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Strategies & Market Trends : Anyone following Capstead (CMO)?? -- Ignore unavailable to you. Want to Upgrade?

To: jmt who wrote (162)	12/12/1998 11:15:00 PM
From: MCsweet	Read Replies (1) \| Respond to of 216

JMT You ask some good questions. You would think that GMAC would buy all the "good stuff," but CMO states they expect the sale to produce a modest gain, so I don't see much write-down of assets from the sale. To me, the downside of the sale is in a more limited upside for the stock, but of course I believe there is PLENTY of upside left. It is just that if you bought in at $20.00, I wouldn't be holding my breath in expectations of getting all my money back anytime soon. Assets and Book Value Yes, there exists preferred stock and there may be some further degradation of assets this quarter, so I am not sure that the book value is as high as 9, but I think we are all fairly confident that it is well north of $4.00 with lots of cash. CMO states "by year-end the companies mortgage investments will consist almost exclusively of 2.2 billion of Fannie Mae, Freddie Mac, and Ginnie Mae securities financed by approximately 2.1 billion of short-term borrowings." I am by no means an expert on this subject, but this does not sound too high risk to me. And I agree with James, when a company has lots of cash, good things usually happen. CMO management screwed the pooch on their leveraged interest rate bet, but they did keep the company afloat, and I think they are competent enough to find a good use for the money. MC