A History of Analyst Upgrades/Downgrades – Countrywide Financial (CFC), American Home Mortgage (AHM), Thornburg (TMA)

I just had to delay the after market report to get this post written.. the market report will come later tonight. 

It was mighty amusing to see the sell ratings on Thornburg Mortgage from Citigroup and AG Edwards today.  Oh OK, right got it.  Now I should no longer hold TMA and dump it.  Great work and great timing guys.  Or how about the sell rating on Countrywide Financial (CFC) out of Merrill Lynch this morning from Kenneth Bruce just days after he called the issues with CFC media sensationalization.  Again, fantastic timing.  Remind me again exactly what you guys get paid the big bucks for?  Apparently we are seeing the same thing in the lender business as we saw back in the internet bubble days.  Despite the lawsuits and the promises, the jail sentences… nothing has really changed.  It’s the same game.  Either these analysts are asleep at the wheel, incredibly incompetent in getting to the truth about the company’s they are paid to cover or flat out frauds.  Harry Domash wrote up an excellent piece today highlighting the downfall of American Home Mortgage (AHM) and the analyst upgrades/dowgrades along the way.  I’m sure there are other excellent articles out there from fellow bloggers that I have missed or just haven’t had the time to read so if anyone reading this has a link I’d be happy to post it here.  Below are histories of upgrades and downgrades for 3 lenders with plummeting stock prices (AHM has filed for bankruptcy).  It’s very interesting to see when the upgrades/downgrades were made.

Below is the history for Thornburg Mortgage (TMA).  What stands out to me here is the hold rating from  Deustche Securities, the buy rating from AG Edwards and the sector perform rating from RBC Capital Markets at the end of April.  These guys must take long vacations because it wasn’t until Aug 7th AFTER the stock plunged 30% over several days that Deutsche Securities was the first to downgraded the stock.  Three days later AG Edwards downgraded the stock from Buy to Hold!  As if they were just reacting to news that we all receive on these companies and not acting on the best inside research money can buy, the sell rating didn’t come until a full week later.  That was today.  The stock had already plunged another 60% before that sell rating came.  Job well done. 

Upgrade/Downgrade History from Briefing.com

thornburg tma upgrades downgrades history

This is a fun one. .. American Home Mortgage (AHM).  A lender that has filed for bankruptcy with investors heeding the advice of these brokers losing everything.  How about that, our good friend AG Edward showing up again!  This time recommending a buy on a company that would just a few months later declare bankruptcy.  Notice they last issue a downgrade to hold on May 1st, then nothing more… maintaining a hold all the way into bankruptcy.  Sorry for singling you out AG Edwards, but you guys are really on a roll here!

This has to be my favorite upgrade of them all.  Keefe Bruyette upgraded Countrywide just over 2 weeks ago after the company missed estimates and guided lower.  Not only that, but the CEO of Countrywide made the following comments in the conference call:

"During the quarter, softening home prices continued to affect many areas of the country and delinquencies and defaults continued to rise across all mortgage product categories as a result. Due to these adverse conditions, the Company incurred increased credit-related costs in the quarter, primarily related to its investments in prime home equity loans."

"We are experiencing home price depreciation almost like never before, with the exception of the Great Depression"

This sounds like a reason to upgrade to me! 

countrywide finacial cfc upgrades downgrades

5 thoughts on “A History of Analyst Upgrades/Downgrades – Countrywide Financial (CFC), American Home Mortgage (AHM), Thornburg (TMA)”

  1. Just my opinion, but….
    Back in the medieval times a king was considered a tyrant when he took advantage of his position to gain godlike wealth and riches from the poor and the innocent. But today, we just call this bonuses, executive compensation, and stock options for subprime loans and interest only loans.
    But the difference is the king is soon beheaded, the CEO collects his winnings and moves on … next?
    Case in point, Countrywide, has to hold value on their houses they are unable to sell to larger banks just to make sure their capital does show they should be in bankruptcy. So let’s see how the king did:

    According to Forbes online:

    Angelo R Mozilo
    Total Compensation
    $68.955 mil (#10)

    5-Year Compensation Total
    $160.14 mil

    Angelo R Mozilo has been CEO of Countrywide Financial (CFC) for 8 years. Mr. Mozilo has been with the company for 37 years and is the company’s founder.The 67 year old executive ranks 3 within Diversified Financials

    Education
    College: Fordham University BS ’60
    Graduate School: NA

    Performance Vs. Pay
    Rank: 68 / 189 Countrywide Financial

    6-Year Annual Total Return 33%
    Mr. Mozilo

    6-Year Average Compensation
    $27.71 mil 6-Year Return Relative to Industry 110
    6-Year Return Relative to Market 134
    Relative returns: 100 equals the market or industry.

    Angelo R Mozilo’s Compensation Vs. Diversified Financials Medians
    Salary $2.47 mil $0.70 mil
    Bonus $17.27 mil $1.42 mil
    Other $0.62 mil $0.53 mil
    Stock Gains $48.59 mil $0.75 mil

    Total Compensation $68.955 mil $7.77 mil
    Data Contributor
    Countrywide Financial
    (CFC: quote, news, executives)

    4500 Park Granada
    Calabasas, CA 91302
    California
    818-225-3000
    818-225-4051

    http://www.countrywide.com
    Angelo R Mozilo’s Ownership Of Countrywide Financial
    Industry Medians
    Stock Owned (% of Co) 0.22% 0.34%
    Stock Owned $46.3 mil $0.05 mil

    Countrywide Financial’s Stock Performance

    Total Return During Tenure 16%
    Relative to Market 110

    Sort List By:
    Rank | Name | Age | Company | Efficiency
    Total Compensation | 5 Year Compensation | Market Value

    Methodology:
    Compensation rank is based on total compensation for latest fiscal year. Total compensation for each chief executive includes the following: salary and bonuses; other compensation, such as vested restricted stock grants, LTIP payouts and perks; and stock gains, the value realized by exercising stock options. Efficiency rank is based on our chief executive’s performance/pay score. Ranks are given only to chief executives who have a six-year tenure and six-year compensation history. The most efficient rank is 1 and least efficient is 189. Compensation rank is based on total compensation for latest fiscal year.

  2. Very informative post but we in real estate have known about this pimp AZ for some time. The fact is now, and has been for several months, that CW is stalling short sales in order to receive a lions share of toxic asset relief. ALL REALTORS ARE BEING MADE AWARE OF THEIR CURRENT BUSINESS MODEL…….LOL….AND WILL AVOID REPRESENTATION OF ANYONE REGARDING CW WHETHER SELLER OR BUYER. YOU CAN FEEL SORRY FOR SELLERS, (AS WE WITH CONSCIENCES DO), BUT THE PIMPS AT CW HAVE LAID THE GROUND RULES AND THERE IS NO RECOURSE FOR ANY INTERESTED PARTIES. LET’S CONTINUE TO PRIVATIZE PROFITS WHILE PUBLICLY DISTRIBUTE LOSSES. CONGRATS TO CW! YOU ARE THE KING OF PIMP KINGS! THE PURPLE FEDORA IS IN THE MAIL!

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