1.09.2007

Shorting Countrywide

I shorted Countrywide (CFC). They are a sleazy subprime lender, one of the biggest promoters of toxic option ARMs, and highly vulnerable if the housing bubble really bursts.

Pros to shorting:
- missing earnings estimates, analysts revising numbers downward
- president and CEO are cashing out like madmen
- pushers of option ARMs, AKA Darwinian euthanasia. Darwinian euthanasia is fine, except when Dr. Kevorkian is stuck by the deceased with an underwater house.
- they take unsecured promissory notes from broke and unemployed 24-year-olds to avoid foreclosing on bad loans
- still near an all-time high despite evidence that the housing bubble is beginning to burst

Cons to shorting:
- relatively cheap at 9x or 10x earnings
- Helicopter Ben and the Easy Fed will bail these bastards out

If snotty bullet points don't pass for analysis where you live, too bad. They do here.

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