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Strategies & Market Trends : Value Investing
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To: Michael Burry who wrote (2735)12/11/1997 10:35:00 AM
From: bananawind  Read Replies (2) of 78596
 
Mike, re GNT's accounting. I'm not sure if this accounting is standard throughout the securitized lending business. However, based on the info in the WSJ article referred to by another poster, that looks to be the case. My info/understanding of the technique arose when researching the manufactured housing companies, some of whom also originate and securitize mortgages. In that group Oakwood Homes (OH) used the most conservative accounting at the time of my review. Others were quite agressive. It is an important distinction when comparing these companies since the more conservative treatment has either understated their earnings or created an asset (an annuity- like stream of future earnings) that is unrecorded. To the degree this is misunderstood or underappreciated by the street there is a good chance for mispricing the stocks.

Disclosure-- I hold a sizeable position in Oakwood Homes. -JLF
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