• Mortgage insurers MGIC Investment Corp. and Radian Group Inc. said they might write off their combined $1.03-billion stake in a venture that invests in sub-prime mortgages on which payments were past due.
• American Home Mortgage Investment Corp., which lends to people close to the sub-prime category, postponed payment of its dividend, took "major" write-downs and said its lenders were demanding that it put up more cash. Its stock plunged 39%.
• Insurer CNA Financial Corp. wrote down $20 million in sub-prime-backed securities.
• A German bank with U.S. sub-prime exposure cut its profit forecast and replaced its chief executive.
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1 comment:
Actions speak louder than words. The GMAC preferred stock ($25 par) is selling for about $21.5, this is up slightly from the low below $21. This gives a current yield of 8.8%.
Apparently many investors are still skittish about anything tied to the mortgage market. GMAC makes most of its money elsewhere, but investors only focus on the poorly performing division.
For a preferred the only consideration should be whether the firm can continue paying the dividend and the current rate for long-term funds.
Those who dig deeper than the headlines can sometimes find bargains.
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