American Home Mortgage (Symbol: AHM) is waiving the proverbial white flag as shares freefell 90% on resumed trading—closing all the way down to $1.04.
The company announced that it’s looking into liquidating assets, as it can no longer fund mortgages.
Next stop, bankruptcy? That’s what Keefe, Bruyette & Woods analyst Bose George thinks.
When talking about the ability of American Home Mortgage to survive through this disaster, George said, “the chances are low.”
It’s time to throw in the towel on AHM. Lenders, such as USB AG, JPMorgan Chase & Co and Bear Stearns Cos, have walked away. The AP is reporting that some of the lenders are now demanding lent money back—perhaps a desperate last gasp to get back anything before AHM disappears.
On Monday, American Home Mortgage failed to deliver $300 million in mortgages to home buyers. The company expects to be unable to finance up to $500 million in additional mortgages.
Despite the almost obvious implosion, shares of AHM are up over 5% in after-hours trading. One last gamble anyone?
Another financial company, Novastar Financial (Symbol: NFI), took a hit today. Shares of Novastar Financial dove 25.44% on the day to close at $9.64. Just think, seven months ago NFI was at $120 and the stock was as high as $40 last month.
The canary in the mine has long died, but if you still have financial companies in your portfolio, just about every expert is advising you to get out.
My name is Jason A. Martin. I'm an investor/trader, financial writer and entrepreneur. This is my blog. I also run a social media integration & cross-media design company. If you'd like to follow me on twitter, here's the link: Jason A. Martin
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My name is Jason A. Martin and this is my investment blog. Back in Jr. High School I fell in love with an electrical wiring company's stock on Wall Street. After following the stock daily in the papers—the Internet wasn't around back then—I sent them a letter and they sent me back all sorts of wonderful information about their company.
In High School, we had a stock market contest. All the kids were picking companies that made stuff they consumed. When I announced my beloved company, I was laughed at. Little did they know that my company was going to be the subject of a takeover soon.
Long story short, I won the contest and have made money in the stock market, through real estate investing, currency trading and so forth.
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5 Comments
“Despite the almost obvious implosion, shares of AHM are up over 5% in after-hours trading. One last gamble anyone?”
I cannot imagine who the genius is that is actually advising people to buy American Home Mortgage stock. What are they thinking??
loan researcher
8/3/2007
I think it was a case of the “gamblers” coming in verses any financial advisement.
However, if someone were to have been advised to buy, I’d fire all those involved.
Jason Martin
8/7/2007
its up because investors have to repurchase the stock to cover their shorts, thats why there is minmal demand.
jl
8/28/2007
I think it may be something expected…
Pierluigi Rotundo
9/19/2007
However, I hope there won’t be any negative effects on the whole banking environment
Pierluigi Rotundo
Pierluigi Rotundo
10/15/2007
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