Could This Repo Financing Haircut Spell the End for Deerfield Capital?

Well, it looks like the collateral haircut for repo financing of agency mortgages has gone up, from 3%, to somewhere between 4 and 5%. That may account for some of the panic, especially regarding Carlyle. It also may mean that Deerfield Capital (DFR) is kaput. I am presently long, but I may sell next week. This company would be my personal biggest blunder ever, and my apologies to those who were influenced by me to own the company.

Full disclosure: long DFR

Comments

[MW:]

I have the great recent misfortune of being long DFR as well, in fact I actually purchased more on Feb 29th before earnings came out that eve. Needless to say, it was my quickest loss ever, however I don't see how selling now is going to do much good. Seems like upside far outweighs the down side (i.e. Divvy later in the year?, credit crunch slowly unwinds through the year, etc). While there's certainly risk, I see no more risk at this price than the market itself, and obvious upside to $3-4 if they perform status quo for the next 2-3 quarters. Didn't they say not one week ago in the CC that they had liquidity to ride the storm out?

2008 Mar 09 09:59 PM

[Nosinev:]

If a person bought this stock now does anyone believe there will be a dividend paid out in May equal to or greater than the price of a share?

2008 Mar 13 01:43 PM

[Money-Maker:]

In my opinion the collateral hair cutting and in some cases doubled up hair cutting on repo financing is just another case of companies cutting their own thoats. I realize we are all in this to make money but if we are not careful we will end up with no companies to do business with. As for DFR from the few bits of information I have been able to pick on as far as positions are concerned. If they can survive this latest credit crunch I see them being as high as $8 by the end of 08 And so far I'm 12 for 12 on perdictions. money money money!

2008 Mar 25 05:19 PM

[User 172479:]

Bought my shares@1.55 few weeks back. I noticed its like climbing mount everest to get this back to that number! One step froward, two steps back.

This I noticed almost everyday DFR stock does the opposite of FINL which I had@3.72 until I sold it too quickly :(

2008 Apr 03 01:52 PM