cubanstockpicker (73.98)

Recent stocks Screaming SHORT ME!!!!!

February 22, 2008 – Comments (2) | RELATED TICKERS: HVT , CRM , USG

Fellow fools, I have been picking a handful of stocks that I think are poised for some serious shorting potential. The market will continue to trend downward, and some of my foolish outperfrom picks on stock that I believe will go belly up only show that the fed will have to bring the RATE down to 1% to start helping the eceonomy. Think Tech bubble, is this worse housing/credit/financial/homebuilder crisis worse or better?

One of the ones that I know everyone except a few people on this website can agree on is

CRM. The company has a P/E that couldnt even survive a whiff of bad news. They are doing their best to force feed the product to everyone. I get an email everyday telling me how they are discounting their software if I buy NOW. If that doesnt smell like a shorter from a mile away I am sure the downturn in business this year.

Next UP HVT. They came in with better than expected same store sales. When you consider theyre better than expected was above analysts already downgraded expectations. Lowered expectations may make a mediocre company reporting mediocre results look good. 25% of their stores are in Florida. LOL. The housing bubble central. I can more than guess that their beating their downgraded expectations goes in line that people buying foreclosed homes are having to retrofit it with appliances/cabinets and other hardware because disgruntled homeowners usually gut these homes when they are forced to leave.

BECN: I cannot imagine one good reason why this company is up. Theyre posted earnings show a clear indicator that it would be more than impossible to turn a profit. When you look at their gross marigns and operating margins, the picture becomes clearer. Oil,which is a major component of roofing materials is also still very hig cutting their PM even smaller.

USG: "We had anticipated what has become a multi-year downturn in the housing market," Foote continued. "Over a year ago, we began aggressively removing excess manufacturing capacity and cutting overhead expenses and reducing total employment. During the last 18 months, we have curtailed or closed 3.3 billion square feet of wallboard manufacturing capacity and eliminated about 1,250 positions. In the second half of 2007, we cut the level of overhead expenses by $24 million compared to the first half of the year. We continue to take steps to adjust our operations to market conditions. In December, we shut down the paper mill at our Jacksonville plant and we recently announced plans to close our 80-year-old Boston wallboard line in March."

They also commenced a leveraged buyback plan. Even when they swing to a profit, theyre market will become permanantly affeected due to the shutdown of that papermill.

IMB: A very resilient stock of late that keeps hanging in there when they reported that the only reason they made money was selling their REOs and servicing mortgages. If they arent underwriting/lending, they will be resorted to maintain their status as a clearing house of REO/foreclosed homes. Theyre operating margins went up and theyre profit was down, way down.

Theyre expected earnings in the future will stay as a fraction of theyr historical run of 05-06.

If RDN's latest report on how they will only be insuring Low risk mortgages means GUIDELINES have permanantly changed. No more 100%, 95% or even 90% which in eccense fueled the housing market. If someone has to buy and bring a 15% deposit, of which americans are not functionally capable of putting away any kind of money, means LONG TERM, no one will be buying a home, because the bond insurers, which are the S &Ls of this generation, WILL NOT ASSUME THE RISK of lending. AAnd if and when they do, it will be at considerably lower volume than before. Add to that, that FHA, which does borrow at 97.75% LTV is getting harder to finance everyday, because they had the "breakthrough Idea": of having a trained real underwriter sitting there and MANUALLY going over the file. Even then, FHA has its very tight limits.

1: Only one home, they dont do investor financing

2: Real jobs, with evidence of real checks being deposited

3: Financing has a hard cap and most homes still are over these caps, caps on loan limits are different county to county..

LONG TERM, WAY LONG TERM, when Americans learn how to save money, and as a very old and wise mentor of mine from Wells Fargo stated, start buying lioke the "old days" when people HAD to bring 20% down payment on a home or they werent going to buy.

The writing is on the wall.

I dont think I need to go into the bread and butter shorts like ABK, RDN, MBI, the cookie cutter home builders and Thrift mortgagers because we already know whats out there.

I will be a definite bear until the fed drops the rate to 1.0, which now is finding it tougher, because inflation, due to high costs on everything from milk, fuel, transport is preventing a massive cut that would help ease the credit crunch. Anyone who believes that hoyusing is just waiting for the big turn around is failing to see that the underlying fundamentals have severally changed.

 Just to think I ALMOST BECAME an optimistic bull at the beginning of the year when everyone including Cramer started with his little "they know something" button.

On another note, foreclosures are not even being reported yet in most counties across Florida, because attorneys and banks cant find a calendar spot in the court system. Collier county alone has a two year back log on foreclosure proceedings. People are now living in their homes without paying their mortgage and wil continute for the NEXT TWO years because the banks cant get them out until due process is served.

Scary how the trends will reflect how foreclosures have steadied as a market uptrend, when all it really means is that banks cant go any faster to foreclose because the court system can't service that high of a volume.