investorgold2002

Corus Bankshares, Brush Engineered Materials: Two Winners Among Losers

I am betting that CORS, the Glickman's, and their very stringent loan committee that is intimately familiar with all of their loans, made above average decisions and will not be impacted as much as the market and the shorts are betting. Certainly, it could happen, but if it was really an imminent risk, the Glickman's and CORS would face major charges of enriching themselves via company cash when a collapse was imminent.
>>&g...
what major charges are you talking ? The most that can happen in most corporate mis-governance is a class action law suit , that will eventually end with monetary settlement. Happens all the time.

>>&g...
The developers, in the first place, have to justify obtaining the financing, regardless of what source and regardless if it is secured or not. Banks simply do not just hand out dollars to these developers. Additionally, at some point, even if it is a few years, things will turn around and the projects will be complete and units will sell. The developer could bail out now, but why? To lose all that has been put into the deal - which is sizeable from a personal standpoint for these developers - is not going to happen. Things might be tight for them, but they will wait around if they need to before defaulting. Therefore, I would surmise that CORS will come out with some battle scars, but will not collapse, despite the negativity facing this sector.

Again they made out secured loans on inflated collateral. So you give a loan of 100 million considering development is worth 100 million but then turns out project is worth Only 60 million. Who loses ?

Although writing off a loan will take time(years), the number of non performing loans will increase significantly this year and next year. This will increase their loan loss reserve...this year and next year

It is not hard to see what will happen to their regulatory capital ratios if their loan loss allowance goes from current 50 million or so to 300-400 million . And remember it can get to that 300-400 million
Loan loss provision is based on subjective judgements by management based on historical charge offs, etc.. So current calculation, is very skewed . They have never in their history taken such huge risk by giving out so many high value loans in HIGHLY inflated condo market. Factor that, loan loss provision seems rather oddly small number


>>&g...
Yes, there is great risk, but that is why CORS is currently yielding about 6% (excluding the special one-time dividend). If eating loans to the point of going under was a real possibility, I doubt CORS would continue their dividend payments to shareholders. For them, making a bad decision knowing what will happen in the end if it is bad is an almost definitive path to having to forfeit their monies received from the strategy and watching their many-multi-million dollar stake deteriorate.

Insider owning some 40% is good. But I do not work in securities industry. I have heard from many people the amount of manipulation that happens in securities industry. The heavy shorting, the announcement of $1 per share special dividend doesnt give me the confidence to invest or short this stock.
This special dividend is by no means a prudent measure when the entire housing market is down and going to be down in foreseable future and esp since they have seen experienced first time in their history an increase of their problem loans . So i dont know what the intent of management is ...ward off shorts?
i dont know. As i said, some stocks are manipulated by hedge funds and others in ways ordinary investors cannot and will not know.
just staying from those is the best thing to do for retail
Again, banking on Glickmans stake is not good idea. Glickman would have made >1 million dollar a year for several years, may have already sold millions in stock