At this time of heightened stress for UK mortgage banks/lenders and housebuilders, spare a thought for their US counterparts. Who still have it much worse.
HBOS might be down more than 72 per cent over the last year, Bradford & Bingley 80 per cent, but Thornburg Mortage in the States is down 97.2 per cent. From a high of $28 dollars in 2007, at close of trade Thursday, Thornburg shares were worth just 75 cents a piece.
The company specialises in jumbo mortgages – a category on the verge of subprime. Consider too the veritable disaster-smorgesbord of wholesale funding methods through which Thornburg aggressively grew its businesses: CDO issuance, commercial paper conduits and repo agreements with prime brokerages.
The company would have gone bust too (having triggered material defaults on all of its $10bn+ repo loans in March) were it not for a broader crisis on Wall Street and the collapse of Bear. While the headline news saving Thornburg from bankruptcy was a $1.3bn bond issue on March 25, the real saving-grace underlying that – triggered in part by the Bear collapse – was approval from US regulators on the 20th for Fannie and Freddie to buy up and guarantee jumbo loans.
Even factoring out default risk and liquidity issues, however, and Thornburg still gave reasons for its share price to be so dismally low on Thursday, when it reported its Q1 results:
Thornburg Mortgage, Inc. (NYSE:TMA – News), today reported a net loss before preferred stock dividends for the quarter ended March 31, 2008 of $3.306 billion, or a loss of $20.64 per common share, as compared to net income of $75.0 million, or $0.62 per common share, for the same period in the prior year.
Consider also that analysts consensus remains bleak. At 75c, the stock is “overvalued” Kevin Starke of CRT Capital told Bloomberg.
Related links
Thornburg reports loss of $3.31bn on writedowns – Bloomberg
Thornburg swings to a loss – WSJ