Countrywide

[CrushinFelt]

mmmmmm I love BofA

[Groty]

Yesterday, the WSJ speculated Buffett might be interested in CFC as an investment.

In 2002, Buffett made a direct investment in LVLT when it was on the ropes. I remember the deal was structured as a convertible with a big coupon (around 9%) and it was convertible into common at a 20% discount to market.

Today, we learn BAC is buying from CFC a 7.25% convertible preferred, with the conversion price about 20% below where the stock closed today.

The CFC deal sure looks like a Buffett deal. I wonder if he was intended to be the investor but decided not to close for some reason?

[DesertCat]

I'd be shocked if Buffett would touch Countrywide with a ten foot pole. Management seems untrustworthy, and he's not going to pay a premium so mgmt isn't going to view him as white knight. His level three investment was pure vulture investing. BOA isn't getting near high enough rate on that convertible to interest Buffett. Lastly there is no evidence Buffett has taken any position in BOA. Lou Simpsons purchases are reported on the same forms as WEBs, and the size of the position looks much more like a Lou purchase than a Warren.

[DesertCat]

for example, the brk forms indicate ownership of $3.3b of BNI, widely regarded as a recent Buffett purchase, but only $400m of BOA. If he was accumulating BOA, he'd petition to keep it under wraps, which the SEC allows him to do, and which he's done with BNI. Lastly, ownership of $400m of BOA is less than 0.2%, not enough to influence anything.

[maxtower]

The article that mentioned Buffet was interested, was misleading. It was speculating that he could be interested in portions of the countrywide, namely the loan servicing business. I doubt Buffet has any intentions of buying shares of CFC.

[DesertCat]

NY Times reporting CFC agreed to buy back loans from securitizations if they ever were modified, i.e servicer is forced to offer better terms/rate to keep borrower current. Never heard of this before, big potential liability.

[ahnuld]

[ QUOTE ]
NY Times reporting CFC agreed to buy back loans from securitizations if they ever were modified, i.e servicer is forced to offer better terms/rate to keep borrower current. Never heard of this before, big potential liability.

[/ QUOTE ]


Could you link this article please? I searched but couldnt find it.

[DesertCat]

Sorry i am on the road, and I don't have the link on my IPhone.

[DesertCat]

OK I'm back at my laptop. The article is Assurances on Buybacks May Cost Lender.

[maxtower]

Housing panic suggested that BofA is getting a risk free 7.25% for as long as Countrywide can pay, if they also hedge against bankruptcy by buying puts. Is this correct?