Arohan’s investing life

Just a quick update for the readers …

Today CFC was too good to pass up and I bought. This is truly a contrarian/value judgment and goes with my conviction that the stock is severely undervalued

Here is another opinion that lays out a case for investing in Countrywide from good friends at The Tycoon Report

I also bought WaMU (WM) in the last week and I added to my position at BAC

With my holdings in LPX I am now well positioned for the eventual housing turn around

Whenever that happens

I am patient

Appears that the Soros fund has bought into Countrywide

Soros Fund Management reported in a filing with the U.S. Securities and Exchange Commission its holdings as of Sept. 30, which included a $33.9 million investment in Countrywide

On Sep 28th CFC stock closed at around 19. The subprime meltdown was in full swing.

Bank of America thought CFC stock at $18 is a good value. CFC is now trading at $13-$14

Does Countrywide now present us with enough discount on the stock to compensate for the risk that the business may not survive in the long term?

The stock is cheap enough, according to Yahoo trading at about 0.55 Price to Book. The liquidity in the credit markets have also eased a bit

Any investment in CFC today has to be based on a judgement of how much bankruptcy risk remains in the name. Countrywide has restructured its organization as well as the loan portfolio to safer loans and does expect to be profitable going forward. The profits however, may be minimal and will do wonders to inflate the PE ratio, still it will allow it to survive long enough to see the upturn in the housing market. The weak would have died, leaving the market to the survivors. The pot of gold here surely lies at the other end of the housing cycle. How long is this going to be?

And BAC has always coveted CFC, now more so than ever!

Decisions, decisions, decisions …