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Strategies & Market Trends : Value Investing
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To: Terrapin who wrote (32064)9/18/2008 11:02:03 PM
From: rich evans  Read Replies (1) of 78687
 
CIT is a victim of the credit crunch. It loans are tied to LIBOR and when libor goes way up, it hurts. Also when the credit market freezes, CIT can not get the funding it needs. So the CIT model as well as investment banking model is suspect. That said, CIT has funding until 2010 for all it commitments. It is out of the mortgage and student loan business basically and has an experienced group to make money in corporate midlevel financing, factoring, transportation leases, and vendor financing. But its earning power has gone way done to about 50 cents a share based on its earning assets and loan loss provisions. Also it efficiency ratios are too high and geared for a larger company. I would expect CIT to eventually return to a level of its tangible value per share which is about 14 dollars if the credit crunch subsidies. But it is subject to all the problems , scares and rumors in the finance industry. Look at GE as another example. It is very volatile as todays price action indicates.
Rick
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