Freddie Tanks on Earnings Miss, Possible Q4 Dividend Cut
-
Font Size:
Freddie Mac was last down 15.3% to $31.75 in pre-market trading, following its report of a more than doubling of Q3 losses to $2.03 billion ($3.29/share) and warning it may have to cut its dividend by 50%. Analysts were expecting a loss of $0.22/share, on average. Freddie Mac cited a higher provision for credit losses ($1.2B) and losses on mark-to-market items ($3.6B).
The company reported a Q3 loss of $715M ($1.17/share) last year. Freddie Mac said the credit losses reflect the "significant deterioration of mortgage credit as a result of continued weakness in the housing market." Furthermore, Freddie Mac said the fair value of net assets attributable to common stockholders (before capital transactions) fell by around $8.1B in Q3, compared to an increase of about $300M last year. CFO Buddy Piszel commented that over the past year the company has "begun raising prices, tightened our credit standards and enhanced our risk management practices. We also continue to improve our internal controls as we move closer to completing our remediation efforts and returning to timely financial reporting. These actions position us well to take advantage of opportunities when the current market dislocation ends." (Earnings call transcript later today). Freddie Mac said it has "engaged Goldman Sachs and Lehman Brothers as financial advisors to help it consider very near term capital raising alternatives." Freddie Mac also said it is "seriously considering" reducing its Q4 dividend by 50%. Shares of Freddie Mac lost 7.9% to $37.50 on Monday.
Commentary: Fannie Mae Masking High Losses With Accounting Tweak - Fortune • Regulator Irate Over NY AG's Probe of Fannie and Freddie • Fannie, Freddie, WaMu Tumble on Expanded Probe
Stocks to watch: FRE, FNM
Get Seeking Alpha Free Stock Alerts by Email!
Get Free Stock Alerts by Email!
-
Editor's Picks
-
Most Popular
- Scarlett O'Hara, Doris Day and Financial Market Tumult
- U.S. Markets: Is it Time to Throw Caution to the Wind?
- Protecting Your Wealth and Profit During the 2008 Crash
- Inside the Dubai Gold & Commodities Exchange: An Interview with Malcolm Wall Morris
- How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play it
- How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play It, Part II
- Full list of Editor's Picks »
- Apple Feels 'Max Pain' »
- The Oil Bubble Will Meet the Same Fate as Tech, Housing »
- Historic Financial Collapse Underway? »
- How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play it »
- Time To Buy Banks? Proceed With Caution. »
- How High Leverage Has Brought Down the Whole Banking Industry »
- ConocoPhillips: Why the Sell-off? »
- Earnings Preview: Bank of America »
- Why I'm Shorting Apple Ahead of Earnings »
- How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play It, Part II »
- Sirius and XMSR's Six Year Prison Sentence »
-
Long Ideas
-
Short Ideas
-
Cramer's Picks
- VSE Corp.: Quite Attractive at Current Price
- Valuing SuperValu: Favorable Comparison vs. Peers
- Tech and Healthcare Offer Growth at a Discount - Barron's Interview
- Accenture Reaps Benefits of Slow Economy - Barron's
- Solar's Warm, But Not Hot - Barron's
- Market Rotation Bolsters Financials - Fast Money Recap (7/18/08)
- Barron's Goes Bullish on Banks, Again
- The Continuum for Google Shares Continues
- What Will It Take for Finisar to Reach the High End of Revenue Guidance?
- Ship Finance Int'l: Steady Income in a Volatile Sector
- Full list of Long Ideas »
- Ford's Financial Services Business About to Enter the Red
- Educational and Training Services Are An Excellent Short Opportunity
- Short Selling: Others Want Protection Too
- The SEC's Campaign Against Naked Shorting: Misguided or Right On?
- The Oil Bubble Will Meet the Same Fate as Tech, Housing
- Why I'm Shorting Apple Ahead of Earnings
- The Best Safe-Haven Investments, and Some Potential Threats
- Do Tell, Intel - Fast Money Recap (7/15/08)
- Separate Abusive Short Sellers from Those Who Play by the Rules
- Lehman: The End Game
- Full list of Short Ideas »
- Market Rotation Bolsters Financials - Fast Money Recap (7/18/08)
- For Everything, Wind - Stop Trading! (7/17/08)
- Market Lunacy Provides Opportunity - Cramer's Lightning Round (7/17/08)
- Market Rotation Underway - Cramer's Mad Money (7/17/08)
- Cox Not Watching - Cramer's Stop Trading! (7/16/08)
- Buy Boring Gas and Oil - Cramer's Lightning Round (7/16/08)
- Bear Market Rally - Mad Money Recap (7/16/08)
- The Great American Sellout - Cramer's Stop Trading! (7/15/08)
- Natural Gas Will Stay - Cramer's Lightning Round (7/15/08)
- The Windex Will Clean Up - Cramer's Mad Money (7/15/08)
- Full list of Cramers Picks »
Most Popular Feeds
-
ETFs
-
US Market
-
Long Ideas
-
Alt. Energy
- Full list of feeds »
Hedge Fund Jobs
Job Seekers:
- Search jobs by category
- Get job alerts by email or live feed
- Apply online
Employers
- See all recruitment options
- Get applications online or by email




This article has 1 comment: