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Non-Tech : Cityscape Financial (CTYS)
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To: Rational who wrote (859)10/11/1997 5:38:00 PM
From: Brooks Jackson   of 2544
 
Sankar, you've convinced me. Almost. Enough to buy some shares -- not yet enough to really go in heavily.

Since there appear to be nothing but longs on this thread, humor me by playing devil's advocate for just a moment. What is the worst that can happen to CTYS, and how likely?

For example:
--Won't the next recession pose a real test for CTYS? Won't their loan portfolios be hit with three, four times the rate of delinquencies and forclosures that traditional mortgage lenders must contend with? Is there any objective way now to judge where the bottom will be then?

--If CTYS can only raise money at reasonable rates from private placements, doesn't that greatly limit their growth potential and possible share price? Could they end up starved for money to lend?

--The road to Hell being paved with good intentions, what assurance do any of us have that management can actually get a handle on the delinquency problem as they say they intend to do? HOW will they do it?

--Doesn't the delinquency problem show that they just made stupid loans in the first place -- like the nitwit Texas S&L managers of the 1980's? Where's the proof that this is a collection problem (easy to fix) and not an underwriting problem (evidence of a flawed business concept and looming future calamity)?

I'm long and looking to go longer -- but first I need to understand this business better. So I hope you don't mind my asking.

--Brooks Jackson
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