TanToday - 03 November 2009 09:58 PM

the biggest bank in the country has been quietly selling some of the option-ARM loans it bought when it acquired Countrywide Financial last year. American Banker reports some of the loans Bank of America has been dumping sell for as little as 40 cents on the dollar. The banking trade magazine says delinquency rates are 30%-40%.

At the moment, the resetting of subprime mortgages has abated, and the resetting of option-ARM loans hasn’t yet kicked into high gear. At the Value Investing Congress a couple weeks ago in New York, co-host/investor Whitney Tilson put up the slide below, which tells you why mortgage resets aren’t filling the headlines quite like they used to and why you can expect them to take the stage front and center over the next couple years…

The purple mountain on the left is the subprime crisis, which is behind us in 2007 and 2008. The mostly blue mountain on the right is the option-ARM crisis, a two- to three-year slog that lies just around the next bend and could continue through 2012.

Right now, we’re sitting in the eye of this mortgage hurricane. When we hit the opposite wall early next year, the storm will become deadly all over again.

Tan, people purchasing bank equities right now are looking down range past the further 5,000,000 foreclosures that are expected to take place over the next 18 months and considering what the banking landscape will look like then. That’s the trick of buying low: when you can buy low, nobody else wants to buy. 

I posted this in the wrong thread.

In other news, Bove has stumbled and fallen down a flight of stairs and hit his head or something but it has had the net effect of knocking some sense into him. Bove now sides with the Swiss Family Landstrom and believes as he always should have than the banks will double. Bove remains a useful idiot after all and I will stop wearing my “I Loath Bove” lapel pin in public.

http://www.bloomberg.com/apps/news?pid=20601087&sid=akQYPxVt_J_I&pos=4

Low volume today, but it looks like $4 is pretty good resistance so far.  Maybe this is the double bottom going back to Oct 28th?

It always amazes me that so many millions of share trade in a day with only a few pennies of range.

61 million shares so far, and C is, if not on fire, showing great strength at the open.

gatesofhell - 06 November 2009 09:43 AM

61 million shares so far, and C is, if not on fire, showing great strength at the open.

  If 3.96 does not hold I think a trip to 3.80 is in order and hopefully a double bottom off that level.  Dick Bove’s comments on the banks (thanks for posting Eric) may trigger more buying today and the next few days.

I’m going for 3.50-3.57 for the final bottom on C.  The 200 day is there as well as a support / resistance line.  Seems like it would be a huge stretch to get there but that’s what I"m “banking on” before real buyers come in and this stock moves up.  I’ll add to my position if we do in fact hit that level, if not, then I miss the move.

Sure seems to want to stay above/around $4…

OT: good blog on FNM and BAC loss provisions.

http://brontecapital.blogspot.com/2009/11/fannie-maes-results-oh-and-what-if-bank.html

dc930 - 06 November 2009 12:25 PM

Sure seems to want to stay above/around $4…

Close at 4.06. No gain, no pain.

willrob - 06 November 2009 04:02 PM

dc930 - 06 November 2009 12:25 PM

Sure seems to want to stay above/around $4…

Close at 4.06. No gain, no pain.

Is boring good?

C is one of those stocks that the HFT (High Frequency Traders like to target). This is exhibit A of what is wrong with the stock market.  Market centers of which they are now over 60 ( think back to the days when they were only the NYSE and Nasdaq) are offering rebates of up to 1/4 penny per trade, to the likes of the great squid to drive churn.. This is how Goldman sachs can generate record trading days with 1 down day in the last quarter.

http://www.bloomberg.com/apps/news?pid=20601087&sid=afxeZy5a_Dz8&pos=5

Eric Landstrom - 04 November 2009 10:50 AM

Tan, people purchasing bank equities right now are looking down range past the further 5,000,000 foreclosures that are expected to take place over the next 18 months and considering what the banking landscape will look like then. That’s the trick of buying low: when you can buy low, nobody else wants to buy. 

Juggling falling knives, is an exciting hobby, but one that leads to many fingerless aficionado’s.

Just look at all the “Formerly Unfailable’s” that are no longer in the game.

I think there are MUCH safer ways to make more money, perhaps it isn’t as much fun as skydiving with hankies for parachutes, but your odds of making it to the ground ALIVE, are oh, so much higher.

Eric Landstrom - 28 October 2009 10:39 AM

runedge - 28 October 2009 10:13 AM

Anyone doing anything here?

I’ve a limit order sitting at $4.06.

Edit: Blew right threw my limit.

People ask me how I do it and I say there is nothing to it: you just stand there looking cute, and when something moves you shoot!

What’s everyone’s take on C’s obvious underperformance recently compared to the financials?  In a market that isn’t moving one way or the other, are people putting their money in more secure banks, and avoiding C as a trading stock?