terça-feira, 4 de dezembro de 2007

The bull lobby is working to catch you!

After reading the following CNNMoney article (Here's the full article: http://money.cnn.com/2007/11/29/news/companies/bc.apfn.freddiemac.stock.ap/index.htm), I cannot pass without making some comments about it:


"Big mortgage finance company Freddie Mac on Thursday set a price of $25 a share for the $6 billion in special stock it is selling to help shore up its finances amid strong investor demand for the stock."

LOL, strong investor demand for this loosing money machine?
...

"The nation's No. 2 buyer and guarantor of home loans lost more than $2 billion in the third quarter as more borrowers missed payments on their home loans. Freddie Mac also said it had decided, in light of the robust demand for its special cash-raising offering, to make all 240 million shares of preferred stock not convertible to common stock."

Read again. Robust demand, strong demand...? This must be that kind of demand we see in the IPO's: ask 10 thousands shares to get 1 thousand shares, they use to say...

And with the greater percentage of ARM mortgages set to reset in the first half of 2008, I would rather expect those losses to narrow...

...

"It was five times oversubscribed, according to the company."We are very pleased by the strong investor interest and demand shown in our preferred stock offering," Richard Syron, the company's chairman and CEO, said in a statement Thursday..."

Ok, it is realy that kind of demand we see in the IPO's: ask 5 thousands to get 1 thousand...

"...We are raising capital in this offering to enable Freddie Mac to continue fulfilling our important housing mission through the current market environment, and better position us to effectively manage the company going forward.""

To fulfill their important housing mission through the current market environment??? Humm... Maybe some of the raised cash will be to fulfill some holes in some items in their balance sheet... Not a bad idea, hein...? :-D

Better position to effectively manage the company going forward? Of course, with a nasty balance sheet it would be hard to go forward...!

...

"McLean, Va.-based Freddie Mac (Charts, Fortune 500) also said Tuesday it was slicing its quarterly dividend in half, to 25 cents, as it anticipates additional losses from mortgages gone sour - its first dividend cut since it became a public company in 1989."

They put this "Buy more stocks and get a sliced dividend" infos. on the offer's prospect/documentation?

"Typically, preferred stock pays a higher dividend than common stock and carries a stronger claim on the assets of a company if it goes into bankruptcy. "

What a relief!

...

"Lehman Brothers and Goldman Sachs are managing the sale of preferred stock, which the company applied to list on the New York Stock Exchange."

Those who tell you "Ask 10 thousands, get 1 thousand!"... :-)