Douglas A. McIntyre at 24/7 Wall Street rounds up a sobering list of big-name stocks that have fallen below $1 a share, plus a few that could be headed that way. His list, their recent prices, and their 52-week highs below.

• Thornburg Mortgage. (TMA) Current price: 26 cents. 52-week high: $140.50.
• Fannie Mae. (FNM) 83 cents. $40.45.
• Freddie Mac (FRE) 82 cents. $37.18.
• Sirius XM Radio (SIRI) 18 cents. $3.94.
• Level 3 (LVLT) 82 cents. $4.48.
• Charter Communications (CHTR) 17 cents. $1.67.

Names that could still meet their break-the-buck fate? Ford (F), Citigroup (C), Sprint (S), The New York Times (NYT), and ETrade (EFTC) -- a list that would've looked like the top holdings of a pretty conservative mutual fund 18 months ago.

On last week's conference call to announce Q308 results, mortgage REIT Thornburg Mortgage (TMA) said they were banking on the success of a preferred stock tender to raise cash:

Thornburg Mortgage, Inc. (TMA)

The Wall Street Analyst Forum

November 17, 2008 9:50 am ET

Thornburg Mortgage (TMA) is still dealing with “going concern” warnings that ratings agencies have placed upon it. The company wrote down its mortgage-backed securities portfolio by $655 million this quarter, and is planning a preferred/common share swap.

Q3 2008 Earnings Call Transcript

November 12, 2008 10:30 am ET

Mortgages and Lending

So the SEC is going on a tirade against short selling after public pressure forced them to do something. However, exactly how and why were the 799 financial firms selected for the temporary short selling prohibition chosen? Granted, most of the companies on the list are bank holding companies, which make sense. However, there were a few oddball choices, such as Apollo Investment Corp. (AINV), which is a business development company, and FBR Capital Markets (FBCM). None of the mortgage-focused real estate investment trusts, which play an important role in loan origination for the primary market and which purchase numerous mortgages and MBS in the secondary market, made the list.

Hedge Funds In Control – Joy Global (JOYG), CSX (CSX), Lehman Brothers (LEH), Washington Mutual (WM)

Quotes of the Day 

"Without such a plan like this, shareholders might get zero. You want zero or ongoing companies?" - Dan Fuss of Loomis, who says the government would have to offer preferred shares in Fannie and Freddie that could be converted to common stock.  (24/7 Wall St., Aug. 26) 

Quote of the Day

“Anybody who is below 1 percent or in the low 1 percent range in this environment should be given an Olympic medal.” - Joseph Schroeder, CEO, San Diego Metropolitan credit union, on the rising—but still low—default rates of consumer (particularly real estate-related) credit at credit unions. Schroeder was comparing the relatively safe credit unions to larger banks that are suffering much higher default rates. (San Diego Union Tribune, Aug. 24) 

It is about a year ago now that the credit crisis first started affecting jumbo mortgage originator Thornburg Mortgage (TMA). In early August 2007 the stock was still trading in the low $20’s and rumors were just starting about what was soon to become a full blown crisis in the mortgage industry. Thornburg was hit hard in the fall of 2007, but it appeared that the company would continue OK on the strength of its high quality mortgage portfolio. The share price fell as low as $7.60 before recovering to the $10 range until late February. Business seemed to be going well as the 4th quarter earnings were released in February 2008 and by that time many competitors had dropped from the market and the company anticipated growing profitability.

Within 3 weeks, however, the other shoe fell. Thornburg started receiving margin call on repo agreements pledged with the company’s mortgage securities. Soon the margin calls approached $1 billion, some mortgage assets were taken by some lenders and suddenly Thornburg was within days of going out of business. To save the company, management found investors willing to provide about $1.3 billion in cash in exchange for 18% interest and a couple of billion stock warrants at a penny each. The investors also would collect the principal payments on most of Thornburg’s $20 billion (guesstimate) mortgage portfolio until the end of time unless the current shareholders agreed to a couple of changes.

