I purchased a bunch of new books on a variety of technical stock analysis subjects. I plan to digest as much of this information as I can so that I can quickly to help augment my trading!
The stocks look ready for more uptime again. In reading articles yesterday I noticed that LEND (Accredited Home Lending) had cut is workforce significantly and suspended all new loan apps in the US. This naturally sent the stock down. I checked it out and noticed that the price was around $6 and that the put options at $2.50 were going for $0.25. A 10% premium on an option over 50% out of the money! Wow, I thought this is a must sell! Then I checked the Yahoo financial data and they had a "price to book" of 0.29 or something! That generally means that the breakup value is worth over 3 times the value of the stock. Which generally indicates that even in bankruptcy the company is worth buying.
I was convinced this was a shot to take, but I figured that there had to be more behind the numbers for such a massive premium.
So I read through the past news items and through the rest of the numbers and it looks like LEND will just as likely be out of business completely by the end of the option period as anything else. They are losing money so rapidly that they could have more defaulted debt than their book value any day now.
And, of course, they are late on their Nasdaq filings which is always bad. And this is their 3rd time this year, so they either put up this month or they will be de-listed. That generally drops the stock about 50% or more I'd say!
The only thing holding LEND in place appears to be that they are essentially suing "Loanstar" to force them to continue with their merger plans which Loanstar has bailed on due to the fact that LEND has no value whatsoever. The odds of LEND winning that suit seems minimal and if it doesn't the odds of them falling below 2.5 seems pretty good.
Anyway, before you buy or sell make sure you know the company well! If not you will get burned.
God bless!
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