Countrywide's Debt is still worth more than analyst's opinion despite being lowered to junk level as debt.
S&P cut Countrywide's debt to junk after Bank of America hinted it may not back all of Countrywide's debt in an SEC filing on May 1st. Meanwhile, FBR's crack analyst Paul Miller said Bank of America should renegotiate its bid for Countrywide, and downgraded the stock to "underperform" from "market perform."
Why this analyst's musings are reported as news, I will never understand. First of all, he upgraded Countrywide's stock to "market perform" on August 23, 2007, when the stock was trading around $22. During the entire time that the stock dropped to around $5 before Bank of America's bid, he said nothing. He must've been in hibernation for the credit crunch, and just woken up to realize that he must say something, anything, about a stock that has now lost 90% of its value.
He did the same thing with Thornburg, which he downgraded from an "outperform" to "underperform" last week, a full month after the company narrowly avoided bankruptcy by raising a private placement that diluted its stock by 95%. When he issues research notes that have completely missed the boat and come months after the obvious has already been priced into the market, he should also issue an apology.
In the meantime, I'm reaffirming my "underperform" rating on Paul Miller's research, and issuing a "junk" rating on his outlook.
Source: By Mock The Market
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