BofA Invests in CFC

[Coronita]

 

Fat, thanks for the insight, we're pretty much on the same page with the cars. I also like the A3, only complaint is it is a little small and I would like more power. The 335 may be the best turbo beast available, I need to test drive one to find out, maybe I'll love it. But I agree there are so many 3series cars out here in SD that it comes across as a commoners car. 45K is a lot of money to spend on a car that everyone already has. I want to see the 08 Evolution when it comes out, in the pictures it looks more attractive than the current model. What do you think about the Mazda Speed3? I've been meaning to test one of those.

 

I'm going to be a "jerk" and hijack this thread to respond to a hijacked thread (sorry).

OT Comment: I haven't drove the mazda speed 3. But, my friends have said it's interesting. I prefer the sedan of the mazda 3, but they only offer the mazda speed 3 in the hatch. Too bad they canned the mazda speed 6. 

There isn't that much selection right now imho. Which is fine for me, because I'm still waiting. Hoping things line up right for an S5. I think I misposted before. I meant to say the TT and A3 2.0T only come in FWD, not the A5/S5/RS5. The TT in the AWD configuration will be a 3.2 version. The A5/SG/RS5 should be AWD (or have an AWD option), with RWD bias. Also, these pushed back the engine to achieve better weight balance. (Current A and S lines are very nose heavy)

 

There is one correction: There will be one twin turbo coming out soon. Skyline GT-R. But $80k for a Nissan might be absurd 🙂

—–

 

On topic: CFC's rally really faded pretty quickly. It will be interesting to see what happens tomorrow.

 

[Anonymous]

Good call on the S5, looks interesting. When CFC drops below $10 I’ll be in great position to buy the S5 (or about any car I want). What about the Infiniti G37? Seems like more bang for the buck.

Last night’s uptick in CFC was just a short squeeze based on the BoA news. We are going to this cycle repeated numerous times on its inevitable spiral down. These are great opportunities to short if you see a 20-30% spike up, cause you know its temporary.

[Anonymous]

Good call on the S5, looks interesting. When CFC drops below $10 I’ll be in great position to buy the S5 (or about any car I want). What about the Infiniti G37? Seems like more bang for the buck.

Last night’s uptick in CFC was just a short squeeze based on the BoA news. We are going to this cycle repeated numerous times on its inevitable spiral down. These are great opportunities to short if you see a 20-30% spike up, cause you know its temporary.

[Anonymous]

Good call on the S5, looks interesting. When CFC drops below $10 I’ll be in great position to buy the S5 (or about any car I want). What about the Infiniti G37? Seems like more bang for the buck.

Last night’s uptick in CFC was just a short squeeze based on the BoA news. We are going to this cycle repeated numerous times on its inevitable spiral down. These are great opportunities to short if you see a 20-30% spike up, cause you know its temporary.

[wsm]

I think CFC is too big to go to BK. Some of those banks will try to capture it cheap before it went to BK. I just wonder if anyone would recommend an entry porint for this stock ? $20 , $15 or $10 ?

[wsm]

I think CFC is too big to go to BK. Some of those banks will try to capture it cheap before it went to BK. I just wonder if anyone would recommend an entry porint for this stock ? $20 , $15 or $10 ?

[wsm]

I think CFC is too big to go to BK. Some of those banks will try to capture it cheap before it went to BK. I just wonder if anyone would recommend an entry porint for this stock ? $20 , $15 or $10 ?

[capeman]

But it has put a higher floor on CFC's potential price decline, even if it's only a couple of bucks.

There is no higher floor due to that deal. It just gave BAC a security net and shorting opportunity on their investment. Remember they get preferred shares so they get the goods first in a liquidation pulling the floor out from under the common shareholder. They just screwed the longs and for that put a lower price floor on a BK.

[capeman]

But it has put a higher floor on CFC's potential price decline, even if it's only a couple of bucks.

There is no higher floor due to that deal. It just gave BAC a security net and shorting opportunity on their investment. Remember they get preferred shares so they get the goods first in a liquidation pulling the floor out from under the common shareholder. They just screwed the longs and for that put a lower price floor on a BK.

[capeman]

But it has put a higher floor on CFC's potential price decline, even if it's only a couple of bucks.

There is no higher floor due to that deal. It just gave BAC a security net and shorting opportunity on their investment. Remember they get preferred shares so they get the goods first in a liquidation pulling the floor out from under the common shareholder. They just screwed the longs and for that put a lower price floor on a BK.

