Stock Discussion - WaMu

**sweeps** · 01-09-2008, 07:28 PM

Ah, catching the falling knife. If you're confident that WaMu is a solid company and should be invested in, my suggestion would be not to put all your money in it at once. Buy some now... see what happens... if it keeps going down, buy some more.

**atomicrc11** · 01-10-2008, 06:14 AM

If you are going to be investing in individual stocks I would recommend something that pays a dividend. Bank of America (BAC) and Coca Cola (KO) are ones that I have owned for years. It is only a couple shares that were bought for me when I was younger, but I am still holding them and getting the dividend.

**Broken Arrow** · 01-10-2008, 07:29 AM

Well, charts tell you what happened and possibly why, but they don't tell you what will happen next. For that, you will have to pore through the fundamentals and some technicals just to get an idea of how it may perform eventually.

For example, while it's true that it looks super cheap, their balance sheet is frightening. They've got a lot of debt, and very little equity left to leverage if need be. That means it's a company that I think will under-perform for some time, even when the financial sector finally recovers.

Cash flow looks OK, but I only have 2005 and 2006 to look at right now. That's also assuming that they didn't fudge the numbers somehow to make it look pretty.

I don't know anything about their leadership though, or what their current strategy is. You'll want to pore through their 10-k and 8-ks.

I didn't do anything more than look up their stock ticker and a few stats, but from what little I've seen, my opinion is that it's a HOLD. I think there are better financials you can buy into, but if you already got some, I'd just hang on to it.

And as always, I am just running my mouth. PLEASE oh PLEASE don't mistake it as actual investment advice.

**Broken Arrow** · 01-10-2008, 07:44 AM

Originally posted by atomicrc11 View Post

If you are going to be investing in individual stocks I would recommend something that pays a dividend. Bank of America (BAC) and Coca Cola (KO) are ones that I have owned for years. It is only a couple shares that were bought for me when I was younger, but I am still holding them and getting the dividend.

Dividend investing is certainly one strategy, especially when your goal is passive income. However, it's not the only strategy, and depending on your goal, not the ideal strategy either.

That said, BAC and KO are strong dividend stocks to have and I would sleep well at night with them.

**tripods68** · 01-14-2008, 10:13 AM

Melt Down

When I worked for Wells Fargo Bank many years ago, WM came in Northern California pretty strong. They have excellent products (low fees) IMO better than Wells Fargo. Sorry guys

But VM products were better. They took many of our customers away. WFC charges tons of fees, which I won't go there.

But with th subprime meltdown financial stocks has been pummelled, WM, WFC, and BOFA are no exceptions.

WM had $1.6 Billions writedowns 4th qtr which will lower Net Income. They also noted that they will continue to write downs more in the future. They also cut their dividends (from 56 cents to 16 cents), which means they are trying to hold on to their cash. They also cut 2600 positions on loan departments. Overall they cut or eliminated 10,000 jobs since 2005 to reduced their operationg expenses. WM Net Income down significantly as of Sept 30-07.

In Millions 30-Sep-0730-Jun-07 1-Mar-07 31-Dec-06
Net Income 187,000 830,000 784,000 1,057,000

They also sold or borrowed (collaterized asset) worth $26 Billions to cover their losses. They have secured up to $50 Billions asset (collaterized or investment) for rainy day.

These came from 8-K report on yahoo.com. Do your own reading and don't take my just my word. Luckily, I just didn't have nothing else to do for an hour.

The upside though, I think the WM stocks is at a discount $14.00 per share. It will bounce back eventually, although it might not be for a while. My advice follow the company's fundamental for several quarters; pay attention on net income. They still have excellent product, 51% of income revenue comes from deposits. They sold many (if not all) of their subprime assets and focused more on higher FICOs customers (above 700 scores). They still carry some mortgage bonds or investments but ONLY with higher quality rating.

Having said that, I'm not a WM hater. I like WM price at this bargain price if your going for Long. Proceed with caution. And do more research.

**simple987** · 01-14-2008, 03:39 PM

Some are predicting that Washington mutual will fail pretty soon, and/or be bought out by another bank. If I had bought stock, what would happen to it?

**tripods68** · 01-14-2008, 05:47 PM

Originally posted by simple987 View Post

Some are predicting that Washington mutual will fail pretty soon, and/or be bought out by another bank. If I had bought stock, what would happen to it?

I've not hear that one yet, but that is certainly a possibility. The price has to be so low to be attractive for takeover. The perfect example is BOFA buying Countrywide at significant bargain price last week, but they also inherent all Countrywide's bad loan losses. This certainly will put downward pressure on BOFA stock price through earning per share. It was daring moved (no doubt) on their part acquired CW to show to the financial market stability and confidence back to the mortgage industry. But it could also the be biggest Bonehead moved by BOFA if doesn't work out. With the meltdown to continue this year, who knows where, or how WM will emerge from this mess.

**Broken Arrow** · 01-15-2008, 03:53 AM

Originally posted by simple987 View Post

Some are predicting that Washington mutual will fail pretty soon, and/or be bought out by another bank. If I had bought stock, what would happen to it?

Beware of predictions, especially from those who offer conflicting outcomes. If buy WaMu now, and it fails later, you lose money. If WaMu gets bought out, you'll probably make money. So, which is it?

**sweeps** · 03-07-2008, 04:25 PM

Washington Mutual melting down

**jc3900** · 03-07-2008, 05:21 PM

Yeah I don't know, like a poster said above this is like catching a falling knife except catching it with your heart. From what I hear, record foreclosures are ahead of us and the tense credit crisis could last until 2009. It could be a good bet but you must realize that WM running around begging for cash doesn't sound like a good fundamentals situation to be in.

I found this quote in an article by wall street examiner.

Bear In Mind › Washington Mutual and Countrywide: Wiped out?

Let’s start with Washington Mutual’s portfolio, shall we?

Option ARMs $63.4 billion

Loans with combined loan-to-value over 80% (and no insurance) $7.5 billion

Home equity loans and home equity lines of credit $15.6 billion

Interest-only loans $11.7 billion

Total exposure: $98.2 billion

You can find all these numbers on page 79 of their last annual report found here.

Now the way to assess the likelihood of insolvency would be to divide their total equity by this total exposure. It is more accurate to use “tangible equity” (which subtracts intangible assets that have no value in liquidation).

Tangible equity: $14.4 billion (Source: Yahoo Finance)

Just looking at this, I would say that if they take a big enough hit on their exposures, they could take a big fall. Does anyone know how much their income is per quarter.

**jc3900** · 03-11-2008, 10:39 AM

Ok, after looking a little more in to this story, Goldman Sachs and Buffet are offering a possible cash infusion. Since goldman sachs and buffet seem to have a midas touch on them, I would say that there could be more room to fall but in the long term it will probably be a good bet. Of course today, WM is up 17 percent so a good chunk of opportunity was missed.

**aida2003** · 03-11-2008, 12:03 PM

Maybe the WaMu will not file for bankruptcy, but there could be a good chance of being bought. Back in Jan. there were talks about merger with MorganChase, but probably the talks stalled for time being. Maybe instead of the merger, Morgan will do an acquisition instead if/when WM stock price goes down more

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We got BAC though we started investing at bad time...I wish I had a crystal ball at the time

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Stock Discussion - WaMu