And there goes Countrywide....

[Slew Foot]

Hmmm, is BofA up to something sinister? (tapped from another site)
Edit: Ive been following these guys advice for a couple years now, my portfolio in that time is up about 12,000%




I'm Mozillo. I'm about to go broke. I can't sell CP, I can't go to the discount window, I just tapped my $11b credit line and there is no more.

So here comes my "Savior", BAC. They "give" me $2 billion in money in exchange for convertable preferred. I agree to pay them 7.25% and they get rights on roughly 111 million shares of stock ($18 by the 2 billion)

Sounds like a good deal, right?

Wrong.

Here's why.

The day after I do this, BAC shorts 111 million shares of my stock! This nets them $2.8 billion dollars RIGHT NOW. They get interest on the $2.8 billion on top of it. So now if I'm BAC I just made $800 million bucks.

If the stock runs I have an $18 cover. But if I can short the stock to ZERO, I pocket the entire $2.8 billion PLUS I have preference picking over the bones PLUS I got my coupon until they die.

You this won't happen? The @#$% it won't! I've seen it DOZENS of times. Hell, this is old @#$% guys.

So is CFC stupid? Or are they REALLY in that tight of a box?

By the way, Cramer wrote about this years ago here
http://www.thestreet.com/comment/rewrite...

You got a gift here if you're long and underwater. GET OUT AND DO IT NOW.

If you're short, why would you cover? BAC is going to short this pig to zero. That's how they win. They've got a delta-neutral zero-risk trade on this one guys.

Don't be idiots; this sort of issue is NEVER good news.

NEVER.

AHM did one of these and guess what - they got shorted relentlessly and died. CFC did one months ago privately, and guess what - they never saw that price again, and THAT ONE had a PREMIUM over the offer price.

This is at a DISCOUNT.

I'm short. Hurt? Hell no; I have plenty of free cash margin on my account. I'm not stupid enough to get close enough to the line to get hurt by this, and I'm NOT COVERING.

Don't play the long side on this. The pros show up in the morning and they've seen this play before, and know how it ends.

Be the smart money or get killed.

Your choice, but there will be no further warnings from me, and lots of laughing when CFC's stock implodes.

 

[dmcowen674]

Originally posted by: Slew Foot
Hmmm, is BofA up to something sinister? (tapped from another site)
Edit: Ive been following these guys advice for a couple years now, my portfolio in that time is up about 12,000%

I'm Mozillo. I'm about to go broke. I can't sell CP, I can't go to the discount window, I just tapped my $11b credit line and there is no more.

So here comes my "Savior", BAC. They "give" me $2 billion in money in exchange for convertable preferred. I agree to pay them 7.25% and they get rights on roughly 111 million shares of stock ($18 by the 2 billion)

Sounds like a good deal, right?

Wrong.

Here's why.

The day after I do this, BAC shorts 111 million shares of my stock! This nets them $2.8 billion dollars RIGHT NOW. They get interest on the $2.8 billion on top of it. So now if I'm BAC I just made $800 million bucks.

If the stock runs I have an $18 cover. But if I can short the stock to ZERO, I pocket the entire $2.8 billion PLUS I have preference picking over the bones PLUS I got my coupon until they die.

You this won't happen? The @#$% it won't! I've seen it DOZENS of times. Hell, this is old @#$% guys.

So is CFC stupid? Or are they REALLY in that tight of a box?

By the way, Cramer wrote about this years ago here
http://www.thestreet.com/comment/rewrite...

You got a gift here if you're long and underwater. GET OUT AND DO IT NOW.

If you're short, why would you cover? BAC is going to short this pig to zero. That's how they win. They've got a delta-neutral zero-risk trade on this one guys.

Don't be idiots; this sort of issue is NEVER good news.

NEVER.

AHM did one of these and guess what - they got shorted relentlessly and died. CFC did one months ago privately, and guess what - they never saw that price again, and THAT ONE had a PREMIUM over the offer price.

This is at a DISCOUNT.