[davelj]

capeman, I’m confused. Explain to me the “shorting opportunity on their investment.” If BAC wants to hedge their recent debt infusion they can use CDSs. If they wanted to short CFC’s common stock, they would have just shorted it, rather than going long convertible preferreds first. If BAC was truly bearish on CFC, there are much more efficient ways of making money on the situation than infusing debt and converts. I’d like to see your logic here.

That “they get preferred shares so they get the goods first in a liquidation” is factually correct but empirically naive. Go back and review the handful of situations from the last 10 years where a depository has failed and handed the keys over to the FDIC for liquidation, and tell me how much the preferred holders received. I’ll save you the work: less than 20 cents on the dollar on average. If you go back to the early 90s it’s less than 10 cents. Bottom line: preferred shareholders, for the most part, get wiped out when banks fail. BAC knows this. For whatever reason, BAC actually thinks CFC is going to survive and they’ll make money on this deal. I think CFC will survive but my guess is they get re-capped (again) at a lower price.

In any case, we’ll find out soon enough…

[davelj]

capeman, I’m confused. Explain to me the “shorting opportunity on their investment.” If BAC wants to hedge their recent debt infusion they can use CDSs. If they wanted to short CFC’s common stock, they would have just shorted it, rather than going long convertible preferreds first. If BAC was truly bearish on CFC, there are much more efficient ways of making money on the situation than infusing debt and converts. I’d like to see your logic here.

That “they get preferred shares so they get the goods first in a liquidation” is factually correct but empirically naive. Go back and review the handful of situations from the last 10 years where a depository has failed and handed the keys over to the FDIC for liquidation, and tell me how much the preferred holders received. I’ll save you the work: less than 20 cents on the dollar on average. If you go back to the early 90s it’s less than 10 cents. Bottom line: preferred shareholders, for the most part, get wiped out when banks fail. BAC knows this. For whatever reason, BAC actually thinks CFC is going to survive and they’ll make money on this deal. I think CFC will survive but my guess is they get re-capped (again) at a lower price.

In any case, we’ll find out soon enough…

[davelj]

capeman, I’m confused. Explain to me the “shorting opportunity on their investment.” If BAC wants to hedge their recent debt infusion they can use CDSs. If they wanted to short CFC’s common stock, they would have just shorted it, rather than going long convertible preferreds first. If BAC was truly bearish on CFC, there are much more efficient ways of making money on the situation than infusing debt and converts. I’d like to see your logic here.

That “they get preferred shares so they get the goods first in a liquidation” is factually correct but empirically naive. Go back and review the handful of situations from the last 10 years where a depository has failed and handed the keys over to the FDIC for liquidation, and tell me how much the preferred holders received. I’ll save you the work: less than 20 cents on the dollar on average. If you go back to the early 90s it’s less than 10 cents. Bottom line: preferred shareholders, for the most part, get wiped out when banks fail. BAC knows this. For whatever reason, BAC actually thinks CFC is going to survive and they’ll make money on this deal. I think CFC will survive but my guess is they get re-capped (again) at a lower price.

In any case, we’ll find out soon enough…

[capeman]

Good luck to them on passing CDS paper. People aren’t touching corporate paper with a long pole at this point. They received a Preferred stock point of conversion at $18. The price can be altered by BofA to get more shares if liquidation occurs. So say they get 111 million shares or ~14% of the company at $18 but if the stock goes to $9 they get double the shares in conversion. If the stock goes to near Zero they screw the common stock holders and take what they’ve wanted all along which is the servicing unit. You can’t tell me that getting in at $18 when the stock was $21 then seeing it pop to $26 on volume of over 140million shares the next day that they weren’t shorting CFC into the hole on that. To top it they get a higher rate dividend than the borrowing rate so they are pretty much light of risk and the first vulture to the body in a liquidation event.

[capeman]

Good luck to them on passing CDS paper. People aren’t touching corporate paper with a long pole at this point. They received a Preferred stock point of conversion at $18. The price can be altered by BofA to get more shares if liquidation occurs. So say they get 111 million shares or ~14% of the company at $18 but if the stock goes to $9 they get double the shares in conversion. If the stock goes to near Zero they screw the common stock holders and take what they’ve wanted all along which is the servicing unit. You can’t tell me that getting in at $18 when the stock was $21 then seeing it pop to $26 on volume of over 140million shares the next day that they weren’t shorting CFC into the hole on that. To top it they get a higher rate dividend than the borrowing rate so they are pretty much light of risk and the first vulture to the body in a liquidation event.

[Author]

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