovia agreed to $24.2 billion for Golden West, an Oakland, Calif.-based savings and loan run by Herb and Marion Sandler, the legendary husband-and-wife banking team that took over the S&L in 1963 and built GW into one of California's biggest lenders

Unfortunately, Golden West was a business built on adjustable-rate mortgages. Even though analysts questioned Wachovia's chief financial officer, Tom Wurtz, about the prudence of adding exposure to that market, he brushed it off.

"It's a very complicated process to put in place all of the discipline and process that they have to get the in-house appraisers, get them trained and to create the working knowledge by the broker community that they been able to achieve through a long-standing period of training with those brokers and delivering on their commitment," Wurtz said in a conference call announcing the deal. "And so from that standpoint there is extraordinary value in their mortgage operations."

Ouch!

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2 Comments:

Anonymous eh said...

Völlig absurd.

But the reality is that these calls move not only individual stocks but also market indexes. Take a look at the homebuilders this year: all the bottom calling and 2nd half recovery talk has really pushed them higher, which makes no sense at all, as housing will only get worse from here.

7:24 AM  
Blogger shankar said...

Maybe I am dreaming (since I have been short on all these players for over a year now), but I expect most of the financial stocks to be in single digits over the next 18-24 months.


Shankar

8:01 AM  

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