Jim Cramer's Stop Trading! 1/10/08: Shotgun Marriages for Financials

Recap of Jim Cramer’s comments on Stop Trading! Thursday January 10. Click on a stock ticker for more analysis:

Bank of America (BAC), Countrywide Financial (CFC), Wachovia (WB), Wells Fargo (WFC), Berkshire Hathaway (BRK.A), Ambac (ABK), MBIA (MBI): "Shotgun marriages" are needed in the beleagured financial sector, said Cramer, and he pointed to deal between BAC and CFC as a prime example; "This is what happens at the bottom," Cramer said. "I just don't know why the Fed would say you got to pay a premium for Countrywide …They don't want Countrywide to go out of business, because the servicing thing would play havoc." He added WB and WFC should benefit from a rate cut. Another ray of hope, said Cramer, was Berkshire's courting mortgage insurers MBI and ABK.

AMR (AMR), Mosaic (MOS): Cramer noted the comeback of aerospace and believes AMR will be "worth a lot." He thinks a month should pass before buying these stocks. Concerning Mosaic, Cramer said; "I love the ag guys because ag is so good … That Mosaic was down yesterday was just the shorts pressing their bets again."

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Comments

[Victhom:]

Jim you always....put down IMB but i found something for you....

www.indymacbank.com/

Indymac has an inner GEM call Financial Freedom??

Do you copy?? Nope?? Let me explain...you know with aging population....we have "REVERSE MORTAGE" with growth over 20%...you follow???

Here for you...

Unlocking of Value

Another intriguing part to Indymac that’s not well appreciated is a business it owns, a reverse-mortgage originator called Financial Freedom, that sits on its books for $80 million. Financial Freedom is the largest player in the reverse mortgage space. This is an area of tremendous opportunity and market focus. As the population ages, the reverse-mortgage business has been booming and is widely expected to grow at 20% or more annually for years. There’s lately been a lot of interest both from private equity and strategic buyers. For example, earlier in the year Seattle Mortgage, the third-largest player, was bought by Bank of America.

Indymac had bought Financial Freedom from Lehman Brothers for $112 million in 2004. The acquisition has been a home run: last year First Freedom earned $54 million. Should Indymac decide to sell this business, it’s not hard to imagine a price of, say, 15 times trailing earnings, or $800 million. To put that into context, Indymac’s total market capitalization is $420 million. For myself, I’d be delighted to see the company sell a minority stake to show the value of this business.

2008 Jan 11 07:12 PM

[Victhom:]

www.financialfreedom.c.../

2008 Jan 11 07:13 PM

[Victhom:]

Also Mike Perry CEO of IMB plan for January 2008

read....

"With that said, management and certain key employees (about 130 employees total) have over $40 million in the deferred compensation plan, and the company has arranged to be able to “open this plan up” and for individuals to be able to use these funds to purchase IMB stock….and several of us, including myself, plan to do this (personally, I am planning to invest more than $1.5 million)."



Shareholder’s Email:

Mike,

It’s been some time since we’ve had a chance to meet and talk. I’m a shareholder once again … While I realize that the decline in IMB’s stock price has been painful to you in many ways (not just financially) I think there can be no stronger message about the viability of IMB as an institution than significant insider buying at these depressed levels. If management can’t step up at these levels, then imagine what a “leap of faith” it must be for outsiders to purchase the stock at these levels. Thanks for taking the time to read my email in what must be an incredibly hectic time for you. Best of luck.

Mike Perry’s Response:

I completely agree with the point of your note. I think you know I bought $1 million of our stock earlier this year at $29. In addition, we have had a lot of other managers and some directors purchase this year, too.

Also, management and the board have lost more personally this year than anyone else by far…as most of us have not sold any stock or options in 2006 or 2007 (no sales from the CEO, President and CFO during this time). As a result, most of us are not in a personal financial position to purchase shares…even though we would like to.

With that said, management and certain key employees (about 130 employees total) have over $40 million in the deferred compensation plan, and the company has arranged to be able to “open this plan up” and for individuals to be able to use these funds to purchase IMB stock….and several of us, including myself, plan to do this (personally, I am planning to invest more than $1.5 million).

Unfortunately, our window for insiders to trade IMB stock is currently closed.

I would expect that the window will reopen once we release 4th quarter earnings in late January, and I would expect to see myself and other insiders purchase in a material way (for management) at that time. I hope that makes sense.

mike

2008 Jan 11 07:20 PM