IndyMac at 18-year low; CEO sounds tough on ‘put-backs’
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On a good day for most financial stocks, IndyMac Bancorp shares finished at a new 18-year closing low after the company’s first-quarter loss report and conference call with analysts -- despite CEO Michael Perry’s continuing efforts to paint the Pasadena-based mortgage lender as a survivor.
The stock slid 37 cents to $3.06, below the previous closing low of $3.25 on April 30.
Frustrated investors in the stock may be tempted to blame short sellers -- traders who borrow stock and sell it, betting on falling prices. The shorts have targeted IndyMac over the last year, and they may be jumping on it again. But if so, that would be a switch from the last few months: The total number of shorted shares was 34.8 million as of April 30, down from 41.9 million at the end of February, according to New York Stock Exchange data. Looks like the shorts have been getting bored with this one.
Some analysts have raised questions about losses the company could face on now-troubled loans it previously sold to investors, if those buyers try to renege by arguing that IndyMac failed to properly vet the loans.
Perry, asked about put-backs on today’s conference call with analysts, said he expected them to increase. ‘You know, clearly it is one of those environments where you don’t know for certain how that’s all going to work its way out. You are going to have investors trying to ask you to repurchase more loans. I mean, that is just the way it is,’ he said.
He also indicated that IndyMac would go to the mat with investors. The loan-evaluation team for potential put-backs is headed by Richard Wohl, the bank’s president and ‘a Harvard lawyer,’ Perry reminded analysts. ‘They have got a strong team in that area really looking through each one of these loans, making sure the reason that the loss has been incurred is something that we did wrong as opposed to the housing market just declining.’
Of course, it’s likely the investors employ some Harvard-educated lawyers as well.