Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and I seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

If you had followed my suggestion back on April 4th to sell short shares of Coast Financial Holdings Inc. (NASDAQ: CFHI) -- when it traded at $6.90 -- and cover your position this morning at $2.43, you could lock in a return of 184% -- pretty good for about seven weeks.

I have done consulting work for the Federal Deposit Insurance Corporation (FDIC), a leading bank regulator, and I worked for a large bank that got in trouble with bad real estate loans in the late 1980s. Yet I have never seen a bank regulator order a bank's board to fire its CEO. But according to the HeraldTribune, that is exactly what the FDIC and Florida Office of Financial Regulation ordered CFHI's board to do. And it complied -- replacing Brian Grimes with Anne Lee.

Continue reading Short Stories: Coast ordered to fire CEO

Short Stories: Coast ordered to fire CEO originally appeared on BloggingStocks on Wed, 30 May 2007 09:56:00 EST. Please see our terms for use of feeds.

Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and I seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

Monday the Wall Street Journal noted that two of the worst performing stocks in the first quarter were NovaStar Financial, Inc. (NYSE: NFI) and Bally Total Fitness, Inc. (NYSE: BFT) -- both of which I suggested shorting last year. Looking for some new short ideas? Last month I was in Florida where the real estate market is tanking.

Reading about a busted residential real estate development there in the Sarasota Herald-Tribune gave me another idea for short stories: Coast Financial Holdings, Inc. (NASDAQ: CFHI). Although its market capitalization has tumbled 59% to $44.9 million in the last year, CFHI could file for bankruptcy. How so? In a nutshell, Coast lent money to Florida real estate developers who are going belly up. As a result it's at risk of not having enough cash to pay a $12 million portion of its long-term debt which is due this year.

Continue reading Short Stories: Will Coast Financial drown in a sea of bad debt?

Short Stories: Will Coast Financial drown in a sea of bad debt? originally appeared on BloggingStocks on Wed, 04 Apr 2007 17:29:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Bank of America upgraded The Kroger Co (NYSE: KR) to Buy from Sell with a $29 target. Due to streamlined distribution and reduced SG&A expenses having closed the productivity gap with Wal-Mart Corp (NYSE: WMT), the firm believes Kroger is well positioned to accelerate growth and modestly increase operating margins.

• JP Morgan upgraded shares of Quest Diagnostics Inc (NYSE: DGX) to Overweight from Neutral as they not only believe the company's results will outperform expectations over the next few quarters, but that management will become more aggressive in the acquisitions market.

• Sterne Agee upgraded Coast Financial Holdings Inc (NASDAQ: CFHI) to Hold from Sell, with an $8.50 target.

• Goldman Sachs upgraded shares of Nova Chemical Corp (NYSE: NCX) to Neutral from Sell, with a $12 target, citing the potential sale of Nova's styrene business.

• Citing the possibility of a merger with Abitibi-Consolidated Inc (NYSE: ABY), Bowater Inc (NYSE: BOW) was upgraded to Neutral from Sell at Bank of America and to Buy from Hold at Soliel Securities.

Analyst upgrades 1-29-07: Kroger gets a Buy originally appeared on BloggingStocks on Mon, 29 Jan 2007 10:55:00 EST. Please see our terms for use of feeds.