terminator
Recycles dryer sheets
- Joined
- May 30, 2006
- Messages
- 230
WHI has been discussed before. Is anyone still following it?
I saw in late June they disclosed a material impairment of at least $80MM on one of their asset-backed loans. It appears the total loan balance of the impaired loan is about $140MM.
On one hand, that could wipe out the earnings for a whole year, but on the other hand the balance sheet shows equity of about $1.2B and 165MM shares, so the book value is about $7.25 (before the fallout from any impaired loans).
It's trading around $2.80 or so now so it seems that the market has decided that not only this one loan is bad but that they are expecting quite a few other bad loans too. (Heck, they'd need about $700MM in totally bad loans to get the book value down to market price.)
Based on the balance sheet it looks like they have plenty of capital to meet the necessary ratios even if there were quite a few other bad loans.
Earnings for the year could get wiped out and dividends could be cut going forward since I think they pay them based on the previous two years of earnings.
Anyway, in the interest of full disclosure I went ahead and bought some. Just curious if anyone else has thoughts on it.
I saw in late June they disclosed a material impairment of at least $80MM on one of their asset-backed loans. It appears the total loan balance of the impaired loan is about $140MM.
On one hand, that could wipe out the earnings for a whole year, but on the other hand the balance sheet shows equity of about $1.2B and 165MM shares, so the book value is about $7.25 (before the fallout from any impaired loans).
It's trading around $2.80 or so now so it seems that the market has decided that not only this one loan is bad but that they are expecting quite a few other bad loans too. (Heck, they'd need about $700MM in totally bad loans to get the book value down to market price.)
Based on the balance sheet it looks like they have plenty of capital to meet the necessary ratios even if there were quite a few other bad loans.
Earnings for the year could get wiped out and dividends could be cut going forward since I think they pay them based on the previous two years of earnings.
Anyway, in the interest of full disclosure I went ahead and bought some. Just curious if anyone else has thoughts on it.