I'm short. Hurt? Hell no; I have plenty of free cash margin on my account. I'm not stupid enough to get close enough to the line to get hurt by this, and I'm NOT COVERING.

Don't play the long side on this. The pros show up in the morning and they've seen this play before, and know how it ends.

Be the smart money or get killed.

Your choice, but there will be no further warnings from me, and lots of laughing when CFC's stock implodes.

Oh come on.

You saw how I got hammered on here when I said what happens to shorted Companies.

Must be a figment of your imagination.

 

[rchiu]

Originally posted by: Slew Foot
Hmmm, is BofA up to something sinister? (tapped from another site)
Edit: Ive been following these guys advice for a couple years now, my portfolio in that time is up about 12,000%




I'm Mozillo. I'm about to go broke. I can't sell CP, I can't go to the discount window, I just tapped my $11b credit line and there is no more.

So here comes my "Savior", BAC. They "give" me $2 billion in money in exchange for convertable preferred. I agree to pay them 7.25% and they get rights on roughly 111 million shares of stock ($18 by the 2 billion)

Sounds like a good deal, right?

Wrong.

Here's why.

The day after I do this, BAC shorts 111 million shares of my stock! This nets them $2.8 billion dollars RIGHT NOW. They get interest on the $2.8 billion on top of it. So now if I'm BAC I just made $800 million bucks.

If the stock runs I have an $18 cover. But if I can short the stock to ZERO, I pocket the entire $2.8 billion PLUS I have preference picking over the bones PLUS I got my coupon until they die.

You this won't happen? The @#$% it won't! I've seen it DOZENS of times. Hell, this is old @#$% guys.

So is CFC stupid? Or are they REALLY in that tight of a box?

By the way, Cramer wrote about this years ago here
http://www.thestreet.com/comment/rewrite...

You got a gift here if you're long and underwater. GET OUT AND DO IT NOW.

If you're short, why would you cover? BAC is going to short this pig to zero. That's how they win. They've got a delta-neutral zero-risk trade on this one guys.

Don't be idiots; this sort of issue is NEVER good news.

NEVER.

AHM did one of these and guess what - they got shorted relentlessly and died. CFC did one months ago privately, and guess what - they never saw that price again, and THAT ONE had a PREMIUM over the offer price.

This is at a DISCOUNT.

I'm short. Hurt? Hell no; I have plenty of free cash margin on my account. I'm not stupid enough to get close enough to the line to get hurt by this, and I'm NOT COVERING.

Don't play the long side on this. The pros show up in the morning and they've seen this play before, and know how it ends.

Be the smart money or get killed.

Your choice, but there will be no further warnings from me, and lots of laughing when CFC's stock implodes.

Your theory is based on the assumption that CFC stock price isn't gonna change if BOA start shorting CFC stock. You really think BOA is gonna be able to short all 111 million shares of CFC without any kinda market reactions? The minute BOA start shorting, CFC can easily drop blow $18 and BOA won't get anything out of shorting.

As it is right now, BOA is like holding a non-expiring option on CFC at $18 exercise price and it is getting interest on the bond. Why would it choose to damage CFC stock price? BOA has lot to gain if CFC stock price goes up in the future.

 

[OS]

because now they have a stake, they get first dibs at the carcass

 

[Vic]

Welp, Slew Foot just threw away what little credibility he had left here.

 

[rchiu]

Originally posted by: OS
because now they have a stake, they get first dibs at the carcass

And why would they wanna stake in the carcass in the first place? They could've put their 2 billion in any investment couple of days ago.

 

[dmcowen674]

8-23-2007 Countrywide CEO sees recession ahead

Countrywide Financial Corp Chief Executive Angelo Mozilo said on Thursday the U.S. housing downturn is likely to lead the country into recession, but that the largest U.S. mortgage lender will survive.

In an interview, Mozilo also said that to promote liquidity, the U.S. Federal Reserve should cut the rate it charges banks to borrow.

In an interview with CNBC television, Mozilo said markets are in "one of the greatest panics I've ever seen in 55 years in financial services."

Still, he rejected as "irresponsible and baseless" an August 15 report by Merrill Lynch & Co analyst Kenneth Bruce that downgraded Countrywide to "sell" from "buy" and said the company might face bankruptcy if market conditions worsen.

Mozilo called on the Bush Administration and Fed Chairman Ben Bernanke to state that they will not allow the housing environment to get out of control.

 

[Pabster]

...And there goes Countrywide, sucking up $2 billion from Bank Of America. :laugh:

Countrywide isn't going anywhere.

 

[bbdub333]

Originally posted by: Slew Foot

Edit: Ive been following these guys advice for a couple years now, my portfolio in that time is up about 12,000%

Well you better call somebody, because you're probably the most successful money manager on the planet.

(Yes, I am calling BS on this statement FYI)

 

[bbdub333]

Originally posted by: dmcowen674

Oh come on.

You saw how I got hammered on here when I said what happens to shorted Companies.

Must be a figment of your imagination.

If, by your statement, you are implying that this happens to all, most, or even many shorted companies, you would be way off base.

I don't know of a publicly traded company which isn't shorted. Do you?

 

[Slew Foot]

Originally posted by: Vic
Welp, Slew Foot just threw away what little credibility he had left here.

Well if I listened to the mainstream media and the RE industry, Id have lost over 100K on a house in the last two years, instead I listened to those guys and turned $300K into over $3 mill (I only started with about $20K on their advice mostly puts against various RE-based companies, the rest was in safer stocks of my own choosing).

 

[rchiu]

Originally posted by: Slew Foot

Originally posted by: Vic
Welp, Slew Foot just threw away what little credibility he had left here.

Well if I listened to the mainstream media and the RE industry, Id have lost over 100K on a house in the last two years, instead I listened to those guys and turned $300K into over $3 mill (I only started with about $20K on their advice mostly puts against various RE-based companies, the rest was in safer stocks of my own choosing).

Haha, that's the biggest BS I've heard all day. Just look at Dow REIT composite index and the trend for the past 2 years, and you'd see that if you bought puts against RE companies, you'd lost most of your money in the first year and won't last long enough to March this year when Real Estate companies starting to tank.

 

[TheSlamma]

The banks brought this on themselves.

I have over 700 credit score, make over 60K a year and struggled to get approved for a 103K loan on a house appraised for $249, meanwhile I hear about a Co-worker who works part-time who makes maybe 20K if that. Her boyfriend is a 2 time felon who hops from job to job and they get approved for brand new house for $280K with nothing down.

Guess where they live now (Mom's house)

The banks KNEW there was no way. They seem interested in forclosure IMO.

With that being said I hope to read about more banks falling, screw them they can REAP IT.

 

[dmcowen674]

Originally posted by: TheSlamma
The banks brought this on themselves.

I have over 700 credit score, make over 60K a year and struggled to get approved for a 103K loan on a house appraised for $249, meanwhile I hear about a Co-worker who works part-time who makes maybe 20K if that.

Her boyfriend is a 2 time felon who hops from job to job and they get approved for brand new house for $280K with nothing down.

Guess where they live now (Mom's house)

The banks KNEW there was no way. They seem interested in forclosure IMO.

With that being said I hope to read about more banks falling, screw them they can REAP IT.

BFT

 

[ponyo]

Originally posted by: Slew Foot
Hmmm, is BofA up to something sinister? (tapped from another site)
Edit: Ive been following these guys advice for a couple years now, my portfolio in that time is up about 12,000%




I'm Mozillo. I'm about to go broke. I can't sell CP, I can't go to the discount window, I just tapped my $11b credit line and there is no more.

So here comes my "Savior", BAC. They "give" me $2 billion in money in exchange for convertable preferred. I agree to pay them 7.25% and they get rights on roughly 111 million shares of stock ($18 by the 2 billion)

Sounds like a good deal, right?

Wrong.

Here's why.

The day after I do this, BAC shorts 111 million shares of my stock! This nets them $2.8 billion dollars RIGHT NOW. They get interest on the $2.8 billion on top of it. So now if I'm BAC I just made $800 million bucks.

