Posted on 08/10/2007 5:53:06 AM PDT by Hydroshock
Countrywide (CFC - Cramer's Take - Stockpickr - Rating) plunged 16% in early trading a day after the struggling mortgage lender warned in a regulatory filing that mortgage market disruption could hurt the company's financial condition.
1. Top 10 Potential Short-Squeeze Stocks 2. Apple and Google Tenuous Teammates 3. Highest-Yielding Schwarzenegger Stocks 4. You Ask, Cramer Answers 5. Top 10 Stocks With Big Insider Buying, Buybacks
E*TRADE FINANCIAL Zecco.com
Fisher Investments Fidelity Investments
Options House TD AMERITRADE
"Since the company is highly dependent on the availability of credit to finance its operations, disruptions in the debt markets or a reduction in our credit ratings could have an adverse impact on our earnings and financial condition, particularly in the short term," Countrywide said in the risk factors section of a filing made late Thursday.
Countrywide shares have been tumbling since problems with the subprime mortgage market came to light back in February. The stock hit a 52-week high of $45 just before rivals like HSBC (HBC - Cramer's Take - Stockpickr), New Century (NEWCQ - Cramer's Take - Stockpickr) and NovaStar (NFI - Cramer's Take - Stockpickr - Rating) said they would take big losses on loans gone sour to homeowners with poor credit histories. New Century subsequently filed for Chapter 11 bankruptcy.
Countrywide dropped as low as $23 Monday amid worries about the health of the credit markets before bouncing back during a widespread market rally earlier this week.
Shares fell $4.61 early Friday to $24.05.
Toddster!!!!!!!!!!!!!!!!!!!!!!!
The Toddster!!!!!!!!!!!!!!!!!
FightTheLogic!
You'll probably just get more of them.
We're 2 months shy of paying them off after 15 years (wahoooo! big party with fire pit) and called with them a few weeks back to have them stop withholding tax escrow --- (need to do it ourselves now) and immediately were hit with home equity offers.
It's just business --- nothing personal. ;~))
It’s still a poor word choice. The fact is the money went to pay depositors on their insured deposits. You can look at it as the government bailing out its own insurance company, but the industry itself was not nor were any of its institutions bailed out.
I agree with “econjack.”
It was a BAIL OUT!!!
I agree with “econjack.”
It was a BAIL OUT!!!
wonder if alan greenspan is thinking and thinking and thinking
of solutions,
since it’s his reputation that’s going
down.
And like econjack, you’re wrong.
What do you expect from someone named Andy Jackson, one of the biggest haters of banks, ever?
Title is Bailout but the Goldman chief says “this is not a rescue”. I think he many be right since the SEC was opening the books on the fund Goldman had no choice.
Goldman Hedge Fund Gets $3B Bailout
Monday August 13, 11:08 am ET
By Joe Bel Bruno, AP Business Writer
Goldman Sachs Hedge Fund Gets $3 Billion Bailout After Big Market Losses
NEW YORK (AP) — Goldman Sachs Group said Monday it is leading a group of investors that includes Maurice “Hank” Greenberg and Eli Broad, sinking $3 billion into one of its biggest hedge funds which has seen its value plunge amid market volatility.
ADVERTISEMENT
The investment bank said its Global Equity Opportunities fund “suffered significantly” as global markets sold off on worries about debt and credit. The fund lost about 28 percent in the past few weeks, dragging its value down to $3.6 billion, from about $5 billion last month.
Goldman Sachs will invest $2 billion. Other investors will contribute about $1 billion to the fund, whose computer-driven investment strategies were disrupted by triple-digit swings in the financial markets.
“This is not a rescue,” said Goldman Chief Financial Officer David Viniar. “Given the dislocation in the market, we believe this is a good investment opportunity for us and other investors.”
Joining Goldman in injecting more capital was former American International Group chairman Greenberg, and also Broad, a California real estate developer who helped found SunAmerica and later sold it to AIG. Hedge fund Perry Capital LLC, which is run by a former Goldman Sachs equity trader, is also among the investors.
In addition, the investment bank said that two other hedge funds it manages — Global Alpha and the North American Equities Opportunities Fund — have also suffered during the market dislocation. The Alpha fund, for instance, has lost 27 percent of its value — with more than half of that last week alone.
Viniar would not say if the bank was considering similar action for the other two funds, which combined are worth about $6.4 billion. He said Goldman has spent the past week reducing the risk and leverage for all three funds to stem losses.
The $2.7 trillion hedge fund industry uses investments from wealthy individuals and institutions to make bets on stocks and other securities using sophisticated investment strategies.
Hedge funds have been routed in the past few months as Wall Street has become much more volatile. Quantitative funds like Goldman Sachs’, which rely on computer models to make investments, have taken a beating from triple-digit swings on Wall Street during the past few weeks.
Other quantitative funds run by firms, including AQR Capital Management LLC and Highbridge Capital Management LLC, may also have sustained heavy losses.
Goldman, one of the world’s premiere financial companies, joins Bear Stearns Cos. and France’s BNP Paribas in revealing that its hedge funds have been slammed by the credit market crisis. There is some $2 trillion believed to be held in hedge funds globally.
Bear Stearns earlier this summer disclosed that two of its multibillion dollar hedge funds were wiped out because of heavy bets on mortgage-backed securities. BNP Paribas said last week it would freeze three funds invested in U.S. asset-backed securities.
Britain’s Barclays PLC, in the midst of a takeover battle for ABN Amro, is said to be among the banks that is having troubles. Barclays Global investors is one of the world’s biggest fund managers, with some $2 trillion in assets under management.
Goldman Sachs held a rare conference call on Monday to update analysts and investors about the plight of its fund. This was a rare move for the company, which is known on Wall Street for being insular and closed off to most outsiders.
Viniar said the company has no intention of unwinding Global Alpha or the North American Equity Opportunities funds. Global Alpha is a multistrategy fund with a significant quantitative equity long-short portfolio, which was a primary contributor to the fund’s recent weakness. The North American Equity Opportunities fund is a quantitative equity long-short fund.
He said the funds do not “represent the fundamental values, either positive or negative, of the underlying stocks.”
He said that the market is “way out of whack.”
“While there is a lot of volatility and a difficult market, we also think there are a fair number of assets that are selling at distressed prices and aren’t distressed,” he said. “When we see those assets, we will try and take advantage of the situation.”
Investors appeared satisfied that Goldman made the right move.
Shares rose $3.31, or 1.8 percent, to $183.81 in midmorning trading.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.