OJO Zafado

Insider Trends in the Financial Sector

I tend to agree with Serge. WB looks the most vulnerable. I do not see these financials bottoming until after the annual Summer sell off. We are going to see this bear market persist, after this bear trap rally past 1400 S&P ends. There is still time to get some puts on. BOA is big enough to weather the storm and will most likely rally strongly in the year end rally. JPM has capable leadership. C has a new CEO and he means business. All the deadwood will be out of Dodge at C in short order. Wells Fargo is very much exposed to the Calif. realestate market but was a little more selective than most in loaning money on realestate without equity. They have reasonably capable leadership as well. That leaves WB with their lame CEO who has embarrassed himself and the bank. Many times proclaiming the dividend secure in the months and weeks up to this past week's disasterous numbers and not just triming but brutally slashing the dividend by 40%. WB was still running their PicAPay mortgages ads(Neg amort) on TV just weeks before they reported. WB is the most vulnerable of the top 5! The leadership is either shell shocked or just really stupid! There is one place to gain a foothold in these financials NOW though. There are fabulous and relatively safe yields to be had on the existing prefferred subordinated debt shares of the better banks. USBPrE, JPMPrW, are good yielders. There are also some issues of BOA &WFC that are good as well. The WBPrS is up over 8% and that is a signal to stay away. These can be augmented with ADJ rate issuances like UBS-D, BAC-E & FNM-P for inflation protection. A position in DXKSX will also help offset any inflation issues. WB could easily break through $20 to the down size if they do not have a mangement change soon. Since the exposure of the LIBOR fixing fraud UBS-D has rallied sharply and may be best acquired on a pull back.