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Non-Tech : FMAX (Franchise Mortgage Acceptance)
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To: Rosemary who wrote (3)4/11/1998 11:18:00 PM
From: Carey Thompson  Read Replies (1) of 25
 
I like the ICII, SFC, and Imperial Bank in about that order. I bought last year about the time of the big Cityscape scare when all sub-prime lenders were taken out and shot. The good ones will rebound while the others will be bought on the cheap by stronger finance companies. Witness Ocwen buying Cityscape's British business last month. If times remain good, most homeowners will continue to pay their mortgages, you have to worry about their prospects in a recession.

Return on equity, ROE, is a great why to assess the fortunes of a company. IMHO,I compare ROE of a stock to the interest rate a bank pays you on your money or equity. In this case the higher the ROE or the interest rate paid to the depositer the better. On a company's balance sheet the shareholders equity is the residual of

Total Assets - Total Liabilities.

The entire residual belongs to the owners of the company. So from an accounting standpoint, this residual is what the stockholders get when they buy a company. Just keep in mind this residual divided by the number of shs outstanding is also known as BOOK VALUE. For what its worth growth investors and value investors are looking at same residual value. The growth investors believe the return on this residual to be most important, while the value investors believe a stock is an undervalued buy when the market price is below this residual.
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