This is the most overvalued stock on the market, the company will be lucky to escape bankruptcy. CFC's mgt was twice as smart about the credit crises than IMB mgt, and CFC mgt was happy to sell themselves in mid single digits (a HUGE decline from highs). Meanwhile, IMB mgt has chosen to try to sweep the credit crunch under the rug, refusing to eliminate the dividend while paying top interest rates on deposits (makes zero sense).
IMB balance sheet is worth zero, if it's not worth a negative amount (more likely). Even financial-types seem to accept this, but are betting on CFC and IMB because they were good origination businesses and can earn their way out of the hole they've dug themselves. I have no doubt that originating loans is a great business if you are the #1 guy and you're not starting your business on day one with a massively risky amount of debt on your balance sheet, in the first year of a multiple year credit disaster. IMB is such a bank.
So either IMB is going bankrupt in the very near term, like the next 1-9 months, or its origination business will slow to less than 20% of it's original size, and those who've been re-capitalizing originators will realize it was a very poor return on investment.
IMB is going down, MUCH further in the next 3 years. Look for the total drop from peak to trough to exceed 95%, and it might even be a zero.
If IMB is acquired, keep the short in the acquirer, because they will go down 80-90% also, just as BAC is destroying itself by acquiring the much better company, CFC.
$10.78 (02/05/08)
Agree
Disagree
