Smooth Jazz's Comments

Alesco Agony Reaches a Crisis Point

Wed, 16 Jul 2008 13:51:11 -0400

I hear you. The TruPS model is DEFINITELY broken. In a Seeking Alpha post yesterday, Prudential Speculations described some possible scenarios for them going forward including focusing on the leveraged loan franchise they have built, DeREITing and using the cash to rebuild the platform around something other than bank TruPS. Btw, RAS (common and the PFD B & PFD C) is my largest holding in the REIT space. Your Mortgage REITs journal is a fantastic blog and I check in often. GL to you.

Alesco Agony Reaches a Crisis Point

Wed, 16 Jul 2008 10:55:14 -0400
Good points, but you didn't mention that the failed CDOs only hit 41% of their taxable income, suggesting the last 2 CDOs are much larger contributors that the 2 that are offline. In other words, 59% of their taxable income (approx 50cents per year) are still coming from contributing businesses, a nice chunk of income for a $1 stock with over $100M in cash.

And while you noted that the $86M was a tax loss, you didn't mention the fact that this allows them to save on paying out cash for "Phantom Income". Or that they are no longer subject to counter party risk on that cash. Finally, you failed to note that AFN has over $100M unrestricted cash, $88M of restricted cash available for additional investments, a viable CLO generating approx 24cents in income per year, and no short term recourse debt.

If they had recourse debt and facing imminent firesales into this market, I would agree with you that they faced an imminent crisis. While the TruPS business broken is broken, their huge cash position provides a significant cushion.

Alesco Financial: REIT Selling For Less Than Cash On Hand

Tue, 15 Jul 2008 17:16:15 -0400

Thanks for the info Scotty. That would depend on which banks and whether they are in AFN CDOs. Other than IMB, ETFC was the only other large financial company in AFN TruPS at 2.4%. If the deferred/defaulted that would hit AFN. Multiple smaller banks deferring/defaulting would do the trick as well. One or two additional small deferrals would likely not have much impact.

Alesco: IndyMac Failure Priced In

Tue, 15 Jul 2008 17:11:46 -0400
Great article Prudent and thanks for the plug (I'm Brian King). You eloquently laid out some great ideas to grow the business and leverage their core competencies. Hope Mgmt and the "Special Committe" are reading SA and consider some of you excellent advice.

I dont see the stock getting any traction in this market where good financial names are getting 10% - 20% haircuts daily. Hopefully, this "crisis" in the sector will pass and folks will see the value in AFN that you described. Unfortunately, I don't see any let up until we get through C, BAC, MER, etc earnings reports the next few weeks, and the REITs start reporting in early August.

Nice job!

Alesco Financial: REIT Selling For Less Than Cash On Hand

Sun, 13 Jul 2008 11:07:11 -0400

User,

Read the May 15th press release carefully. AFN said the CDOs would cure in 4 - 7 months even if IMB defaulted and didn't pay another dime. The key is that there are no other or minimal defaults/deferrals in the affected CDOs. AFN Mgmt suspected that IMB would eventually fail and that is why they put that caveat ("even if IMB does not resume making payment") in the press release. The key for AFN therefore are the other 300+ banks in its CDOs.

GL to you.

Alesco Financial: REIT Selling For Less Than Cash On Hand

Fri, 11 Jul 2008 19:27:19 -0400

Hello Franklin,

Yes, I am the author and I own AFN shares. I use a stock screener which filters out high yielding stocks where the yield is way out of whack. Then I do my DD and take my chances from there.

AFN first came on my radar when it dropped in the $2s in Aug 2007 after the AHM meltdown took down the entire sector. Since then I've added in the lows $2s and low $3s and received 4 dividends (including the one today) equal to $1.06. I'm usually a trader who likes to swing trade these companies for profit but chose to hold this one through all the ups & downs.

GL to you.

Crystal River Capital: Deleveraging to Wait Out the Storm

Tue, 08 Jul 2008 12:02:34 -0400

investorvillage.co...&...;

Now you're starting to flail about like a small child. Just where in that Novastar post from 2 years ago did I advise buying Novastar???. You are flat out LYING. The post clearly states that a number of posters were asking me for my best guess on Novastar 3Q2006 GAAP and Taxable Income. I provided a detailed response.

