This is what I've got so far, looking for feedback
Clearly the market (read:institutions) were pissed by the surprise write and the exit of the CEO
Institutions owned about 78% of the shares
5 held 23.3mm or 38%
two weeks ago 16.3mm shares traded, last week 5.7mm, so these big holders clearly have not all bailed out
will they at this level?
Puts are trading at about par:
May 20's at 5.50
Oct 20's at 6.50
The lowest call I can find are 20's so that tells little
Earning ests were lowered but are still generally "high"
12/00 $2.90-4.02 avg 3.45
12/21 $3.45-4.50 avg 4.16
so a P/E in the area of 4 x's
book value is about $26-28
so at 15 FNV is at almost half of book value
book of $1,775,000 vs market cap of $919,00
so there would have to be an additional $856,000 of losses to break even on this measure
DPC lowered the debt rating to A-, still high quality and in the report gave little indication of more serious problems, just a general uneasyness
The others, S+P, Fitch, Moodys, have issued no new ratings
From 1995 to 1999 reserve for credit losses averaged a steady 1.9-2.1% of earning assets
Write off were in a tight .44-.59% range
So the reserve has been at 4 times the "normal" write off rate
So we have a company that is trading at a 40% discount from book, with a forward P/E of at least half "normal", ( see CIT HF etc)with reserves that seem adequate, and rating agencies that are not sending any huge red flags
Open questions:
Which came first, the write off or Sam's firing?
Are there more large serious control problems?
Will the institutions sell, hold, or add down here?
Will the earnings on I think 4/18 shed any new light on the situation?
Will there be a share buyback announced?
I'm long a bunch at avg cost af $16.560
Will likely day trade 1-3K a day until direction becomes more clear
If more bad news I'll take the loss
If it runs >>15>>16>>17 will likely add fast then take profits on some holding a core amount for 18-22
This may be my obsession du jour for a while
Any feedback will help
thanks |
