If not for the collapse of Washington Mutual (NYSE: WM) this week, I would probably not have posted this saga so soon after last Monday's report. However, since I was a shareholder of WaMu and thought there was value in it when I posted Chasing Value: Are you watching WaMu? I felt it was time to take my lumps.
I cannot go on ranting and raving about the failures and deceptions of others without making sure that I am forthright and transparent myself. I did post Chasing Value: Not -- WaMu one week later - ouch! but now WaMu is toast and so is some of my money.
Since I posted Serious Money: Tempting fate with 10 financials, the results of buying into the following pool of financial stocks at a time when the "hate 'em" factor was at a peak, with each passing day investors have found something more to hate.
The portfolio is losing 4.8% to date, not counting dividends. Some of my colleagues thought it was way too early to get back into the financial sector; seems that way now, and one read me the riot act for reporting the story so soon on MBIA Inc. (NYSE: MBI) being up substantially.
Surprisingly, even though Wamu is now history after the FDIC took over and JPMorgan Chase (NYSE: JPM) bought it out, and Lehman Brothers Holdings (OTC: LEHMQ) went bankrupt, I would have thought the results might have been even worse -- and that could happen before it gets better. This week six stocks are still up, two are down, and two are gone. The original prices are from July 29 and the follow-up is from September 26.
- Lehman Bros. Holdings (NYSE: LEH) -- $16.88 down 75% from its 52 week high of $67.73; down and out -100%. Barclays bought assets in bankruptcy.
- Washington Mutual (NYSE: WM) -- $4.43 down 89% from its 52 week high of $39.48; down and out -100%. FDIC took over collapsing company and sold assets to JPMorgan Chase (NYSE: JPM) for $1.9 billion.
- Merrill Lynch (NYSE: MER) -- $26.25 down 67% from its 52 week high of $79.72; closed Friday at $27.36, up 4.23%. Being acquired by Bank of America (NYSE: BAC).
The vultures are circling:
- Gramercy Capital (NYSE: GKK) -- $6.72 down 77% from its 52 week high of $29.45; closed Friday at $3.68, down 45.24%.
- Wachovia Corp. (NYSE: WB) -- $15.70 down 70% from its 52 week high of $53.10; closed Friday at $10.00, down 36.3%
- Citigroup Inc. (NYSE: C) -- $18.45 down 63% from its 52 week high of $49.90; closed Friday at $20.15, up 9.21%
- E*TRADE (NASDAQ: ETFC) -- $3.06 down 84% from its 52 week high of $19.39; closed Friday at $3.45, up 12.75%
- Newcastle Investment (NYSE: NCT) -- $5.88 down 72% from its 52 week high of $20.88; closed Friday at $6.25, up 6.3%.
- East West Bancorp (NASDAQ: EWBC) -- $12.46 down 67% from its 52 week high of $30.42; closed Friday at $15.21, up 22.07%.
- MBIA Inc (NYSE: MBI) -- $4.92 down 93% from its 52 week high of $68.98; closed Friday at $13.74, up 179%.
I will continue to report on this story as events unfold. This week we have witnessed the long overdue capitulation by President Bush that things are bad and getting worse. Obviously he was the last to know, even with all the briefings by the Federal Reserve and Treasury and screams from Wall Street and Main Street. The Congress has finally capitulated as Details of $700 Billion Plan Emerge.
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 MBI, NCT & did own WM.