I note you didn't post the ACTUAL RESULTS versus my estimate which I followed up with a post a few days later:

www.investorvillage.co...

That seems to be your pattern. Only provide PART of the story. Why didn't you link to my follow up post days later?

And what does your link prove other than the sector has been hammered siince early with many financial companies down 50% - 80% since then. Go research what JRT, ABR, NCT, AMC, C, BAC, LEH, MCGC, ALD, etc. etc etc and you will see they have all suffered the same fate or worse than AFN.

Finally, posters who follow me on Yahoo know that RAS and RSO are my biggest holdings that I picked up in the $5s & $6s respectively. I'm way up on my 2 largest holdings. Since you have so much time on your hands to spend all day on GOOG, how about spending that valuable time and locating the posts where I recommended RAS at $5+ and RSO at $6+.

Peace off.

Crystal River Capital: Deleveraging to Wait Out the Storm

Tue, 08 Jul 2008 11:43:52 -0400

Sure the numbers are wrong, at least 2 of them are since the company provided updates yesterday on the unused credit facility and callable repo debt. As of July 7, the unused line is $70M (higher than the $52M reported in the article) and the repo balance is $22M (lower than the $28M reported in the article). Of course, this rebuttal wasn't about numbers and I think you know that. The anchor of the article was the April 8K, and all I was doing was something you didn't alert your readers to. It appears that since the credit line was higher and repo debt lower, the company may have used some of the $45M cash reported in April to pay down one or both. I agree yesterday's PR didn't address the current cash balance and unencumbered assets compared to the numbers reported above.

Indeed, the crux of my complaint with you is not what you said, but what you DIDN'T say. You made some assumptions about CMBS performance, credit metrics and the like. We will not know whether you are right or wrong until the company reports. My complaint was that used the "Bankruptcy" meme in your headline, obviously to get a desired effect, without alerting your readers the company had made some moves a few weeks earlier to avert the cataclysmic scenario essential guaranteed would occur.

Next time I suggest you TRUST YOUR READERS. Tell them EVERYTHING and let them decide. Give them ALL the data points and let them make up their own minds.

Peace out.

Redwood Trust: From $30 to $4 by Year-End?

Mon, 07 Jul 2008 21:53:41 -0400

Hey Wez, You are just a flunky for Fast Money "Hitman" Westman, so let me make this plain for you in the case of CRZ: IT'S ABOUT FULL DISCLOSURE. If you are going to scream bankrutcy in an headline grabbing article, at least tell your reader about the company's liquidity backstop, like CRZ Mgmt did today, and let readers make up their own minds.

Keep chasing that Shill around, but a lot of people are watching him now, and people are gathering information about his omissions and deceptions in anticipation of a suit against him. CRZ started recovering after they came out with a statement today, so it may well turn out that his CRZ hit piece was deliberate manipulation. Rest assured, you may very well get an opportunity to cheer him on in the pokie.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Mon, 07 Jul 2008 19:45:56 -0400

Greg "Hitman" Weston,

Meaningless?? The company just obliterated one of the the 2 major tenets of your hit piece: Namely that bankruptcy was imminent as they wrote down the value of their assets in 2Q according to you. As Davis and I mentioned to you and the editors of Seeking Alpha a number of times yesterday which you casually omitted from your "objective" article, the liquidity available on a funding line is more than enough to cover the modest $22M of callable debt they have outstanding.

The other major tenet of your article, that negative marks will be material and "might" trip covenants, will not have an answer until CRZ Mgmt officially joins the fray and publishes their numbers. You may eventually be right that they have significant negative marks. I admit that this is a possibility and the one positive aspect of your article was the significant work you put into estimating the potential marks.

