Yomgui

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    • Wed Jul 23rd 08:46 AM
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      Commented on:
      Is There a More Efficient Shorting Tactic?
      Thanks Owen for the detailed discussion of how to short via options or futures.
      As a conclusion it is obvious that the SEC rule is not effective to curb short selling. Other methods are readily available to profit from a decline in share price (options, futures).
      So what are the benefits for the SEC of issuing such a rule ?
      - Psychological impact on the market (it seems to work well).
      - Need to 'look good' politically to the general public, who doens't like the idea of banks going bankrupt because of alleged short seller manipulation.
      View article »
    • Mon Jul 21st 10:01 AM
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      Commented on:
      Is There a More Efficient Shorting Tactic?
      The simpler way to short one of those financial stocks is to buy a put option.
      Even for 'Sec restricted' financial stocks you can easily buy a deeply in the money put. The P'n'L from that position will very closely mimick a short sale.
      View article »
    • Fri Jul 4th 10:43 AM
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      Commented on:
      Crystal River’s Q2 Write-Downs Could Bankrupt the Company
      Thanks Greg for the clarification.

      Fatcat, FYI I'am long RWT: I don't share Greg point of view on this one and believe RWT has a significant upisde potential if you can wait a couple of years. It all depends on your time horizon I guess.
      View article »
    • Fri Jul 4th 05:04 AM
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      Commented on:
      Crystal River’s Q2 Write-Downs Could Bankrupt the Company
      Thank you Greg for this detailed analysis on CRZ.
      Regarding your disclosure ('Short TMA, Long CRZ puts, no position in other companies mentioned'):
      Could you please confirm that you closed your short positions in RWT, a company you mentioned several times in today's article.

      I'am asking because in your june 27 article (seekingalpha.com/artic...)
      you disclose a short position.
      Congratulations if you have closed it with a profit in the meantime, but could you please share the rationale with us, since RWT is still trading at 20 and you forecast a price of '8 to 4' by year end ?
      Thank You,
      Yomgui

      View article »
    • Fri Jun 27th 13:30 PM
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      Commented on:
      Redwood Trust: From $30 to $4 by Year-End?
      Your forecast of Q2 write-downs seems reasonable. But it DOESN’T MEAN that the stock will go down.

      There is a big flaw in your argument: you ASSUME that RWT stock price is primarily derived by its book value.

      Redwood is above all a Dividend Play. With a regular dividend of $3 per year it translates into a nice 11% rate at today’s price of 26.6 . And that’s without counting any “special” dividend (an extra $2 last year).

      The stock price is driven by anticipations of the rise or fall of the dividend.

      As a REIT, Redwood must distribute 90% of its REIT taxable income. Taxable income doesn’t take mark to market into account and thus makes the level of write downs irrelevant.
      THAT’S WHY YOUR PREDICTION OF SEVERE PRICE DECLINE IS BASED ON AN IRRELEVANT MTM WRITE-DOWNS ANALYSIS.

      Being funded by Long Term debt Redwood can wait patiently for the loans it holds to mature. It doesn’t have to sell now at heavily discounted prices in a panic market.

      RWT also holds $ 250 Millions (that’s 1/3 of shareholders equity) of Excess Capital ready to be invested at today’s depressed price. These 2008 investments will produce juicy yields for years to come and potentially some big capital gains if and when the real estate market recovers.

      While you wait for a potential recovery in real estate you pocket circa 11% per year of dividend. Not bad. That’s of course IF the regular dividend stays at 0,75 quarter.
      To state Redwood Management “the board of directors has
      indicated it intends to maintain the regular quarterly dividend rate of $0.75 per share during 2008 ”

      The question now is: Will RWT be able to sustain such a dividend in 2009. The answer to this question will determine future share price MUCH MORE than volatile Quarterly Write Downs.
      View article »