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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: mchip who wrote (3387)	9/30/1998 8:26:00 AM
From: Mr. Pink	Read Replies (4) \| Respond to of 18998

<- Previous Next -> Message 2467 of 2468 Reply Mr. Pink's Crystal Ball Mr_Pink_esq Sep 30 1998 7:43AM EDT messages.yahoo.com on=e Mr. Pink continues to enjoy FP as a short. The more He learns the stinkier Dano's predicament becomes. Reasons to remain short: Company is desperately attempting to salvage itself via a strategic partnership....Once it is clear that no one wants to throw good money after bad, they will announce that there is no deal...there is not even a chance of a capital infusion. Negative industry fundamentals: As is well known by everyone except the prostitutional analysts who seem to have their heads buried in the sand next to Sir Bin's tent, the securitization market is in the SHITTER. The market for B pieces is DEAD. Even if they could do a securitization, they would have to retain over 10% of the B piece rather than 7.25% in the past. That means a cash outlay of over 50 milsky on a 600mm securitization. They aint got the cashish. Warehouse line pulled or severely curtailed. Let's say they have 900mm available under the Deutchebank Warehouse line (which Mr. Pink doubts). The company does 5bn in originations a year, about 1.25bn a quarter.....that means their warehouse lines can store about 2 months worth of originations......That means they go out of business in 1 quarter. Or they try to sell whole loans....But to whom? LEH is basically out of business. LTCM has 100s of BILLIONS of mortgage paper hanging over the market. The economy sucks and the US and the UK could be going into a recession....What does that mean for FP's deadbeat borrowers....Those dirtbags who have no grip on their personal finances...Could you imagine what kind of irresponsible plebian runs up 40--50,000 in credit card debt at 18%...Then in desperation takes out a second mortgage on his house to refinance...You can be sure that Joe Six-Pack leveraged up to his eyeballs will get laid off soon and then what happens? He moves into a trailer park...with his big screen TV, 4wd truck, modern kitchen appliances, wife's cheesey wardrobe...and let's the bank have the keys to his condo....Guess how much of the value of that condo FP gets on its 125 loan? Not much Hence credit risk is severly understated. Earnings estimates are dropping. The analysts that have not yet lowered numbers (they are waiting to see if a securitization gets done this quarter and you know how many days they have left to do one?) will surely drop estimates and their rating. Mr. Pink's basic rules of investing: Do not invest in companies with negative industry trends. Do not get long stocks with declining estimates. Do not buy stocks of companies run by high stakes gamblers where CEO has been bankrupt twice. Do not invest in companies where CEO blames fictional and delusional internet character for his OWN problems. Mr. Pink's Crystal Ball sees single digits by next week...under 3 bucks or bankrupt by year-end. Dan, you should have never threatened Mr. Pink. Whoever advised you to do so should be fired. Remember from your gambling trips to Caesar's not to underestimate your opponent. The enemy you did not have to have. Mr. Pink will pray for you today, even though He would not be admitted to your country club. Mr. Pink