But CRZ SP rise late in the day, on an absolutely brutal day for financials, and the $2.60 - $2.65 AH bid/Ask according to Schwab at 6:30pm EST, suggests it MAY start to recover somewhat from your ambush. I think the company shot down your imminent bankruptcy thesis this afternoon. We'll just see where we go from here with credit markets in such terrible shape.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Mon, 07 Jul 2008 15:08:56 -0400
As I was saying, the company earlier just released a statement saying they have $70M of available funding to take care of $22M of repo debt and $3. I am even more furious with Mr Weston's blatant omissions in his "Hatchet Job For Profit" article.

The company statement reinforced my entire point regarding my problems with his article: The he OMITTED germane information such as the company only had $22 of Repo exposure that could be more than covered with adequate liquidity to prevent bankruptcy. And to make matters worse, his hit job appears on a day when financials are being taken to the woodshed and shot yet again, excascerbating CRZ's drop.

I sincerely hope this short pays for this!

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Mon, 07 Jul 2008 13:48:55 -0400
Mr Weston,

Obviously you were able to get away with this. If the stock keeps falling, at some point the company will HAVE to respond at the urging of either the NYSE or on its own initiative. It is really sad that someone of the blue can use a respected public blog to manipulate stocks in this manner using dubious assumptions and omitting key elements of a contrarian thesis. A bullseye is now on you. IF you profit from this manipulation and IF it is proven you were malicious, at least you'll have some profits to put towards legal fees in defending yourself when you are sued.

Best Regards & peace out.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Mon, 07 Jul 2008 07:52:07 -0400

209.85.173.104/search?...

Greg Weston,

This is getting almost comical. You reference a post of mine from 11/5/2006 where I estimate Novastar's GAAP and Taxable for 3Q2006, without pointing on the post 2 days later which showed my estimates were almost dead on:

www.investorvillage.co...

And what does Novastar 2006 have to do with anything? These stocks go in cycles and I traded in an out of Novastar (Including the Preferred) about 15 times between 2004 and 2007. A GOOG search of my Yahoo NFI posts going back a few years clearly shows that. I have no idea why my trading philosphy on Novastar in 2006 had to do with their status in 2008 or CRZ today.

Get a grip and stop being so defensive. Just try to include data points that go against your these next time and let the reader decide what is germane.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Mon, 07 Jul 2008 07:37:30 -0400

Greg Weston,

How can you say I am consistently wrong when you don't even know me. On the other hand, I believe you are shark trying to manipulate markets and a well known blog site. As previously stated, my problem is not so much what you wrote (even though I see quite a few inaccuracies), it is what you DIDN'T say, namely:

1. The company recently deleveraged away repo risk, and recently enhanced liquidity up to approx $200M including unencumbered assets; and,

2. The company recently declared a 30cents dividend. Companies going bankrupt

By leaving out these critical data points, you did not provide your readers with a "complete" picture and calls into question your motives.

In any event, the editors from Seeking Alpha have contacting me about rebutting you. I intend to do so by reminding the readers of Seeking Alpha of CRZ recent liquidity actions which you omitted from your "article". We'll see if the editors can get it up on the site quickly enough so that investors get a balanced view and can make up their own mind.

Redwood Trust: From $30 to $4 by Year-End?

Sun, 06 Jul 2008 16:54:14 -0400

I have no dog in the RWT hunt, but it appears your hero has pissed a lot of CRZ stakeholders off with his "next" hit piece. I know of at least 7 commenters on the CRZ piece and perhaps another 10 on the CRZ Yahoo message board that is contacting either Seeking Alpha Mgmt, the SEC, CRZ Investor Relations and Brookfield Investor Relations. Rarely do I see this type of passion with so many people, even folks without a position, react so vehemently. At a mimimum, Mr Weston has put a bulleye on himself and people WILL be watching.

seekingalpha.com/artic...

Mr Weston wants everyone to think CRZ is going bankrupt in a few weeks, but failed to tell his readers that the company has as much of $200M in liquidity via unrestricted cash, unencumbered assets, unused credit lines, etc and only approx $20+ in short term repo debt as of May 2008. He also failed to tell his readers CRZ just declared a 30cents dividend 2 weeks ago, or satisfactorily explain how a company going bankrupt in July after writing down assets is paying out dividends to shareholders. I don't think anybody is claiming CRZ is not struggling or will not go insolvent eventually; People are mostly upset that Mr Weston blatantly kept critical liquidity information from his article while claiming the company is going bankrupt, ostensibly to make a fast buck on his puts.

