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Can Colonial Make It? (CNB)

247wallst — Wed, 28 Jan 2009 15:54:39 +0000

Colonial Bancgroup Inc. (NYSE: CNB) is looking like it is the next banking institution on the verge of tipping over into the abyss. Its earnings report leaves nothing to be desired. But a 44% drop in the stock on double an average day’s volume will raise eyebrows even if the shares have now fallen under the $1.00-mark. The bank better be thankful that the NYSE has eased some of its share price rules.

Analysts were already looking for a loss or more than $0.30 per share,but it posted -$1.45 EPS for Q4-2008. There is a real problem here.Colonial has already been slated for $533 million in TARP money, but itappears that it is subject to a $300 million increase in equity. Thecompany is speaking to SunTx Capital Partners and others.

The bank has a non-binding letter of intent with SunTx Capital Partnersand others that would cover a potential investment in the company.This appears to be nearly 25% of the bank’s capitalization, but youhave to wonder if it will hold. The price was said to be in a range of$1.00 to $1.50. Shares are under $1.00 today. That is only one of thereasons to be concerned about the financing.

Colonial unloaded more than $300 million of its problem assets, and ittransferred almost $50 million more in assets to be classified as "heldfor sale" during the quarter. Charge-offs are roughly $415 million.

The goodwill impairment per share charge is now larger than its entireshare price, which was listed as $2.66 per share for that impairmentcharge. Its fourth quarter results were marred additionally because ofa $575 million non-cash charge. A $40.6 million tax benefit fromimpairment charges is going to be of little help. The net loss afteritems was listed as being roughly $825 million.

Posting an $825 million headline loss just isn’t going to satisfyshareholders in this environment. We are not convinced that theadditional capital will come. If it does, it seems that there might bea push-back over the price. There would be if it was our decision tomake. Whether we’d even make the investment is a conversation foranother time.

This will have either ended up being the opportunity of a lifetime, orit will have ended up being a huge tax loss for investors. Shares aredown over 45% at $0.85 on more than double its average of 4.3 millionshares. A 90%+ drop is bad enough. This down from a yearly high of more than $16.00, and that is down from more than $25.00 in recent years.

The company has frozen executive salaries and eliminated employee pay raises in 2009. Does anyone really care?

Jon C. Ogg
January 28, 2009

Posted in Banking, Earnings, Turnarounds Tagged: CNB

Shorts Attack The Banks Again, But Flee Bailout Targets And Retailers

247wallst — Wed, 10 Dec 2008 06:36:06 +0000

No matter how far down bank stocks go and how hard regulators try to keep short sellers out of financial shares, some of the smart money is willing to gamble that the fortunes of the sector will get worse.

As of the end of November, short piled into Citigroup (C) driving up shares short by 44% to 182.5 million. In Bank of America (BAC) short interest rose 20% to 110 million shares. Short interest in Ambac (ABK) moved up 26% to 60.8 million. Shares sold short in US Bancorp (USB) and Colonial (CNB) were both up over 20%. The short interest in Morgan Stanley (MS) was also up almost 20%.

Surprisingly, short sellers left shares in the large, troubled industrial companies alone. Shares short in GM (GM) fell 2% to 113.1 million. The short interest in Ford (F) dropped 5% to 251.4 million.

Shorts were also unwilling to bet against large retailers. Share short in Wal-Mart (WMT) were down 2% to 48.8 million. Shares sold short in Target (TGT) dropped 9% to 47.4 million.

Short sellers were also willing to hold large positions in tech companies. The short interest in Oracle (ORCL) was up 19%. Shares short in Yahoo! (YHOO) were up 24%. Shares sold short also rose at Microsoft (MSFT), Intel (INTC), Cisco (CSCO), Symantec (SYMC), Sun (JAVA), and Ebay (EBAY) all rose.

Where did the shorts run away and hide? Apple (AAPL), Starbucks (SBUX), and Procter & Gamble (PG). Seems that having a strong brand is valuable after all.

