TheStreet.com's Jim Cramer says Rich Pzena has a different take on the value of the beaten-down financial sector.If you think the world is coming to an end, you might as well read Rich Pzena's note from Pzena Investment's (NYSE: PZN) (Cramer's Take) earnings call -- he talks about how the world just might not be ending.
Rich has done excellent work his whole career and, in full disclosure, is a friend, and I don't seek out or have many friends on Wall Street. It makes the job -- telling the truth as I see it -- a little too hard.
Anyway, Rich has been wrong, or early, or whatever you want to call it, on the financials. Someone like Doug Kass, who has been dead right on the financials, might take umbrage to my even mentioning Rich's work, but Rich deserves respect for his unbelievably great work over the years.
I liked his conference call because no punches were pulled. He just admitted plain up that his quarter was awful, just terrible, as befits a money management company that invests in value, which now means the financials.
What I liked about what Rich wrote is that he says people forget that when they read about the obligations that Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take) have, they see the $5 trillion number and they freak out, but he reminds you that there is $7.5 trillion in home equity backing up those obligations, and the vast majority of it isn't going away. Not only that, but he reminds us that if every single regulator says that FNM and FRE are well capitalized, then what are you scared of, given that they are the ones -- not the media or the shorts -- that determine if more capital needs to be raised?
OK, those are his main points beyond pointing out the franchise values of outfits like Wachovia (NYSE: WB) (Cramer's Take). I don't agree with Rich; I think regulators say one thing and then can do another, and Fannie's and Freddie's losses will be horrendous.
I simply point it out because, well, no one else is, and I thought it was fair to hear what the lonely financial bulls are saying about their now-slaughtered herd.
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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