Hit the keys certain way and that's what you will hear. Which is why I expect a RATHER MASSIVE short squeeze in Downey Financials.
All the RIGHT notes have been hit.
Do: DSL is still paying dividend;
Downey Financial Corp. canceled its plan to suspend its quarterly dividend Friday, saying instead that the payout would be sharply reduced, citing its steep losses on the slumping California housing market.
Re: Modifications everywhere and likely to be a keyword. BAC is releasing super big news about not foreclosing people and modifying loans: (BN) *BANK OF AMERICA COMBINED SEES MODIFY AT LEAST $40B IN...
Mi: Even the bankrupt Mortgage insurers are "submitting plans" allegedly to stay solvent:
April 28 (Bloomberg) -- Radian Group Inc., the third-largest
U.S. mortgage insurer, submitted a plan to Freddie Mac and Fannie
Mae to restore the rating of its claims-paying ability.
Raising its rating to AA ``will be a long-term endeavor,'' Philadelphia-based Radian said today in a statement distributed by PR Newswire.
Fa: GSE is "promising to help" CA jumbos Buy Buy Buy: McLean, VA – Freddie Mac (NYSE: FRE) has agreed to purchase billions of dollars of new conforming jumbo mortgages with original loan amounts up to $729,750 from Wells Fargo Home Mortgage, Chase, CitiMortgage and WaMu. Freddie Mac conforming jumbo mortgages can be used to finance properties in hundreds of high cost markets designated in the Economic Stimulus Act of 2008 President Bush signed on February 13.
Based on the above, there should be a sizeable short covering in DSL, especially with First Fed reporting on April 30. (They tend to "beat" the forecast). No matter how bad the fundamental and how likely DSL is going to go broke by Jan 2009 (my calculation is 100% sure they are dead), I am calling for a 25-35% rally to $18-20 range from here.
The short seller in DSL has been far too complacent. They need to be punished, and punished hard they will be.