After a Loss Changing My Strategy on CountryWide (CFC) Written By: David Neubert 2007-09-11 11:02:50 Felix Salmon at Portfolio.com has rightly trounced me for buying Countrywide Financial earlier this summer. I thought it was a good bet at the time, but I got out in August once things started to get confusing. I knew CFC would have to recognize losses from their higher funding rates and portfolio markdowns. But it was the diluting Bank of America investment and ensuing rally that made me realize that it would be awhile before I would be able to figure out what the equity component of this bank is really worth. I remember the old trader saying: "First loss is your best loss." Well I took losses in this one, and after many buys and sells over the month my final losses amounted to about six bucks a share and my last sales were around $19.00. I have since moved into various bets that make money if Countrywide survives. Which it will, with Bank of America (BAC) or someone else's help. I am happy to bet the company won't go bankrupt. I'm now into the preferred shares and shorting some deep out of the money puts.
The Countrywide Preferred B (CFCprB - $17.15) shares have a dividend yield of 9.9% (which, unlike the common dividend, the bank is likely to continue paying) and a par value of $25.00.
I think this is the result of the implied government guarantee that most investors believe is far stronger in Europe.
However, now that the global financial system is so strongly intertwined I don't think the world financial system could handle a default resulting in the liquidation of any bank on the list.
So does that mean all these banks' default insurance should be trading at government rates?
Exploring for Value and Yield: Neubert Discovers America and Its Big Caps Written By: David Neubert 2007-03-12 14:53:45 Yield Hungry I'm hungry. I've been overweight in cash for the majority of the last ten years. My active trading has helped me maintain respectable returns but I want to start putting more money to work. After all, I want to live off my dividends and income. I've been running value screens on assets all over the world. With a few exceptions, the same assets class keeps coming up cheap:
