Friday, March 2, 2007

New Century (NEW)

Last night I wrote:

"Again I say WRT to New Century, this whole issue of them having to correct errors relating to how it incorrectly applied Statement of Financial Accounting Standards No. 140 - Accounting for Transfers and Servicing of Financial AssetsI and Extinguishment of Liabilities - stinks to high heaven. After scandals like Enron, how is that New Century and its accountants could fail to include the expected discount upon disposition of loans when estimating its allowance for loan repurchase losses?!? Coincident with the delayed annual report, these accounting issues don't engender a great deal of confidence in NEW's situation."

Tonight the U.S. Attorney is launching a criminal probe of New Century. My May 12-1/2 puts should do quite well Monday since the stock is down 30% this evening.

So, in additonal to waving a variety of red flags ahead of the market pullback earlier this week, this blog is two for two on subprime - having warned a day before about NFI and now NEW. It's not hard to figure out - not rocket science. You just need to follow the money and read the fine print. (shameless self horn tooting over.)

6 comments:

Kevin said...

Jim,

You're doing great work. I read your comments last night around midnight when you caught wind of the NEW story before anyone else. You deserve to toot your own horn!

CHRIS said...

Jim,
Great job on the NEW story. One small request I have regarding your blog. Would you be able to post the time you post a blog so it'd be easy to correlate you posts with other news release times. Thnks. Keep up the great work!

Chris

Jim K said...

Chris, the time comes up on the bottom. I see it, does it not come up on your browser?

Lauriston said...

Jim K

Congrats!! I thought NEW was overdone on the downside, but it seems never say never until it breaks the downtrend. Another 30% haircut? This is incredible!! You are gonna make a mint from these subprime issuers!! I have a feeling the bearish side is going to be winning for a some time to come, especially on the housing issues....

Jim K said...

i think the XBD, that we both warned about before the big market slide, was a signal of more than just a technical breakdown in the bull run. The brokers are going to get burned by the mortgage market as well and not just by subprime. Alt-A and, as Countrywide has indicated, even prime are becoming problems. As usual regulators are only now getting to announcing a "crack down" on the loose lending standards. A bit late to the game wouldn't you say?

Howard Lindzon said...

congrats - nice