If the stock runs I have an $18 cover. But if I can short the stock to ZERO, I pocket the entire $2.8 billion PLUS I have preference picking over the bones PLUS I got my coupon until they die.

You this won't happen? The @#$% it won't! I've seen it DOZENS of times. Hell, this is old @#$% guys.

So is CFC stupid? Or are they REALLY in that tight of a box?

By the way, Cramer wrote about this years ago here
http://www.thestreet.com/comment/rewrite...

You got a gift here if you're long and underwater. GET OUT AND DO IT NOW.

If you're short, why would you cover? BAC is going to short this pig to zero. That's how they win. They've got a delta-neutral zero-risk trade on this one guys.

Don't be idiots; this sort of issue is NEVER good news.

NEVER.

AHM did one of these and guess what - they got shorted relentlessly and died. CFC did one months ago privately, and guess what - they never saw that price again, and THAT ONE had a PREMIUM over the offer price.

This is at a DISCOUNT.

I'm short. Hurt? Hell no; I have plenty of free cash margin on my account. I'm not stupid enough to get close enough to the line to get hurt by this, and I'm NOT COVERING.

Don't play the long side on this. The pros show up in the morning and they've seen this play before, and know how it ends.

Be the smart money or get killed.

Your choice, but there will be no further warnings from me, and lots of laughing when CFC's stock implodes.

That poster knows what he's talking about. BAC will short the CFC commons as an hedge. He's absolutely right. I've seen similar happen to companies over the years too. It's basically desperation move done out of stupidity. Hedges funds will try to short CFC to zero. This deal only adds to the pressure. This is normally death sentence.

 

[glutenberg]

Originally posted by: Naustica

Originally posted by: Slew Foot
Hmmm, is BofA up to something sinister? (tapped from another site)
Edit: Ive been following these guys advice for a couple years now, my portfolio in that time is up about 12,000%




I'm Mozillo. I'm about to go broke. I can't sell CP, I can't go to the discount window, I just tapped my $11b credit line and there is no more.

So here comes my "Savior", BAC. They "give" me $2 billion in money in exchange for convertable preferred. I agree to pay them 7.25% and they get rights on roughly 111 million shares of stock ($18 by the 2 billion)

Sounds like a good deal, right?

Wrong.

Here's why.

The day after I do this, BAC shorts 111 million shares of my stock! This nets them $2.8 billion dollars RIGHT NOW. They get interest on the $2.8 billion on top of it. So now if I'm BAC I just made $800 million bucks.

If the stock runs I have an $18 cover. But if I can short the stock to ZERO, I pocket the entire $2.8 billion PLUS I have preference picking over the bones PLUS I got my coupon until they die.

You this won't happen? The @#$% it won't! I've seen it DOZENS of times. Hell, this is old @#$% guys.

So is CFC stupid? Or are they REALLY in that tight of a box?

By the way, Cramer wrote about this years ago here
http://www.thestreet.com/comment/rewrite...

You got a gift here if you're long and underwater. GET OUT AND DO IT NOW.

If you're short, why would you cover? BAC is going to short this pig to zero. That's how they win. They've got a delta-neutral zero-risk trade on this one guys.

Don't be idiots; this sort of issue is NEVER good news.

NEVER.

AHM did one of these and guess what - they got shorted relentlessly and died. CFC did one months ago privately, and guess what - they never saw that price again, and THAT ONE had a PREMIUM over the offer price.

This is at a DISCOUNT.

I'm short. Hurt? Hell no; I have plenty of free cash margin on my account. I'm not stupid enough to get close enough to the line to get hurt by this, and I'm NOT COVERING.

Don't play the long side on this. The pros show up in the morning and they've seen this play before, and know how it ends.

Be the smart money or get killed.

Your choice, but there will be no further warnings from me, and lots of laughing when CFC's stock implodes.

That poster knows what he's talking about. BAC will short the CFC commons as an hedge. He's absolutely right. I've seen similar happen to companies over the years too. It's basically desperation move done out of stupidity. Hedges funds will try to short CFC to zero. This deal only adds to the pressure. This is normally death sentence.

