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Non-Tech : Paired Trades and Hedging Strategies

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From: IRWIN JAMES FRANKEL	8/20/2008 3:17:15 PM
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Here is a paired trade: Thesis - Stress of the credit crunch on financials, FNM and FRE failure could impair ability to sell mortgages. Buy BAC or WFC Sell PULB PULB is a large St. Louis based mortgage lender. They recently sold and leased back their buildings to raise Tier 1 capital. A casual look at their financials suggests they make all their profit comes from mortgage origination and sale. Should that stop they would start losing money. ij

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