Well you will get the opportunity to pay a LOT of attention to him in the pokie IF it is demonstrated that he is blatantly using these forums to perpetrate a fraud for financial gain.

Peace out.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Sun, 06 Jul 2008 15:02:52 -0400

Can you believe the hubris of this guy?? He said that to me when I asked him the "Why would they declare a 30cents divvy if they were going bankrupt" question. I think he is getting a little too arrogant after his takedown of RWT. This CRZ hit job was too blatant.

I tend to be very level headed on these things. I've seen quite a few negative articles like this in nearly 30 years of investing, but the ones I've seen at least pretend there is a counter argument to their thesis. The obfuscations, ommisions and dubious facts in this CRZ article are so disturbing, that I have for the first time decided to simultaneously write to the Seeking Alpha editors, The SEC TIPs line, CRZ Investor Relations and Brookfield Investor relations (See below).

This guy may yet laugh all the way to the bank with this dubious hit job, but, at a minimum, I want him on the radar of a few folks. Peace out all.

messages.finance.yahoo...

messages.finance.yahoo...

CRZ Article 7/4 by Greg Weston‏
From: smoothjazz@msn.com
Sent: Sat 7/05/08 9:34 PM
To: contact-editorial@seek...

Hello There,

I am very disturbed by a 7/4 article written by Greg Weston entitled "Crystal River’s Q2 Write-Downs Could Bankrupt the Company" because he left out some key points that would be germane to his readers. I have no problems with writers on your blog posting negative articles on struggling companies in out of favor sectors. I also have no problems with your writers having a vested financial interest in the articles they post. What I do have a problem with is the veracity of writers who leave out critical information in their articles that run counter to their thesis, especially when they can profit handsomely when the stock falls.

My problem with Mr Weston's article is two-fold:

1. The author failed to disclose to readers CRZ recently raised $100M via the sale of their Agency MBS portfolio and had another $100M of unencumbered assets. This is significant because as of June 2008, CRZ had only $20M in callable, margin debt that could easily be paid down with their current liquidity. Unlike TMA, NEW & AHM which all went bankrupt in an instant because they financed their business with $billions of margin debt, CRZ doesn't have that problem. Please see the "First Quarter 2008 Update" slide below:

files.shareholder.com/...

I find it truly disturbing that he would not mention that perhaps as $200M in CRZ avialable liquidity in an article about bankruptcy. Was this a lack of research on his part or something more nefarious? He has not responded to my question about why he left out their recent liquidity moves in the comments section of his article. If he cashes in his puts for big profits if the stock tanks and his thesis was wrong, I suggest he be prepared to answer the question.

2. When I asked him why a company would declare a 30cent dividend a few weeks before he claims they are insolvent, he responded with the following (Please see his reponse in his 7/4, 9:44pm post):

seekingalpha.com/artic...

"So you think companies that are doing very poorly never try to make it look like everything is honky dory? Besides the obvious reason of "keeping up appearances" I can give you two other plausible explanations.

(1) suspending the dividend would cause the stock to drop at a time when management is considering an equity offering.

(2) if the company is clearly on its way to insolvency or already there, paying a dividend is a way to return money to shareholders rather than creditors. In this sense the company was acting in the best interest of its shareholders by paying a 30 cent dividend, despite its gigantic Q1 loss."

In other words, his reponse is Mgmt is dishonest.

In conclusion, your site has become very popular for investors looking for BOTH short and long ideas. But NO site can prosper if it is demonstrated that contributors with a financial interest deceive investors by only presenting "part" of the story.

Best Regards,
Smooth Jazz

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Sun, 06 Jul 2008 07:54:38 -0400

Again, I hope the company does pay a dividend, because it will decrease the stock price by about the amount of the dividend. If I were short I would be indifferent since the stock would go down but I would have to pay the dividend, however holders of puts do not have to pay for regular dividends.

