Release Date: Not Confirmed 5/1/2008
After Close
You Lucky Bastards: FMD
- Thread starter ByLoSellHi
- Start date
Release Date: Not Confirmed 5/1/2008
After Close
I agree it is a coin flip, just because they had cash December doesn't mean they have cash now.
Many an investor have been caught by surprise when assets on a balance sheet happen to be worth much less than expected or new liabilities materialize out of no where from off balance.
Never a sure thing here but I do admit the risk/reward ratio is rather good, I plan to enter with 5000 - 10000 share stake (depending on macro activity) scaling in over the next week.
At this point, as long as the firm doesn't go bankrupt, in the long term for sure the returns will be high.
So my research has been... what are the scenarios would this firm go belly up? Securitization market never returning? Goldman withdrawing its deal? Off balance liabilities? (That seems to be happening a lot lately!) Overvalued assets? the new lawsuit?
Just trying to stretch my brain and play devil's advocate here to rattle the cage to explore any loose ends that might end up a shoe drop
Many an investor have been caught by surprise when assets on a balance sheet happen to be worth much less than expected or new liabilities materialize out of no where from off balance.
Never a sure thing here but I do admit the risk/reward ratio is rather good, I plan to enter with 5000 - 10000 share stake (depending on macro activity) scaling in over the next week.
At this point, as long as the firm doesn't go bankrupt, in the long term for sure the returns will be high.
So my research has been... what are the scenarios would this firm go belly up? Securitization market never returning? Goldman withdrawing its deal? Off balance liabilities? (That seems to be happening a lot lately!) Overvalued assets? the new lawsuit?
Just trying to stretch my brain and play devil's advocate here to rattle the cage to explore any loose ends that might end up a shoe drop
scriabinop23,
I see the yahoo postings:
http://messages.finance.yahoo.com/S...2&tid=31276&mid=31288&tof=12&rt=1&frt=1&off=1
Maybe some can shed further light on this dilemma.
I see the yahoo postings:
http://messages.finance.yahoo.com/S...2&tid=31276&mid=31288&tof=12&rt=1&frt=1&off=1
Maybe some can shed further light on this dilemma.
Quote from protodigm:
I agree it is a coin flip, just because they had cash December doesn't mean they have cash now.
Many an investor have been caught by surprise when assets on a balance sheet happen to be worth much less than expected or new liabilities materialize out of no where from off balance.
Never a sure thing here but I do admit the risk/reward ratio is rather good, I plan to enter with 5000 - 10000 share stake (depending on macro activity) scaling in over the next week.
At this point, as long as the firm doesn't go bankrupt, in the long term for sure the returns will be high.
So my research has been... what are the scenarios would this firm go belly up? Securitization market never returning? Goldman withdrawing its deal? Off balance liabilities? (That seems to be happening a lot lately!) Overvalued assets? the new lawsuit?
Just trying to stretch my brain and play devil's advocate here to rattle the cage to explore any loose ends that might end up a shoe drop
For me, it's all about the Goldman deal from December for this ticker to make a significant move up. I can imagine longs in this from then counting on that and riding down from $15. If they completely withdraw FMD is fucked. I can easily see them doing maybe half the amount or shares being tendered at a given price.
Is the bottom currently in at 3.12, I haven't a clue and hope so. Can it go to $1, sure. Can it go to $7, sure. If I was working there, I would be busting my ass and on the phone this weekend.
It should be a crazy week with financials. I feel like everyone and their mother is betting against the sector right now for the easy win but I think that money currently on the short end has been made. I'm ready for a curveball.
I think most financials are already close to priced for the worst pending a huge bankruptcy like Lehman. Individual stocks might fall as select bankruptcy in small banks unfolds but I don't see them putting a drag down on the rest for long. ANY news from the big financials thats short of apocalypse that hints they won't go completely belly up can trigger a rebound. Of course I could be wrong but not a good risk/reward ratio to bet against them right now IMO! There are other, better opportunities out there.
Given that, now may be the best time to bottom fish the small cap financials that have been dragged down. Fish small caps, not large caps, most people just simply dump/ignore small caps and focuses on the big players. Many small cap financial that had significant influence pre-crash and merely SURVIVES should give decent ROI. You just need to be correct maybe half of the time to make a killing! Just do your homework well...
My understanding of financial small caps isn't so good, not my area of expertise so any leads would be welcomed.
If anything tips the scales right now, it will be the realization to the extent in which the fallout extends to the rest of the economy, but financials may already be close to bottom.
Financials maybe close to being shorted out but my personal belief is the rest of the economy still considered "hanging strong" might have some short opportunities just showing up again... possibly...
