Purchased TMA shares today

Jimbo · #1 08-14-2007, 11:06 PM

A friend and I bounce short term trading ideas off each other and he politely told me I was nuts. Picked it up at $7.72 and have 5% of my portfolio tied up in it. I about crapped a brick when trading halted but felt a lot better after the statement by the CEO on the Kudlow show.

It appears to have traded much higher in the after hours market. Just soliciting advice from the board here: If you were holding this position would you liquidate all or a portion of this position with a quick profit if possible or hold and see if it rises more in case the Fed adds more liquidity to the market?

I realize this was a pretty high risk move but had some extra profit from cashing GS Aug 170 puts that appreciated more than my expectations and felt that Thornburg was too good a stock with high quality paper to be lumped in with the financial landslide, even with all the analyst downgrades.

All honest opinions are appreciated.

Jimbo

adios · #2 08-15-2007, 01:53 AM

Hi Jimbo,

I'd take the quick profit and here's why. My understanding is that TMA does their borrowing to buy MBS via repos. When the value of the bonds falls to a low enough level TMA can get margin calls via the repo agreements that they entered into. I believe this is precisely what's happening now. Lower grade MBS is shall we say is quite illiquid at this point and thus the bonds TMA owns are nose diving. Someone pointed out to me how the repo dealers can really put the chingas to TMA and make a quick buck off of forcing TMA to liquidate. Also my understanding is that the TMA portfolio is 80+% IO loans thus they don't pay down and are risky if and when housing prices hit the skids. PM me for more info on this one if you'd like.

Jimbo · #3 08-15-2007, 10:20 AM

Thanks Adios,

I came to the same conclusion this morning about the time that the Fed made an anouncement about adding $$$'s then reversed their position. The Thornburg CEO was just on TV and while he was speaking the stock spiked up.

I pulled the trigger at $11.50 per share and am now the proud owner of my largest single day profitable trade of my trading career. WhooPee!!

Jimbo
ps: Even if goes much higher I am still happy as hell

adios · #4 08-15-2007, 12:30 PM

[ QUOTE ]
Thanks Adios,

I came to the same conclusion this morning about the time that the Fed made an anouncement about adding $$$'s then reversed their position. The Thornburg CEO was just on TV and while he was speaking the stock spiked up.

I pulled the trigger at $11.50 per share and am now the proud owner of my largest single day profitable trade of my trading career. WhooPee!!

Jimbo
ps: Even if goes much higher I am still happy as hell

[/ QUOTE ]

Extreme volatility in this one so it could go higher. Nice trade and I'd be happy as all get out too. To be honest more opportunities to trade in and out may happen too. Look at LEND volatility.

One thing that is ironic is that TMA at one time was the premier MReit, one where you'd except a lower yield due to the management and the nature of their portfolio Maybe it still is [img]/images/graemlins/smile.gif[/img].