Relax - 7/5, 9:37pm:

Dividend payout is already in the stock price>

Glad other people are noticing how careless this writer is. He appears to be completely oblivious to the fact that CRZ just declared a 30cent dividend a few weeks ago, and already went XDividend on Jun 28. Maybe that explains why he shrugged off my "Why did the company declare a divvy on Jun 17" question with unintelligible babble about company officers being crooks. Perhaps he wasn't aware they just declared a divy and that is why he didn't mention it in his article.

Just like he when he mistated when the Russell delisting would occur. These misstatements and omissions from his article are starting to pile up. As more people comment and call this guy out on his sloppy and self serving work, more people will take notice and it WILL eventually have an impact if enough people catch these errors.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Sat, 05 Jul 2008 18:07:47 -0400
<"Smooth Jazz" was posting for years in defense of NFI, which is down more than 99.5% from the prices where he was pumping it up.
A few more minutes with Google with find many more examples. They appear to be committed to going down with the ship yet again on yet another failing REIT. That's their right, but discount their arguments accordingly.>

Greg Weston,

Touchy, Touchy are we. I was about to leave your forum for good but couldn't resist. WHAT DOES MY POSTING HISTORY FROM A FEW YEARS AGO HAVE TO DO WITH THE POSSIBILITY THAT YOU ARE PERPETRATING A FRAUD BY NOT TELLING YOUR READERS THE COMPANY YOU SAY IS INSOLVENT HAD $200M OF AVAILIABLE LIQUIDITY AND $20M IN SHORT TERM DEBT AS OF A MONTH AGO.

Yeah, tell your readers to GOOG smoothjazz0204 on Yahoo. They may see upwards of 20 profitable trades in companies such as NFI, NCT, JRT, RAS, RSO, MCGC, LEND PFD A, NRF, ABR, etc, over the past few years. Like I said earlier: You left out critical liquidity information about CRZ that has nothing to do with me, and now you are in a dither and lunging at straws now that you been called on your omission.

If I were you, I would spend less time on GOOG and more time coming up with an answer regarding why your bankruptcy hit job did not mention up to $200M of liquidity identified by the company in April. I would also look to profit from your puts while your hit piece is "hot".

Peace out.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Sat, 05 Jul 2008 17:57:41 -0400
<"Smooth Jazz" was posting for years in defense of NFI, which is down more than 99.5% from the prices where he was pumping it up.
A few more minutes with Google with find many more examples. They appear to be committed to going down with the ship yet again on yet another failing REIT. That's their right, but discount their arguments accordingly.>

Greg Weston,

Tocuhy, Touchy are we. I was about to leave your forum for good but couldn't resist.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Sat, 05 Jul 2008 16:00:40 -0400

Greg Weston,

You have got to be kidding me. You are posting articles about companies going bankrupt, and you make such a grevious error. The Russell deletions occurred on June 27 (You're more than a week late), and most of the selling was done PRIOR to that date so that Russell based index funds are out of the stock by the day of the deletion. Good grief. That blatant error about the Rusell rebalancing suggests maybe you are careless and might not do exhaustive research all of the time.

mreits.blogspot.com/20...

As for your most recent comment, I couldn't care less whether you respond to my legit questions or not, but I can almost surely guarantee you this: If you profit from a situation where you were careless and you turn out to be wrong, you will need to explain to someone how you excluded from your hit piece the convenient fact that the company reported approx $200M in available liquidity in an April 8K ($43M cash from sale of Agency MBS, $50 availabale funding line and $100M in unencumbered assets) when they only had $20M+ in repo debt.

I got a feeling that this one will end nasty given the vast difference between your bankruptcy storyline, and the company's reported $200M liquidity backstop. If Mgmt turns out to be sheisters, you're home free. But if you were wreckless and wrong, responding to legit questions from board "trolls" will be the least of your worries.

