Jack Yetiv

Thornburg's a Huge Bargain After Monday's Crash

Let me respond to a few of the commenters. First, I put VERY LITTLE weight in ratings of debt. There is ONLY ONE rating I care about--and that is the DEFAULT rate. We are almost a year into crashing home prices, crashing stock prices, lenders going out of business, etc.

What is the default rate on TMA mortgages TODAY? Less than 0.5%. To me, that is the only metric that really counts. I have done half a dozen loans, all jumbo's, all stated income, and have not missed a payment and certainly haven't defaulted on anything. The point is that one can speculate on the impact of stated income, or the fact that the loan is adjustable (most of mine have been adjustable), or that they are interest-only, but where the rubber meets the road is the default rate.

And TMA's default rate is absolutely incredible.

To HedgeFundManipulator (quite a handle there!):

Please tell me more about your conclusion that the $270 million has now gone down to $180. How did you glean that from the press release?

To PJ168:

I don't understand your comment. I did not comment on TMA being a good deal at $10 two days ago. If you know otherwise, please let me know.

To Mr. Shinnick:

Your thesis is that high FICO scores are not predictive of low default risk going forward. Everything I have read says the opposite. Can you refer me to your source on this point?

I do agree that this is a risky play that one should not play with unless one can afford to lose, although even in bankruptcy, I cannot believe TMA's enterprise value isn't $480 million ($3/share) so I think downside risk does not take us all the way down to zero. For those who can take this risk, I think the reward potential is very substantial.

To Mr. Riesenberg:

I am intrigued by your comments. Tell us all more about (1) How the debt moved from reverse repurchase to collateralized debt--did this not involve an outside party who put up cash? (2) Tell us why you prefer preferreds--pro's and con's. Frankly, I have never invested in them, so maybe my not looking at them is a function of ignorance rather than a feeling that they are inferior.

Jack Yetiv