Merrill Lynch & Co., Inc. (MER.DL)

Watch375k (< 20) Submitted: 9/9/2008 10:52:11 PM : Start Price: $26.15 MER.DL Score: +14.91

So let me get this right:

1) The company over invested in subprime mortgages and mortgage companies over the past 5 years, funding ever increasing amounts of stated income option arm 100% LTV mortgages.

2) Continued to hold the risk of these loans, but removed the obligations off the balance sheet.

3) Has needed to raise capital two or three times, diluting common shareholder value.

4) Then sold $30 billion dollars worth of CDO's at 22 cents on the dollar, providing the financing to LoanStar for 75% of the $6.5 Billion purchase, only receiving approximately $1.75 Billion of actual cash, to remove and possibility of the shareholders receiving any benefit to any possible upside in the performance of the CDO's over time, capping any gain to finalize all losses.

5) MER then approaches Tomasek for more cash, agreeing to concede some of the financing so as to lower Tomasek's average cost in the MER position, the whole time while continuing to dilute the common shareholders. (Must be nice to be a big time investor).

6) Finally, MER has to settle with Massachusetts on the Auction Rate Securities fraud and also sells it's state in Bloomberg.

And this company is currently considered in as much of a financial peril as LEH. These sure seem like desperate measures.

And let's not for get that John Thain still has his job.