Monday Will Be Interesting

Two of my largest holding were featured this weekend, should make Monday... very interesting.  GNW was featured in Barron's, that has to be all good. CIM finally filed their 2011 10-K (just a year late), but at least it showed no material restatements (Chimera Investment Corporation Files 2011 Annual Report on Form 10-K and Restated Prior Periods).

I read through it.  I have to say that after reading any 10-K, you would probably never invest in a stock again as they do the basic CYA by listing every risk factor imaginable.  It did illustrate to me how risky CIM could.  First, their largest holding (by far) is Residential Mortgage Backed Securities (RMBS).  We all know those got a dirty name in the Global Financial Crisis.  Now all else being equal, I think RMBS' would be bad to hold in times of rising interest rates.  They are essentially like a bond, so their value decreases as rates increase.  But all else is not equal.  It does appear CIM wrote down the value of those RMBS'.  So if they are holding them at 50 cents on the dollar and they recover as the economy improves to 75 cents on the dollar, that can offset the interest rate impact.  I will continue to hold them, largely due to faith in Leon Cooperman and his 22 million shares.

Not much else is new (I did go skiing today in Vermont).  Indiana won the Big Ten title in a hotly contested battle with Michigan.  I could see Michigan fans being unhappy with some calls down the stretch, but the Big Blue had several chances to ice the game at the line.

The stock I am getting closest to buying is RIG.  They seem really cheap for a service that is in demand.

Oh, I did have another aha moment this weekend reading Barron's (what a great magazine).  As my readers know, I have been tinkering with the idea of buying options (perhaps on MFI stocks).  I have been following about 20 stocks and have noted that they are highly volatile and often lightly traded.  I may still try it some day, but not at Dow 15,000!  But the Barron's article mentioned a few securities that were issued during TARP that are warrants which work like options.  Except they do not expire until 2018.  They look like something I would be VERY interested in.  I want to learn more about how they work, and I want to wait to buy them at the "right" time (read during some time of panic between now and 2018... think we will have one?).  Here are a few that I found.  If anyone can give me a consise explanation on how these work (or if you know of others), it would be much appreciated:

• WFC-WT
•  BAC-WTA
•  COF-WT
•  JPM-WT