Peace out.

and a company that reported $200M in available liquidity

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Sat, 05 Jul 2008 11:31:59 -0400

theskeptic,

Stop patronizing me, and insist that the writer answer the basic questions. I know full well the sector stinks and that CRZ's business model is currently broken primarily because they cannot easily raise money in these turbulent credit markets. I also know the difference between a CRZ, which as of April funded 98% of its income with long term, non recourse CDO funding, and NEW/AHM/TMA/etc. which funded their entire business with repo, margin debt and taken down when lenders called in that debt.

The author needs to answer one basic question for me to consider him anything but a huckster using a well known public forum to make a quick buck: How can a company which had $100M of liquidity and about as much in encumbered assets as of April (See "First Quarter 2008 Update" slide from the following presentation) suddenly implode and go belly up when it only has $20 in repo debt. This makes absolutely no sense and it is disturbing he did not let his readers know about the company's actions in April to shore up liquidity. This has nothing to do with a "falling market" or "fundamental shifts in the US Economy" and very much to do with the veracity of one writer with an agenda who leaves out pertinent facts in his thesis.

files.shareholder.com/...

Maybe Mgmt is dishonest and lying. It is also possible the writer did not properly research or due adequate DD in this one instance, his other "good" calls, including FED, notwithstanding. I will not go as far as to call him dishonest. Yet.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Sat, 05 Jul 2008 09:09:52 -0400

Fatcat,

Cut the BS. This isn't about you, RWT or some imaginary Wall Steet mind police. This guy could be the sharpest guy in the kitchen. Or he could be a sheister looking to cash in some puts for a quick buck. I agree it would be tough to put the guy in jail without absolute proof, but he did leave out 3 critical points from his article which would call into question his entire thesis:

1. The company gave a presentation barely 8 weeks ago where they said they freed up approx $100M (cash & a credit line) via the sale of their Agency MBS. Why didn't the writer mention this. Or explain how a company that just freed up $100M in liquidity in April and had only $20M in callable repo debt is insolvent by the end of June.

2. He doesn't satisfactorily explain why the company would declare a 30cents divvy on Jun 17, 2 weeks before he claims they are insolvent. Telling me that Mgmt is just dishonest without proof doesn't cut it. Perhaps they have the liquidity to pay the divvy given they just freed up $100M (See Point #1 above), and his "Mgmt are crooks because they want to pay the divy to shareholders and not creditors before they go bankrupt " (See his 7/4, 9:44pm response) makes absolutely no sense.

3. He doesn't discuss how SFAS 159, which allow companies to mark their CDO debt to match asset writedowns, would call into question his entire thesis by allowing CRZ to offset the CMBS & RMBS writedown he is estimating will bankrupt them with similar debt writedowns.

I do not have much skin in this game, but the more I think about this author's ommisions, non explnanations and duplicity, I get more disturbed when I see that he is trying to use a well known blog for financial gain, without the company having an opportunity to respond beforehand. Yeah, He's safe alright! He could always use the "I was careless" explanation long after he has banked his puts.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Sat, 05 Jul 2008 08:41:29 -0400

"1. An explanation for why would the company declare a 30cents divy weeks before beoming bankrupt"

So you think companies that are doing very poorly never try to make it look like everything is honky dory? Besides the obvious reason of "keeping up appearances" I can give you two other plausible explanations.

(1) suspending the dividend would cause the stock to drop at a time when management is considering an equity offering.

(2) if the company is clearly on its way to insolvency or already there, paying a dividend is a way to return money to shareholders rather than creditors. In this sense the company was acting in the best interest of its shareholders by paying a 30 cent dividend, despite its gigantic Q1 loss.>

Greg Weston, Regarding your 7/4, 9:44pm post:

So let me get this straight: This company would knowingly go ahead and declare a dividend on Jun 17, 2 weeks before it was insolvent, because it was in the process of raising money via an equity offering and was acting in the interest of shareholders in spite of a huge 1Q loss???? Good god. You do realize that the divy is paid out of REIT income (Which was 63cents in 1Q and does not include MTM losses) not GAAP income, which reflect MTM losses correct. Your answer makes absolutely no sense.

