tag:blogger.com,1999:blog-4815867514277794362.post3282527567517606838..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: The Dick Bove problem and an investment ideaJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4815867514277794362.post-21941283478752957822008-09-09T08:39:00.000+10:002008-09-09T08:39:00.000+10:00If they need more capital TPG et. al. are likely t...If they need more capital TPG et. al. are likely to kick in as they benefit from a new lower price according to their agreement. Despite this, debt prices in about 60% chance of default over five years. The big risk is a deposit run and that seems serious to me, but hey - it isn't 60%, so the debt is pricing in too much risk in my view. Like you, I own prefs but I think they are more risky than you suggest - the bank can stop paying pref dividends at will, likewise a new buyer could keep WaMu as a sub, like BofA has done with CFC, and then chose not to declare pref dividends. We may see a moratorium for a few years if they need more capital. That makes sub debt more attractive to me. However, I own series R prefs as they just seem awfully cheap (and cheaper again today..)...Good luck!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-54589224958300112582008-08-02T01:34:00.000+10:002008-08-02T01:34:00.000+10:00Murph - you miss the point.I want the long dated p...Murph - you miss the point.<BR/><BR/>I want the long dated paper trading at a big discount to par. I want the capital appreciation.<BR/><BR/>I am hardly interested in a short dated 12% yield.<BR/><BR/>I want a long dated one!!!John Hemptonhttps://www.blogger.com/profile/03766274392122783128noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-52208000215912171132008-08-02T01:07:00.000+10:002008-08-02T01:07:00.000+10:00John - you can achieve similar yield to the prefer...John - you can achieve similar yield to the preferreds with WaMu's January 2009 bonds. That puts the finish line only 6 months away, and the bonds would be senior to the preferreds in liquidation.<BR/><BR/>Even 6 months is a long time, in the current context. <BR/><BR/>Your assessment of WaMu's sustainable capital position appears to be correct. And, Gimme Credit overlooks the fact that the depositors who have withdrawn funds have left WaMu with a relatively low amount of such deposits remaining - so the damage on that front has perhaps largely been done.<BR/><BR/>However, one leaked letter from Chuck Schumer is apparently enough to start a real bank-run of insured depositors who'd prefer not to wait around for the FDIC to make them whole. Once that happens, it's all over.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-56695356094811518182008-07-31T01:49:00.000+10:002008-07-31T01:49:00.000+10:00Can you find me a single catalyst that will preven...Can you find me a single catalyst that will prevent bank runs, more lack of confidence, skepcticism etc that doesnt involved killing shareholders?The negative reports are all over the place and I will be surprised if in this Q they dont lose retail depositors, like shocked.<BR/>Unless another 1.5 month of the worst is over their liquidity will keep drying up and there is no way housing will change as to affect the mood of the marketAnonymousnoreply@blogger.com