I have took the plunge and bought a FULL allocation of Fremont General common stock. This common stock is in addition to the FREMONT GEN FING I TOPRS 9% (FMT.PR: NYSE) pfd stock I bought in August 2007. So, I got a lot of my investment funds in ownership of Fremont General.
I bought the common because FMT has
1) The rock solid Fremont Industrial Savings Bank, which retains royal customers
2) after the recent write offs, the FMT balance sheet remains solid; Liabilities & equity -- $7,960 of bank deposits, $166 mill of long term debt, only $100 - 105 mill of TOPRS, and $305 mill owners of equity.
Assets of $2,658 in cold hard CASH, and $3,654 of commercial R.E participation FMT has enough cash and customers to keep going as a business.
3) so the current subprime, AltA, ARM mess is overblown in the case of FMT.
4) Concerning the above mess, don’t forget FMT took its medicine early when it sold its residential and commercial real estate businesses (at a big hit to owners equity).
5) FMT has loyal and committed employees/owners. And their employee stock ownership plan ESOP aligns with the interests of all other owners
6) during 3q2007 FMT returned to profitability by earning .24 per share.
The wildcard and great unknown is the new management. If these guys start empire building I will reconsider in a New York minute.
Keeping in mind I can never buy at the absolute bottom, and there is always a chance of another writedown in assets I still think ownership in FMT offers a reasonable chance to more than double in the next 3 years. |