Furthermore, your minor blurb mentioning SFAS 159 near the end of the article does not address the question I was asking: Whether CRZ will be able to mark their CMBS & RMBS related CDO debt to offset the asset marks you are saying will bankrupt them. You barely touch on this by noting "the company will try some tricks such as writing down the value of its debt" at the end of your piece without really discussing SFAS 159 at all and how it may affect your thesis.

Finally, and perhaps most important, did you have a chance to review the "First Quarter 2008 Update" slide from the following presentation before you published your CRZ is bankrupt article. If so why did you not tell your readers they raised $45M in April by selling assets and freed up another $52M.

files.shareholder.com/...

You will note on that slide, the company stated:

1. It raised net cash of $45M from the sale of its Agency MBS
2. It freed up $52M on their funding line
3. Has $100M of unencumbered assets as of mid April

And you claim they are going bankrupt 8 weeks after saying this? Are you stating flatly this Mgmt team is lying when it said it raised $45M in cash and freed up $52M in funding as recently as April? Mr Weston, Did you thoroughly research this company before publishing this article or is this a get rich quick scheme. If you do cash in your puts for big bucks and your article turns out to be sloppply written and proven false, I hope you eventually have to cough up your profits somehow someway.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Fri, 04 Jul 2008 17:44:11 -0400

Ex15,

You claim you do not have a dog in this fight, yet you know enough about me to conclude I have more than a 500 share stake. How prescient of you. I just started a small position and I'm looking to accumulate a lot more at these prices. But I don't want to accumulate shares in a company that is going bankrupt. Morever, I have a pet peeve about full disclosure on a public blog when the writer has something at stake, and the company in question cannot respond right away.

Look, I've been a stock market investor for 30 years, and a real estate/REIT investor for about 10 years. I am well aware what the sector is facing. The headwinds are unmistakable. I also realize there are conflicting opinions about ABX, CMX and related indices and the underlying default rates that are actually occurring.

Howvere, I am well aware that anyone can use public forums like these to make money, so my problem is FULL DISCLOSURE. In other words, the author left out 2 critical tidbits of information:

1. An explanation for why would the company declare a 30cents divy weeks before beoming bankrupt; and,

2. Why didn't the author fully disclose the impact of SFAS 159 - ie Would CRZ be able to offset the negative asset marks

CRZ may very become insolvent at some point, but that wasn't my key point. Since he doesn't want to answer those critical questions, and you are willing to defend him, how about if you answer those 2 critical questions on his behalf.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Fri, 04 Jul 2008 16:53:47 -0400

Oh and a couple more points:

1. You appear to be assuming CRZ isn't generating the REIT income from it's assets to pay the divvy. That doesn't make sense either. Sure, paying divvys reduce GAAP book value. But that assumes the business isn't generating cash to pay it. You do realize cash from operations INCREASE book value don't you.

2. You do not fully adddress the SFAS impact on their Liabilities and that is raising my antenna as well. Effective Jan 1, 2008, companies are allowed to mark their Liabilities to match their asset marks. If so, then it is possible these markdowns you talk about which trigger net worth covenants are at least partially offset by corresponding Liability marks.

I see that you are a lawyer, but do you fully understand basic REIT Accounting. Not only did you leave out info on the company's June 17 divvy declaration, you make some dubious statements about divvy payments affecting BV without pointing out cash from the business increases BV, and you did not clearly discuss how SFAS 159 Liability marks affects your thesis.

This gets curiouser and curiouser. If you do get the SP dump you are looking for and get to cash in your puts in a big way, I hope you are able to look in a mirror if you are wrong and it can be proven you maliciously deceived investors by ommitting critical and germane information.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Fri, 04 Jul 2008 16:26:16 -0400

Greg Weston,

Thank you for responding to my comments, but whether the ABX and/or CMBX are manipulated were the least of my concerns. My main concern is that you have a financial interest in the stock going down, and you use a well know forum to publish a hit job suggesting the company is bankrupt, 2 weeks after the company declared a 30cents divvy suggesting bankruptcy was not imminent.

