Andrew

Haven't We Heard this Market Song Before?

TMA: Although the senior debt has doubled in value since the new financing went through, it's still probably the better investment over common and preferred. I sold my preferred and am looking elsewhere.

BSC: ARE you kidding on increasing valuation from here!!!
--JPM has already started absorbing the BSC mgmt team and letting go some employees. BTW, the BSC people that JPM is hiring get more JPM stocks to cover for the loss in value of their BSC stocks (not to mention a job when Wall Street is chopping everywhere).
-- Who do you think bought Jimmy Cayne's shares??? JPM owns over 42% of the outstanding stocks now. In the case of any future litigation, you don't need to hold the stock to qualify because the event has already happened.

-- Most of BSC's institutional clients, namely the hedge funds, have left. It's sad in a way.....BSC's coveted hedge fund clients turning against their own primary broker by pulling their money while shorting BSC's stock. May not be collusion, but definitely a lesson for other investment banks.

As for the argument about BSC's book value, my analogy is this:

A guy who makes $100,000/yr buys a $2,000,000 with $20,000 down payment (alarms bell should be ringing). The house is fantastic and in a great neighborhood. The guy loses his job, and misses payment on his house for a few months. The house may still be worth $2,000,000, but how much of it belongs to the guy? The answer is less than zero, because even if he sells his house for $2,000,000, he doesn't have enough equity to pay for the selling costs. His best option is to take the $1,000 cash from the mortgage holder and vacate the home without trashing it.

The cruel joke here is the eery similarity between Wall Street and Main Street with regard of debt leverage.....one of the basic lessons in Econ 101.

Thornburg Mortgage Must Sell Its Soul to Stay Afloat

If one is really believe TMA as a going concern and good operator, then you may want to take a look at their callable sr. debt, which is $.39 on the dollar with 8% yield.

The question: is TMA a sinking ship even with new capital?

Thornburg Mortgage Must Sell Its Soul to Stay Afloat

if anyone is interested in new investments in TMA, then they should look at NLY.....much less distressed.

TMA i believe will survive as an entity, but investing in it is kind of like living along the Gulf Coast.....don't live in the basement apartment.

Sunyata, I see your point now.

Thornburg Mortgage Must Sell Its Soul to Stay Afloat

I don't believe reverse stock splits or buybacks will increase the value to the common stock any time soon.

TMA's earnings available to common share holders will be limited for years (if at all) because:
- They have to pay 12% for the $1B, which will eat into the mortgages they are buying/generating.
- They will no longer be able to leverage 20x in the post credit bubble world, which again eats into the future growth potential of mortgage reits.

The only way I see current shareholders make out is if the value of current assets increase in value. With the housing market still going down, i don't see this happening for at least a year.

full disclosure: I am long tma preferred.

So Much for That Mortgage REIT Bull Market

Thanks for sharing Mark, I also hold NLY and bought some TMA.pr.f last week at the "bargain price" of $7.

The only thing that will help mortgage reit unit prices now is government intervention.....Fed start buying mortgages.

Beyond the short term panic, these reits will face a tough recovery over the next few years because of a credit contraction in US financial system.

Despite of recent criticism of the Fed, I believe it is doing the right thing for long term economic growth by deflating the credit bubble. I believe they will: let the weakest players die; severely wound the average, and scar the strongest (at least enough to keep them in check for another 10 yrs). However, I do believe we are getting close to the end of the lesson at this point. Afterall, this is an election year. I believe NLY will be a survivor, although I'm not sure if it will break $20 any time soon. I'm going to be content in collecting my 5%ish yield. As for TMA, we'll find out over the next couple of weeks whether they are one of the survivors in the financial jungle or merely one of the weak.

Hey, here's a hot tip......try getting into commodities, oil and gold.....it's really working well.......no way will they go down from here because they are finite resources.