WaMu: Intensification of Stealth Buying 35 comments
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Stealth buying intensifies as 54 new institutional investors quietly acquire shares of Washington Mutual (WM), according to NASDAQ Detailed Institutional Holdings. That’s an astounding 567 institutional investors now holding 52% of the company. Toscafund Asset Management LLP, a British based value player, reportedly snatched up 105.5 million shares, or a 6% interest. Spotting stealth activity requires painstaking analysis. The majority of investors fail to recognize stealth activity until it’s publicly disclosed. The wholesale accumulation of WaMu shares trumpets a clear “Buy Signal.”
WaMu used this past quarter to come clean, cleanse the books, or as Howard Shapiro of Fox-Pitt Kellton put it, “move ahead of the curve on credit, having charged off or provided for 65 % of it expected loss exposure.” WaMu added over 17 billion dollars of fresh capital, enhancing the balance sheet with 50 billion dollars of liquidity. This was not done out of necessity, but more in a sense to silence the mouths of its adversaries that are mostly short sellers that traffic in fear, terror, false rumors, and manipulation.
WaMu’s house keeping has positioned the company to report better than expected results in the next quarter. This will no doubt come as an overwhelming surprise to those that have been seduced by short sellers, but nevertheless, it’s going to be an eventful day. To say that short sellers will be caught unaware is understating the reality of a panic short-cover rally.
The undeniable facts are plain to see. The intensification of stealth buying will only continue. Short sellers can and will lie about the figures, but the figures do not lie. They are undisputable. We, like so many others, could not help but call WaMu an attractive buy at this level.
Disclosure: Author holds a long position in WM
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This article has 35 comments:
as the SEC yawns as the carnage created by their masters goes on!!!!
I do hope WM has fully come clean, and surprises to the upside in October. Nous veron, as the French say.
With the strong retail franchise and deposit base, and book value at ~$15.35 per share, there is a lot of upside if WM is really clean, relatively speaking of course.
Thanks for sharing your hard work and insight in this forum.
Sadly, Seeking Alpha has become 90% junk or regurgitated crap, whereas your piece is rich, substantive, insightful, and clearly opinionated, which I think is always a good thing.
Daniel Kowkabany
The whole financial sector went into a swan dive because reality overwhelmed the latest sucker rally. Wamu is down another 4.5% today.
My money is in a 24 hour money market account yielding 8% and I will go to bed tonight and sleep soundly. You have put your money where your mouth is and I wish you the best of luck and I mean it but I would advise you to do what I have done.
www.nasdaq.com/asp/hol...
NOTE THAT THE LATEST DATA IS FROM 6/30/08--NOT EXACTLY CURRENT.
55 new positions--20m shares
230 increased positions-172m shares
273 decreased positions-115m shares
88 sold out their positions-32m shares
How does this support 'stealth buying"????????????
>My money is in a 24 hour money market account yielding 8%
WOW where you get that rates? I want to be there :)
As for spotting Toscafund's purchase, you didn't need "painstaking analysis" but rather access to Yahoo Finance. Well, OK, maybe you consider that is the same thing.
BTW I hear the smart money is pouring into WCI- with Icahn as Chairman of the Board and Steve Cohen also buying how can you lose? Oh and here's another one- I hear Leon Black really likes "Linens 'n' Things."
Whenever you get ready to analyze WM's balance sheet and explain to us how they will get through the crunch without raising any more capital (which they can't because of the TPG deal) I'll be glad to read it. (However repeating mgmt's assertions to that effect do not count.)
Certainly the investors in their bankrupt brokerages (who woke up to find that the broker had gone bankrupt, taking their retirement money with them) are.
Have I got my money there? No, I have my money in a 24 hour at call money market account and I can get it anytime within a matter of hours.
venividivici: I don't think I would ever take advice from someone in your position. You obviously know nothing about risk.
In order for WaMu and others to turn their income stream momentum around, they have to start writing more and better business, and absorb all their losses. This is not happening and it doesn't look like its going to happen anytime soon. Most new capital in financials is coming with ratcheting provisions which allows the private placee to be compensated for a drop in market price by the issuance of new shares.
Any new private placement investor is in reality betting that the company will survive, not that the strike price will be maintained.
Can you please give us some background on your education, and your "Advanced Trading Concepts".
- go long shares, buy a big chunk right now, all your cash!
- go long shares with long term protective puts (LEAPs)
- start a 3 layer pyramind, the first layer, will come from buying a chunk now, 1 month later, buy the second layer with a size 20% smaller than the first layer, 1 month after that, the 3erd layer, always hedge your portfolio with LEAPs puts
- instead of buying a single stock, buy XLF, the ETF, and follow the same strategies as above