WaMu is an all out buy
Washington Mutual (NYSE:WM) has been a horrible investment and getting kicked to a new 52-week low serves CEO Kerry Killinger and every other board member right for dragging out subprime lending as long as they did. The Nation's largest Thrift hit $19.72 a share today, down 43% in the last month alone. The stock has hit a low and slowly, it will start to recover, you can count on it.
The big news today is that New York Attorney General Andrew Cuomo said he found a "pattern of collusion'' on mortgage appraisals linked to WaMu today. Add to it that Q1 2008 should see total losses and write-downs in the range between $2.7 billion and $2.9 billion and down the ship goes.
Investors and share holders are wondering if WaMu will ever recover all their outstanding loans and now with the eAppraiseIT, a subsidiary of First American Corp. (NYSE:FAF) scandal, everyone is bailing.
Washington Mutual is going to have to do something drastic.
1st Up - Fire CEO Kerry Killinger.
2nd - Put the company up for sale or start selling the pieces bit by bit.
Shares of WM are now the lowest they've been since 2000 and we suspect a bottom around $17.50 is plausible. Washington Mutual expects mortgage lending nationwide to slump to $1.5 trillion in 2008, the lowest in eight years, from an estimated $2.3 trillion to $2.4 trillion in 2007. The Mortgage Bankers Association estimates $1.9 trillion of originations for 2008.
WaMu's other businesses, including branch banking, credit cards and commercial lending, have been profitable this year, but a $498 million loss in home lending helped drive overall profit down 27 percent from January to September.
Message to WaMu Board: Time for action, get the share value under control.
The Stockmasters have been waiting to pounce on Merrill (NYSE:MER), Citigroup (NYSE:C) and WaMu (NYSE:WM). We think now is the time to make a small position in WaMu and let them fight the battle while you reap the benefits of buying at the bottom. Call me crazy for saying 'WaMu is an all out buy', but no risk, no reward.
Contributor at TheStockMasters.com
Disclaimer: The Author does not hold any positions or shares in the securities mentioned in this publication.
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