GE might have tipped the scales there... will see...
Given that, now may be the best time to bottom fish the small cap financials that have been dragged down. Fish small caps, not large caps, most people just simply dump/ignore small caps and focuses on the big players
. Many small cap financial that had significant influence pre-crash and merely SURVIVES should give decent ROI. You just need to be correct maybe half of the time to make a killing! Just do your homework well...My understanding of financial small caps isn't so good, not my area of expertise so any leads would be welcomed.
If anything tips the scales right now, it will be the realization to the extent in which the fallout extends to the rest of the economy, but financials may already be close to bottom.
Financials maybe close to being shorted out but my personal belief is the rest of the economy still considered "hanging strong" might have some short opportunities just showing up again... possibly...
GE might have tipped the scales there... will see...
For me, FMD is 2 things:
1. They have endorsement and future investment deal with Goldman which is a hard indicator for potential business opportunities after the crash. FMD's fate is more tied to GS, there's less chance of FMD just fading and being forgotten into the background.
But I don't know much details about this deal so currently it is conjecture, will the future investment be at the current market cap/share price/shareholder's equity or $15?
2. Most importantly, they turned down the $1B credit line which STRONGLY suggests they don't have any phantom off-balance liabilities or undervalued assets. Unless of course they are committing suicide
.Simply having cash, saying they have no debts, and having had a high share value before isn't enough, many small companies are like this. Post nasdaq bubble, many companies were in this case, but died if they stay forgotten.
After reading this thread, I had a vision that FMD is just chilling, knowing that the feds will step into the fray and become the insurer of last resort if no one else does. FMD publicly state "oh, gee, things are so bad. We hope someone helps these stressed out students and their families." In the meantime, they refuse a 1 billion warehouse facility from Goldman Sachs, because they have no need for it.
There is a front page article in the New York Times today about how families are already panicking, in April, because they don't know how they'll pay for their kids' college tuition in September this year.
Read that article.
http://www.nytimes.com/2008/04/12/business/12loan.html?em&ex=1208145600&en=2e1077c9c3936876&ei=5087
It puts the business model and the political pressures on the same canvass, and gives me a lot of reassurance that this is a market failure that government will correct, if they have to.
And besides, what's the worst risk even if the feds replace TERI or other insurers? They'll see 4-7% of loans go bad? So what. That's probably less than the default rate on auto or consumer loans, and they'll still make money off the 96% to 93% of loans that perform.
That risk is so negligible for the government that it doesn't even register on the radar. It's not a risk at all, statistically speaking. It's another means of playing the hero role and coming to the rescue. Families actually WANT the government to step in.
Government always wants to be the hero. Unlike how the Bear Stearns 'rescue' made the Federal Reserve and Bernanke look, this will make Congress look like superheroes. Everyone from little Johnny, to Ma and Pa, and even the holy grail of real politik, Grandma and Grandpa, will write letters of thanks to their superhero Congressmen/women and Senators, because the fam can afford to ship Johnny or Susie away to college.
There is a front page article in the New York Times today about how families are already panicking, in April, because they don't know how they'll pay for their kids' college tuition in September this year.
Read that article.
http://www.nytimes.com/2008/04/12/business/12loan.html?em&ex=1208145600&en=2e1077c9c3936876&ei=5087
It puts the business model and the political pressures on the same canvass, and gives me a lot of reassurance that this is a market failure that government will correct, if they have to.
And besides, what's the worst risk even if the feds replace TERI or other insurers? They'll see 4-7% of loans go bad? So what. That's probably less than the default rate on auto or consumer loans, and they'll still make money off the 96% to 93% of loans that perform.
That risk is so negligible for the government that it doesn't even register on the radar. It's not a risk at all, statistically speaking. It's another means of playing the hero role and coming to the rescue. Families actually WANT the government to step in.
Government always wants to be the hero. Unlike how the Bear Stearns 'rescue' made the Federal Reserve and Bernanke look, this will make Congress look like superheroes. Everyone from little Johnny, to Ma and Pa, and even the holy grail of real politik, Grandma and Grandpa, will write letters of thanks to their superhero Congressmen/women and Senators, because the fam can afford to ship Johnny or Susie away to college.
Yeah, the FEDS are gonna have to reassure the public come Tuesday at the hearing. I'm looking for a pump job in the sector with SLM. Couple that with a specific news pump out of FMD and Charlie Gasbag rumor and its boo ya time like ABK.
Okay, thats wishful thinking and has no place in trading. But if that ever happens, it's too late to juice the trade and becomes a sell the news event.I am prepared to sink or swim on this one.