Tuesday, September 16, 2008

Short Idea - Wells Fargo

This stock is insane. Earnings are down around 40% from its peak and yet the stock is near its all-time high. I could go into much more detail on this company but will leave it at that.

Of course I shorted this pig waaaay too early.

I bought more puts today - Jan 30s at $3.20.

These puts are *expensive* but so were Lehman puts, Bear Stearn's puts, Fannie Mae puts,....

Just in the past few days, Wells Fargo announced about $500 million in writedowns tied to Fannie Mae preferreds and losses from Lehman's bankruptcy. What did the stock do?

Today it closed up 3.93 to 34.93!

As far as I am concerned, Wells is playing a shell game with their non-performing loans. At some point soon it'll be:

Damn, that was a gratuitous swipe at holy matrimony!

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