Stabilizing home prices and unfreezing the mortgage market is the paramount focus of US policy makers. The first significant step in this process occurred with the passage of the Housing bill and the US government now explicitly guaranteeing Freddie Mac (FRE) and Fannie Mae (FNM) backed mortgage securities (also known as Agency MBS or Agency debt) and effectively nationalizing more than 50% of the US mortgage market. What this also means is that Agency MBS are now equivalent to Treasuries in terms of risk profile, which implies that the yield spread between Agency MBS and Treasuries of similar maturity should be close to zero.

As shown in the chart below the current spread is almost 160 basis points which must and will close in short order to a more typical 50 basis points, or if rationality prevails to zero, since for the first time in history the government's guarantee is explicit rather than implicit.

Quote Of The Day 

“Locally, everything is going well with us, and with other local banks. But it creates great bargains all around, and there are hundreds of banks that will benefit from this cycle in the long run."- J. Williar Dunlaevy, president and CEO of Massachusetts-based Legacy Banks, which saw its lowest stock price of $10.51 yesterday.  "Our shareholders are hanging with us. The conservatism of New England has helped credit issues to be almost benign compared wtih other areas." - Michael P. Daly, president and CEO of Berkshire Bank. (Berkshire Eagle, July 19^th)

However, I also learned that the assumption that insiders somehow know something outside investors don’t is overly simplistic if not outright false.

Link of the Day

“Ninety per cent of the mortgage market is supported by two private companies losing vast sums of money operating with no equity.” Hedge fund manager John Paulson, on why he’s pessimistic about Fannie Mae and Freddie.Mac.  (Financial Times, June 18^th)

For momentum investors out there (both on the long and short side), below we provide the best and worst performing Russell 3,000 stocks year to date.  The list of winners is primarily made up of stocks in the Energy sector.  Clayton Williams Energy (CWEI) is up the most at 245%, followed by Patriot Coal (PCX), Finish Line (FINL) and Alpha Natural Resources (ANR).  Currently, 23 stocks in the Russell 3,000 are up more than 100% this year, and two-thirds of stocks in the index are down on the year.  The list of losers this year is mostly dominated by Financials, but a Health Care name tops the list- KERX.  Ambac (ABK) and Thornburg Mortgage  (TMA)have been the second and third worst performers in the index this year. 

For those that think the current trend of Energy outperforming and Financials underperforming will continue, these lists could remain similar only with the performance of the winners getting better and the performance of the losers getting worse.  For those that think the trend will reverse in the second half of the year, these names could fall off the best and worst lists quickly. 

Q1 2008 Earnings Call

June 12, 2008 10:00 am ET

Today's Markets

• Asia markets closed in the red. Nikkei -2.08% to 13,889. Hang Seng -1.3% to 23,024. Shanghai -2.21% to 2,958. BSE -0.89% to 15,050.
• Europe at midday: London +0.82%. Paris +0.37%. Frankfurt +0.6%.
• U.S. futures at 7:15 AM: Dow +0.57%. S&P +0.64%. Nasdaq +0.57%. Crude -2% to $133.60. Gold -1.23% to $8.72.

We recently gathered analyst buy and sell ratings for stocks in the Russell 1,000. Below we highlight the average percentage of buy and sell ratings for stocks in each sector.

Not surprisingly, the Energy sector has the highest percentage of buy ratings, while Consumer Discretionary and Financials have the lowest. The average Energy stock has 54% buy ratings, while the average Financial stock is well below all other sectors at 33%. Technology, Materials and Health Care are all behind Energy each with 52% buy ratings. Overall, the average stock in the Russell 1,000 has 44% buy ratings and just 8% sell ratings.

Recap of Jim Cramer’s comments on Stop Trading! Wednesday May 21.

Freeport-McMoran (FCX): Cramer is not blaming the Fed for the 187 point drop in the Dow. Instead he thinks oil needs to take a day off; “If oil were to go up 50 cents a day rather than $5 a day, this wouldn't be happening." The bullish story is global, and Cramer would still own FCX because of surging copper demand in China.

Thornburg Mortgage (TMA): Of Thornburg, Cramer said, “Stocks don't get under a dollar because you want them there. I would be careful."

Dow Chemical (DOW): Cramer praised Dow for a proposal to move most of its business overseas.