TMA.
Thornburg Mortgage. This thing got HAMMERED recently, but today jumped up with some nice news. The good thing is with this one, unlike most penny stocks, is that its traded heavily...meaning you can get out if need be and not have to wait and wait and wait. Check out the news from Forbes today. I listened to the conference call this AM and immediately doubled up my position. My advice, get in, and close your eyes for 6 months.
Market Scan
Thornburg Finally Gets A Break
Maurna Desmond, 08.26.08, 11:40 AM ET
Accounting alchemy pushed troubled Thornburg Mortgage out of the red for the first time in awhile.
The beleaguered mortgage lender jumped to 55 cents from 40 during morning trading after it reported better-than-expected earnings due to big one-time gains from the sale of assets and the perverse effect of a new accounting rule, which requires the firm to record the $536.9 million decline in the value of its liabilities as an earnings gain. Without the added benefit of the new rules, Thornburg would have only brought in $22.7 million. Mortgage insurers Ambac and MBIA enjoyed a similar benefit recently.
Sante Fe-based Thornburg Mortgage (nyse: TMA - news - people ) reported earnings of $412.3 million, or 84 cents per share, vs. $78.1 million, or 66 cents per share, in the year-ago period. This is respectable considering the firm's aggressive fund-raising tactics, which increased the number of outstanding shares to 484.6 million common shares in the 2008 quarter from 119.3 million in the 2007 quarter.
The decrease in the per-share losses is principally due to declines in the liability related to Thornburg's Principal Participation Agreement, or the payback terms of its recent bond issuance, as well as a decline in other liabilities. On the upside, the firm also saw a $235.2 million net increase in the unrealized market value of its purchased adjustable-rate mortgage assets and hedging instruments.
A company representative could not be reached to clarify the impact of the new accounting rules on second-quarter earnings.
Thornburg, which specializes in originating and investing in jumbo mortgages that are worth more than $417,000, has been hurting since the middle of 2007 when the U.S. housing market began to sour. In June, the firm admitted that regulators are investigating whether the firm can continue after it posted a $3.3 billion first-quarter loss.
In early March, the firm said it had faced roughly $1.8 billion in margin calls since the first of the year. While the firm sold assets at fire-sale prices, some savvy investors may have profited from Thornburg's woes. At the time, Bill Gross, chief investment officer of Pacific Investment Management, said he had been buying millions of dollars of Thornburg's debt.
Net interest income, or earnings generated from loans and deposits, fell 48.0% during the quarter to $53.3 million from $102.3 million. However, income generated from fees and other charges jumped to $377.8 million from $6.8 million.
Credit ratings agencies downgraded Thornburg's books significantly during the three-month period ended June 30, which caused a $36.4 million decline in the carrying value of its mortgage-backed securities and a $1.1 billion slide in the seven weeks since. Although ratings agencies have different takes on how much these investments have crumbled, the company said the markdowns "adequately reflects any inherent losses."<!-- / message --><!-- sig -->
Thornburg Mortgage. This thing got HAMMERED recently, but today jumped up with some nice news. The good thing is with this one, unlike most penny stocks, is that its traded heavily...meaning you can get out if need be and not have to wait and wait and wait. Check out the news from Forbes today. I listened to the conference call this AM and immediately doubled up my position. My advice, get in, and close your eyes for 6 months.
Market Scan
Thornburg Finally Gets A Break
Maurna Desmond, 08.26.08, 11:40 AM ET
Accounting alchemy pushed troubled Thornburg Mortgage out of the red for the first time in awhile.
The beleaguered mortgage lender jumped to 55 cents from 40 during morning trading after it reported better-than-expected earnings due to big one-time gains from the sale of assets and the perverse effect of a new accounting rule, which requires the firm to record the $536.9 million decline in the value of its liabilities as an earnings gain. Without the added benefit of the new rules, Thornburg would have only brought in $22.7 million. Mortgage insurers Ambac and MBIA enjoyed a similar benefit recently.
Sante Fe-based Thornburg Mortgage (nyse: TMA - news - people ) reported earnings of $412.3 million, or 84 cents per share, vs. $78.1 million, or 66 cents per share, in the year-ago period. This is respectable considering the firm's aggressive fund-raising tactics, which increased the number of outstanding shares to 484.6 million common shares in the 2008 quarter from 119.3 million in the 2007 quarter.
The decrease in the per-share losses is principally due to declines in the liability related to Thornburg's Principal Participation Agreement, or the payback terms of its recent bond issuance, as well as a decline in other liabilities. On the upside, the firm also saw a $235.2 million net increase in the unrealized market value of its purchased adjustable-rate mortgage assets and hedging instruments.
A company representative could not be reached to clarify the impact of the new accounting rules on second-quarter earnings.
Thornburg, which specializes in originating and investing in jumbo mortgages that are worth more than $417,000, has been hurting since the middle of 2007 when the U.S. housing market began to sour. In June, the firm admitted that regulators are investigating whether the firm can continue after it posted a $3.3 billion first-quarter loss.
In early March, the firm said it had faced roughly $1.8 billion in margin calls since the first of the year. While the firm sold assets at fire-sale prices, some savvy investors may have profited from Thornburg's woes. At the time, Bill Gross, chief investment officer of Pacific Investment Management, said he had been buying millions of dollars of Thornburg's debt.
Net interest income, or earnings generated from loans and deposits, fell 48.0% during the quarter to $53.3 million from $102.3 million. However, income generated from fees and other charges jumped to $377.8 million from $6.8 million.
Credit ratings agencies downgraded Thornburg's books significantly during the three-month period ended June 30, which caused a $36.4 million decline in the carrying value of its mortgage-backed securities and a $1.1 billion slide in the seven weeks since. Although ratings agencies have different takes on how much these investments have crumbled, the company said the markdowns "adequately reflects any inherent losses."<!-- / message --><!-- sig -->
