Thornburg Mortgage: Squeezed Out of Business!

It appears the little guy, Thornburg Mortgage (TMA) is being squeezed out of business by the holders of its reverse repurchase agreements. TMA filed yesterday that J.P. Morgan Chase (JPM) will exercise its rights to seize the collateral because Thornburg has not come up with an additional $28 million for margin requirements. This is after TMA has provided what appears to be $570 million towards the account.

I see J.P. Morgan (JPM) getting the assets at values far below what they will eventually be worth, but first they sucked all of the cash they could get out of Thornburg.

The big banks win in several ways with this. First they drive a small, but efficient company out of the jumbo mortgage business leaving the big boys more opportunity to gouge their jumbo mortgage customers. And they get that company’s assets at fire sale prices which in a year or two will show up as nice trading profits on their balance sheet.

I may be wrong in my analysis here, but it make sense to me. It appears that the only thing that can save TMA at this time is a deep-pocketed white knight.

Note: I am long TMA.

Comments

[D2cold]

Does Bill Gross count as a white knight or is he too just picking up cheap paper from a company that JP made cheap?

[ChaulmoograOil]

Why "or"? He could be/do both. He could also save Thornburg by buying 1/3 to 2/3 of it in new stock.