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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (2725)12/10/1997 4:21:00 PM
From: bananawind  Read Replies (1) of 78596
 
Paul,

I haven't taken the time to look at GNT's footnotes but suspect what you may be missing is some very agressive accounting techniques. This is second hand, so do your own investigation. As I understand it, when they originate and then later securitize a mortgage GNT takes a very agressive stance in their treatment of the spread between the underlying mortgage and the securitized instrument. This essentially amounts to accelerating future revenues to the present accounting period. Of course, when those mortgages get paid back sooner than expected the chickens come home to roost and the previously accelerated revenues must be reversed. Hope this adds something. -JLF
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