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.

4 comments:

Anonymous said...

Jim,
Long time reader and fan, thanks for restarting your blog. I didn't get a chance to subscribe to your service back in the buttonwood spec days, kick myself to this day. You nailed the financial debacle at least a year before the sh-t hit the fan. I remember pulling up the chart of FNM after reading one of posts when it was trading in the high 30's. You were all over the DNDN trade also.
Best of luck and good health to you in the future

JimK said...

thanks for reading

zoe said...
This comment has been removed by a blog administrator.
JimK said...

I deleted the last comment because it was spam