Shareholder equity per share is $47, trading at ±75% equity value right now (yahoo finance reports this as 59% or assuming a book value of 47.9, but I think this maybe old data (i.e. older than the latest annual report)) 13B in loans, >80% in SoCal. 10% NPL, growing monthly, doubling in the next 6 months or so i think, probably will settle in at 15-20%. Assuming 25% right off (given the SoCal price plummet, high inventory and the credit condition right now, as well as the amount of liar loans generated at the time), we are lookinag at 13B * 0.15 * .25 = 480million. That's the final write off assumed. Book value at 1.1B, writing off 480MM, would equal to about 600MM left after all is said and done. That would give a book value per share of ±$21. And I would imagine further growth would be impaired due to recessionary forces (a hypothetical situation), and assuming market will overdo the correction like it often does, we can see the bottom at about $22. HUGE short position has already been built up (48% according to yahoo finance), so this is a risky trade.
$29.25 (02/16/08)
