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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (58117)	4/28/2002 11:20:42 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 99280

With companies like HI, looking at raw balance sheets is not enough, you need to look at aging loans (namely what percentage of loans are more than 90 days due and how that pattern is changing). Yes, as they grow their assets, they grow their liabilities as well. These type of stocks usually have a bad reaction to rising interest rates, but this is not because their profitability decrease (the spread stay constant or even increases as rates increase). The decline is typically in anticipation that some borrowers will be defaulting because the rise in interest rates causes slow down in economic activity. The next few rises from the Fed's however, should not have a major impact on the long term rates. The Fed's should increase rates back to the roughly 3% plus area or else, the next time they need to use this weapon, they will have no ammunition. The long term markets have long ago discounted that, and actually the long term rates have not gone down despite the short term rates going down. As for the stock, I don't follow it since it takes too much analysis in depth to know where they are going next, and I am never sure they really tell the whole story with their numbers. Zeev