Thornburg Mortgage (TMA) may not make it. The mortgage lender once has a market cap of well over $5 billion. Its shares are down to $.65 and its market value is only about $100 million. TMA raised $1.35 billion, but keeping its stock price up has proved difficult due to concerns about the housing market and more home loan defaults.
Thornburg made most of its loans to people who were well off. That makes its trouble all the more peculiar. It also raises the issue of whether other companies in the industry still have more profound problems ahead of them. Since the largest company in the sector is CountryWide (CFC), the Thornburg collapse may have lessons beyond its own walls.
CountryWide still trades above $4. That is down from a 52-week high of almost $39, but the shares have not fallen as far as TMA’s. Perhaps that is because Bank of America (BAC) is buying it.
Wall St. continues to question the wisdom the BAC move. That may have helped drive the shares of the money center bank to a 52-week low of $28, about half of its high for the period.
CountryWide may actually be worse off than Thornburg. It is more squarely in the troubled subprime market. It faces more large write-offs on both home loans and home equity loans.
If CountryWide did not have BAC support, its shares could be well below $1. Without the promise of a "bail out" and with a slew of federal investigations, CFC could be facing the end of its days as well.
The smoke signals from TMA say Bank of America paid too much for CountryWide, no matter how hard the company tries to defend the transaction.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks