Wednesday, October 20, 2010
H&R Block ($HRB) Sinking to oblivion
This was a $14 stock last week. It finished today at $10.95. Without help it could go to Zilch. Why? Remember its Option One subprime mortgage division? Yes, it unloaded that operation in 2008, but the tax preparation company still has potential exposure of over $30 bln from the crappy loans it once made through Option One. Block has reserved less than $200 mln for potential losses in a mortgage put back scenario. So no wonder that Block's CDS spread has widened out to around 700. This is the bond market signalling for possible disaster in this company. Poor old Henry Bloch.