VP of Common Sense

Downey Financial on Shaky Ground

Ok, I actually did a thumbnail analysis:

Negatives: All that said above, plus my freinds in southern California will vouch for all the news stories of significant devaluation. In some communities house values are off close to 45%.

Positives:

1. A significant amount of construction loans, which by definition should have much higher equity than any other residential loan.
2. DSL is an actual bank, with more branch's than TMA has employees. I take this as a sign of diversification of assets.
3. Lower leverage (~8:1) than TMA.

However the 400lb gorrilla remains. If a run is made on their assets they are a small, leveraged company. It won't take much to drive them under. So I have yet to take a position, but I am still leaning towards short.

Downey Financial on Shaky Ground

Common sense says this is an early stage Thornburg. I say short it!