Monday, September 08, 2008
“Equal-Weight” a Wipeout? The Least Helpful Calls You Will Get Today
The least helpful calls you will get today will all be about two companies in the same business, and they will be so unhelpful it will make your head spin.
We refer to the inevitable price target reductions and recommendation downgrades of not only the common stock of Freddie Mac and Fannie Mae, but their recently issued, so-called “preferred” shares, as well.
Unlike most “unhelpful calls” we here at NotMakingThisUp highlight, these calls will not come from only one firm. They will come from many of Wall Street’s Finest.
Already one has slashed his ratings on the two stocks from “Buy” to “Sell,” as if that matters, while a second has gone to a positively mystifying recommendation of “Equal Weight.”
As today’s Wall Street Journal reports:
Under the plan, the government could wipe out most of the value of the common shares by buying nearly 80% of both companies “at a nominal price.” That would leave common stock holders with the remaining 20%, or one-fifth of what they owned on Friday.
How do you “Equal-Weight” a wipe out?
I Am Not Making This Up
© 2008 NotMakingThisUp, LLC
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Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 7:40 AM