Significantly, you did not point out this critical factoid in your article (The company declared a 30cent divvy 90% through the quarter when ABX & CMBX indices were not all that different from today). Nor did you explain to your readers why the comment would declare a divvy, any divvy, barely a few weeks before becoming insolvent. In the case of your RWT hit job the other day, the last time the markets heard from RWT was the divvy announcement in Mid way approx 6 weeks ago so much could have changed since then. In the case of CRZ, Mgmt had to have most of the 2Q numbers in when they declared on June 17, yet you did not let your readers in on this critical fact. The only reasonable explanation I can come up with is that either CRZ Mgmt is dishonest, they declared things were OK for a 30cents divvy on June 17 when they weren't, or they have simply lost their marbles and things were not in great shape on June 17 when they declared. Either way, the fact that you didn't share this important data point with your readers when you clearly have a negative agenda is disturbing. That hasn'nt nothing to do with market indices and everything to do with full disclosure.

Telling me you own puts rather than being short is a difference without a distinction and you know it. You have a vested interest in the stock going down. I would have considered you more credible if you would have explained to your readers how Mgmt could declare a cash divvy weeks before bakruptcy. By leaving that tidbit out, I question your motives and it's a shame Seeking Alpha allows this without closer vetting and scrutiny. As I said, if you are wrong, you will owe a lot of people and apology at a minimum.

Best Regards.

Crystal River’s Q2 Write-Downs Could Bankrupt the Company

Fri, 04 Jul 2008 15:20:17 -0400
Greg Weston,

First off let me say up front I'm a recent long in CRZ having bought 500 shares at the recent lows, so I don't have much at stake. But I have to admit this has to be one of the most irresponsible hit jobs I've seen on a company, in part because of the histrionics headlines and the reliance on dubious market indices to pronounce that the company is dead. I've never been one to question business journalists, but if you are off the mark and you start a self fulfilling "run" on the company's share price which doesn't come to pass, then I would strongly recommend that the SEC look into you and your short position.

I say this because your entire premise, and the criteria you use to try to justify your short position and implosion thesis for this company, is the prevailing value of market indices that arguably have been driven down by short players and may not accurately reflect the performance of the underlying assets. In other words, your thesis is not based on any official communication from the company, or their cash flows, but arbitrary market indices that may not reflect reality. The one premise that would lead to a NEW, AHM or TMA type meltdown is an immediate call on their $20 repo debt based on your view that ABX & CMBX related marks would trigger net worth covenants and generate margin calls on this margin debt. To wit, here are my major problems with your article:

1. It implies the company will implode in part because of the arbitrary, arguably manipulated, ABX index that may not reflect reality:

www.bankstocks.com/Art...

2. It implies the company will implode in part because of the arbitrary, arguably manipulated, CMBX index that may not reflect reality:

www.reitwrecks.com/200...

3. Your thesis does not reflect the fact that SFAS 159 allows the company to mark the CDO Liability debt to match the asset marks, thereby offsetting your draconian net worth scenario.

4. Perhaps most important, the company declared a 30cent divvy on June 17, suggesting that barely 2 - 3 weeks ago, they felt they were not only solvent but in a position to pay 30cents. DID YOU ATTEMPT TO CONTACT THE COMPANY BEFORE PUBLISHING THIS ARTICLE TO SEE WHY THEY WOULD DECLARE A 30CENT DIVVY 2 WEEKS BEFORE YOU TELL THE WORLD THEY ARE GOING BANKRUPT? Unlike your hit job on RWT which we hadn't heard from since May, I'm very curious how you get to a bankrupt scenario so soon WEEKS after they declared a divvy, when 2 weeks ago ABX & CMBX were roughly where they are today. In other words, If the company felt they were facing liqudity draining triggers based on indexes, why didn't they suspend the divvy on June 17. Doesn't make sense.

I clearly agree that CRZ has impaired assets and their value has dropped since 1Q. My problem is that you are able to broadcast dubious bankruptcy headlines on a public blog, based on quetionable market indices, without a response from the company, barely a couple weeks after they decaled a divvy. If your scenario turns out to be wrong, then at a minimum you owe the company's stakeholders an apology for using a well known public blog to push your short position.

Best Regards.