Douglas A. McIntyre

Posted in Short Interest Tagged: AAPL, ABK, BAC, C, CNB, CSCO, EBAY, F, GM, INTC, JAVA, MS, MSFT, ORCL, PG, SBUX, SYMC, TGT, USB, WMT

Early Bird Analyst Downgrades (ADCT, ACL, AMMD, BGH, CNB, CNW, ERTS, FCX, NAT, OSG, PCU, STM)

247wallst — Thu, 23 Oct 2008 06:30:01 +0000

These are some of the top analyst downgrades we are seeing from Wall Street firms this Thursday morning with more than two hours to the open:

ADC Telecommunications (ADCT) Cut to Underweight from Overweight at JPMorgan.
Alcon (ACL) Cut to Neutral from Overweight at JPMorgan.
American Medical Systems (AMMD) Cut to Market Weight at Thomas Weisel.
Buckeye Group Holdings LP (BGH) Cut to Neutral at Goldman Sachs.
Colonial Bancgroup Inc. (CNB) Cut to Neutral at JPMorgan.
Con-Way,Iinc (CNW) Cut to Neutral at Baird.
Electronic Arts (ERTS) Cut to Sell at S&P Equity Research.
Freeport-McMoRan (FCX) Cut to Neutral from Buy at Goldman Sachs.
Nordic American Tanker (NAT) Cut to Neutral at JPMorgan.
Overseas Shipholding (OSG) Cut to Neutral at JPMorgan.
Souhern Copper (PCU) Cut to Sell at Goldman Sachs.
STMicroelectronics (STM) Cut to Hold at S&P Equity Research.

Jon C. Ogg
October 23, 2008

Posted in Analyst Calls Tagged: ACL, ADCT, AMMD, BGH, CNB, CNW, ERTS, FCX, NAT, OSG, PCU, STM

The 52-Week Low Club (CNB)(WB)(GHS)(ZION)

247wallst — Tue, 17 Jun 2008 14:58:29 +0000

The Colonial BancGroup (CNB) Concerns about balance sheet. Down to $4.12 from 52-week high of $25.50.

Wachovia (WB) The bigger the bank, the harder its falls. Drops to $16.96 from 52-week high of $54.54.

Gatehouse Media (GHS) Newspaper. Falls to $2.73 from $19.60.

Zions Bancorporation (ZION) Yet another bank stock sinks. Drops to $33.42 from 52-week high of $71.43.

Douglas A. McIntyre

The 52-Week Low Club (GM)(CNB)(SU)(PFE)(AIG)(FVRL)

247wallst — Tue, 27 May 2008 14:50:58 +0000

GM (GM) falls as sales appear to falter. Down to $16.87 from 52-week high of $43.20.

The Colonial BancGroup (CNB) Worries about bank failures push shares down to $5.65 from 52-week high of $25.50.

Suncor Energy (SU) Stock split. Meaningless. Down to $68.36 from 52-week high of $148.55.

Pfizer (PFE) hit by worries of too few new drugs in the pipeline. Falls to $19.25 from 52-week high of $27.73.

American International Group (AIG) hurt by write-offs, money raise, and broker downgrades. Triple Crown. Off to $36.56 from 52-week high of $72.96.

Favrille (FVRL) has failed drug trials and collapses to $.19 from 52-week high of $4.08.

Douglas A. McIntyre

The 52-Week Low Club (UNH)(CNB)(SSTR)(SLRY)

247wallst — Thu, 15 May 2008 14:55:04 +0000

Unitedhealth Group (UNH) Concerns about healthcare cost cuts still bother stock. Drops to $31.50 from 52-week high of $59.46.

The Colonial BancGroup (CNB) No bad news. Just part and parcel of being a bank. Down to $7.18 from 52-week high of $25.50

Silverstar (SSTR) Unpleasantness over quarterly report. Sells off to $.72 from 52-week high of $5.48.

Salary.Com (SLRY) Quartely loss and downgrades. Slips to $3.88 from 52-week high of $16.32.

Douglas A. McIntyre