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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (30258)	3/6/2008 3:11:50 PM
From: rich evans	Respond to of 78753

I can't figure it out but the street definitely knows something we do not. The student loan goodwill was entirely written off last quarter. The actual student loans are 95% guaranteed by the US government. Transportation leases on airplanes and rail cars are doing well. Corporate finance should be OK as is their trade finance(factoring). They lost Dell in the Vendor finance but have picked up others according to releases. They just priced and sold unsecured notes to get/replace funding. Their adjusted risk spreads have been about 2.6%. So what is out their. They keep announcing more fee income with their M%A unit-Edgeview. I think it must be something else. A douwngrade in their credit rating by Moodys. For each .1% in increased credit provisions or .1% in lower spreads, this costs CIT with 75 bill of managed assets about 75 mill. So the leverage can create big swings in income. I called the company but got a mailbox message. I think it is a downgrade by Moodys who had them on negative watch. I bought at 28 so I am way down. They keep taking more writedowns on their mortgage business . I thought they were through but evidently not. Their bonds are not being sold for a B/R condition. Nothing to do but hold on. Rich

To: Paul Senior who wrote (30258)	3/6/2008 4:48:36 PM
From: Madharry	Respond to of 78753

NEW YORK (AP) -- Shares in CIT Group Inc. plunged Thursday after an analyst slashed its earnings target for the lender on concerns that the company will take a massive charge to write down its student loan portfolio. CIT shares lost $4.50, or 22.1 percent, to $15.86 Thursday. Earlier in the session the stock hit a 52-week low of $15, well below the previous mark of $19.05. Keefe, Bruyette & Woods analyst Sameer Gokhale now expects the company to earn 8 cents per sharein the first quarter instead of his previous estimate of 76 cents per share. "We believe there is increased risk that the company will have to charge off $179 million of private student loans made to students of a flight school which recently filed for bankruptcy," he wrote in a note to investors. He said the students did not receive their licenses and are less likely to be able to repay the loans. Because the loans are private, they cannot be written off in personal bankruptcy, he said. the above may be why. I think all all financials should carry a warning " Buying this stock may be hazardous to your portfolio". Other than buying lottery tickets I dont think its advisable to put any money into financials, insurance companies, or builders, until there is some light at the end of this tunnel. These companies are all pretty leveraged and its clear to me that the risk management, if it was anything like my former employer, was a case of heavy reliance upon rating agencies and credit scoring. We see now that this was a poor strategy resulting in banks following each other like lemmings off a cliff. There is now a shortage of qualified people capable of working out these problem loans because banks have not invested in training qualified personnel as opposed to marketers and syndicators. I remember trying to obtain an interview with a high ranking credit officer at Citibank a decade ago. He told me he was no longer hiring workout officers because Citi had all their loans under control.

To: Paul Senior who wrote (30258)	3/6/2008 5:11:25 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 78753

Thats somewhat sad to hear that CIT disclosed further losses on top of its depressed valuation. But it seems to be the sign of the times. Good luck hopefully it plays out for you.

To: Paul Senior who wrote (30258)	3/6/2008 11:34:33 PM
From: Kevyn Collins-Thompson	Read Replies (1) \| Respond to of 78753

> I'm adding a few shares to my few shares as stock > keeps falling, but am not liking it and am not > comfortable with it. Fall,add,fall,add,fall,add. This has been my value-oriented strategy for Citi: Fall,short,fall,short,fall,fall,short,short. I almost never short stocks, but Citi has been the exception for me. The signs were so clear months ago, and the "hope" factor in the market so high, that I couldn't resist, and my short position has only been growing. My three tests for going short are that rare situation where: a) the potential rewards are so much larger and more likely than the risk of being wrong, and most importantly b) there is some kind of time limit or horizon(s) at which the basic premise of the position is tested. c) there is some vague hope or fear involving a national/global catastrophe that temporarily erases the facts of basic math, science and common sense. The imaginary Y2K "crisis" satisfied all three conditions perfectly and for me was very lucrative (anyone remember ZITL and friends?). I view the subprime crisis the same way (with Y2K "fear" replaced by solvency "hope"). I do hope your long position works out eventually but for now I have to follow the numbers. Kevyn