Chasing Value: Is Indymac back -- for real?

As one who was greatly embarrassed by making a premature recommendation (being kind) that investors give consideration to acquiring shares in IndyMac Bancorp (NYSE: IMB) prior to its dramatic collapse; I can ill afford to suggest that folks jump in now. However, I might just do that.

Yesterday IndyMac jumped about 20% as it was reported that CEO says IndyMac has 'turned a corner' finishing the day at $3.97 a share -- still a long way from its 52-week high of $37.50. "Given the decline in our stock price, some people have questioned IndyMac's survivability in the current environment," Chief Executive Michael Perry said. "I am here to tell you that I believe we have turned a corner and that our business is improving. We are now achieving profitability with this new production model, with all of our nine regional wholesale centers and 104 of our 152 retail lending branches being profitable in March," Perry said.

The message is clear from the top, with negative earnings and corresponding negative P/E ratio just about any turnaround would make this stock cheap. Perry is correct that the stock is priced for failure. What should the price be if Perry gets IMB back to profitability by the end of the year? A lot more than it is now.

The stock moved way up at the opening bell this morning trading to $4.20, so there are a lot of investors who share my view ... and then it traded down, so then again...

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of IMB.