Can you name a few of these companies that you've observed?

 

[ponyo]

Sorry, I thought BAC deal was one of those death spiral convertible deals with adjusting conversion rates. I see the deal has discounted fixed conversion. That's bad but it's not the death sentence like adjusting conversion. I forget most of the names of the companies that did the death spiral converts but all were pretty much pink sheet tech companies. I think eToys, Iomega, and 3dfx did them.

Jim Cramer on toxic converts

More on death spiral converts.

What that poster posted is still true. It just has a cap on conversion price so the max % of shares BAC can ultimately control is 17%. Still that's massive number of shares and dilutes shareholder value.

Plenty of hedges are short CFC due to this so expect short squeeze here and there. But downward pressure will be unrelenting due to the massive shorts. I wouldn't want to be short or long this thing. Puts or call will be the only way I'm touching this thing.

 

[Slew Foot]

Originally posted by: rchiu

Originally posted by: Slew Foot

Originally posted by: Vic
Welp, Slew Foot just threw away what little credibility he had left here.

Well if I listened to the mainstream media and the RE industry, Id have lost over 100K on a house in the last two years, instead I listened to those guys and turned $300K into over $3 mill (I only started with about $20K on their advice mostly puts against various RE-based companies, the rest was in safer stocks of my own choosing).

Haha, that's the biggest BS I've heard all day. Just look at Dow REIT composite index and the trend for the past 2 years, and you'd see that if you bought puts against RE companies, you'd lost most of your money in the first year and won't last long enough to March this year when Real Estate companies starting to tank.

Oh no, some random guy on the internet doesnt believe me. Ive got three million reasons not to care what you think. Though you're right, I made most of the gains in the past few months, but take a look at the individual companies, many of the homebuilders peaked around Jun 05.

 

[rchiu]

Originally posted by: Slew Foot

Originally posted by: rchiu

Originally posted by: Slew Foot

Originally posted by: Vic
Welp, Slew Foot just threw away what little credibility he had left here.

Well if I listened to the mainstream media and the RE industry, Id have lost over 100K on a house in the last two years, instead I listened to those guys and turned $300K into over $3 mill (I only started with about $20K on their advice mostly puts against various RE-based companies, the rest was in safer stocks of my own choosing).

Haha, that's the biggest BS I've heard all day. Just look at Dow REIT composite index and the trend for the past 2 years, and you'd see that if you bought puts against RE companies, you'd lost most of your money in the first year and won't last long enough to March this year when Real Estate companies starting to tank.

Oh no, some random guy on the internet doesnt believe me. Ive got three million reasons not to care what you think. Though you're right, I made most of the gains in the past few months, but take a look at the individual companies, many of the homebuilders peaked around Jun 05.

Oh on, some random guy on the internet claim he has a strategy to give 12,000% returns consistently for the last two years. I know you don't care what I think, but I have seen enough BS around the internet to call one when I see one. If those guy you claimed does have the information to give that kinda of return, number 1, they would keep it to themselves to make all the money, and number two, they would be out enjoying their money rather than posting on some Internet Forum.

 

[yllus]

Originally posted by: Slew Foot

Originally posted by: rchiu

Originally posted by: Slew Foot

Originally posted by: Vic
Welp, Slew Foot just threw away what little credibility he had left here.

Well if I listened to the mainstream media and the RE industry, Id have lost over 100K on a house in the last two years, instead I listened to those guys and turned $300K into over $3 mill (I only started with about $20K on their advice mostly puts against various RE-based companies, the rest was in safer stocks of my own choosing).

Haha, that's the biggest BS I've heard all day. Just look at Dow REIT composite index and the trend for the past 2 years, and you'd see that if you bought puts against RE companies, you'd lost most of your money in the first year and won't last long enough to March this year when Real Estate companies starting to tank.

Oh no, some random guy on the internet doesnt believe me. Ive got three million reasons not to care what you think. Though you're right, I made most of the gains in the past few months, but take a look at the individual companies, many of the homebuilders peaked around Jun 05.

Post an ATM receipt and send me $100 that you won't miss.

 

[dmcowen674]

Originally posted by: Slew Foot
I know we all mocked Dave for saying they would go bankrupt, even me included, but hey a blind squirrel finds a nut eventually.

Not they're going soon, but that looks like the trend.

More of that "trend":

9-7-2007 Countrywide plans to slash up to 12,000 jobs

Troubled subprime mortgage lender Countrywide Financial Corp. plans to slash as many as 12,000 jobs over the next three months, according to company statement released late Friday.

The cuts, which represent 20 percent of its workforce, follow a reduction of 500 jobs at its subprime lending unit in August and another 900 jobs mostly from its mortgage production divisions Wednesday.

Among other companies hurting from subprime mortgage market turmoil, Bear Stearns (Charts, Fortune 500) slashed 850 jobs at its mortgage group early this week.

 

[OS]

CFC is hovering right around the $18 trigger price on that BofA deal.

 

[compuwiz1]

Layoffs don't always mean imminent doom. I see this as a restructuring, with emphasis away from the sub-prime market. As large as Countrywide is, 12,000 would not be an unreasonable number of jobs to eliminate, as their direction changes.
Some people will always get satisfaction at the possibility of someone, or some company failing. :roll:

 

[dmcowen674]

Originally posted by: Naustica
Sorry, I thought BAC deal was one of those death spiral convertible deals with adjusting conversion rates. I see the deal has discounted fixed conversion. That's bad but it's not the death sentence like adjusting conversion. I forget most of the names of the companies that did the death spiral converts but all were pretty much pink sheet tech companies. I think eToys, Iomega, and 3dfx did them.

Jim Cramer on toxic converts

More on death spiral converts.

What that poster posted is still true. It just has a cap on conversion price so the max % of shares BAC can ultimately control is 17%. Still that's massive number of shares and dilutes shareholder value.

Plenty of hedges are short CFC due to this so expect short squeeze here and there. But downward pressure will be unrelenting due to the massive shorts. I wouldn't want to be short or long this thing. Puts or call will be the only way I'm touching this thing.

Originally posted by: compuwiz1
Layoffs don't always mean imminent doom. I see this as a restructuring, with emphasis away from the sub-prime market. As large as Countrywide is, 12,000 would not be an unreasonable number of jobs to eliminate, as their direction changes.
Some people will always get satisfaction at the possibility of someone, or some company failing. :roll:

I have never seen a company survive massive shorting.

If CW manages to survive I would extremely surprised.

What is the incentive to have the company survive?

They've lost all cash, gone 110% credit only.

 

[Engineer]

Originally posted by: dmcowen674

Originally posted by: Naustica
Sorry, I thought BAC deal was one of those death spiral convertible deals with adjusting conversion rates. I see the deal has discounted fixed conversion. That's bad but it's not the death sentence like adjusting conversion. I forget most of the names of the companies that did the death spiral converts but all were pretty much pink sheet tech companies. I think eToys, Iomega, and 3dfx did them.

Jim Cramer on toxic converts

More on death spiral converts.

What that poster posted is still true. It just has a cap on conversion price so the max % of shares BAC can ultimately control is 17%. Still that's massive number of shares and dilutes shareholder value.

Plenty of hedges are short CFC due to this so expect short squeeze here and there. But downward pressure will be unrelenting due to the massive shorts. I wouldn't want to be short or long this thing. Puts or call will be the only way I'm touching this thing.

Originally posted by: compuwiz1
Layoffs don't always mean imminent doom. I see this as a restructuring, with emphasis away from the sub-prime market. As large as Countrywide is, 12,000 would not be an unreasonable number of jobs to eliminate, as their direction changes.
Some people will always get satisfaction at the possibility of someone, or some company failing. :roll:

I have never seen a company survive massive shorting.

If CW manages to survive I would extremely surprised.

What is the incentive to have the company survive?

They've lost all cash, gone 110% credit only.

Dave, have you ever looked at Overstock.com? (naked short selling galore and still alive).