Losses and fear of more losses have taken Fannie Mae (FNM) down to $.87. It traded as high as $40.45 a year ago. The situation is not much better at Freddie Mac (FRE). It sits at $.88 off its 52-week high of $37.18. Remember, these companies were the twin pillars of the US mortgage industry.

The number of important companies which have become penny stocks and the play things of day traders is remarkable, and probably says more about the market than the fact that the DJIA has dropped 40% in a year. Many of the firms trading under $1 were mainstays of their industries. And, some stocks which threaten to drop below the line are shares companies which are critical parts of the national economy.

Sirius XM (SIRI) was considered one of the premier new media and technology companies in the world. Its plan to get scores of channels into every car in America and allow people to listen uninterrupted coast-to-coast was as brilliant as it was simple. And, the technology worked well. But, as the credit markets were destroyed, so was the firm’s ability to refinance its debt. The fall-off in car sales dealt it another blow. The shares change hands at $.16. The stock was at $3.89 a year ago.

Level 3 (LVLT) was an equally promising company. It has 50,000 miles of broadband backbone, perfect for sending data, video, and VoIP, all growing businesses. While the operation’s prospects were promising, the firm’s debt was not. Leverage cost the stock a lot of fans. It now trades at $.79 down from a 52-week high of $4.48.

Charter Communications (CHTR) is one of the country’s largest cable companies. With the popularity of cable-based broadband, VoIP, and VOD its business should be doing well. The credit crisis killed Charter’s chances to compete with phone companies and satellite TV. It trades at $.16 down from a 52-week high of $1.68.

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The lesson that Wall St. can take from this is that a prolonged lack of access to credit and an ongoing banking and housing crisis could take shares in a number of other very well-known companies into the pennies which will make them candidates for delisting and wild price swings from day traders moving in and out of the shares.

Ford (F) has to be near the top of that list, if Congress does not act on behalf of the car companies. It traded at $1.01 about a month ago. It sits at $2.66 now  A lack of financial support from the federal government would strengthen concern that Ford cannot borrow money or refinance its current debt load

Citigroup (C) has traded as low as $3.05. If the bank posts huge losses in the fourth quarter of this year and early into next, the government may have to force feed the firm more capital to keep it alive. Common shareholders could be left holding the bag as they were with AIG (AIG) which got as low as $1.25 after its deal with Washington. AIG could certainly drop below $1 as well, particularly if it has to go back to the well for more cash.

E*Trade’s (ETFC) problems with its mortgage portfolio continue to raise questions about whether the company is a viable standalone candidate, despite the value of its discount brokerage arm. The stock has already been as low as $.79 and trades at $1.15. now. Another bad quarter is all it will take.

Sprint (S) has traded as low at $1.35. Investors are concerned that if the cellular service provider keep losing customers to Verizon Wireless (VZ)(VOD) and AT&T (T) that it could stay in the red for a very long time. The company’s $22 billion in long-term debt is not doing it any good.

As odd as it may seem, The New York Times Company (NYT) could move below $1. It has been as low as $4.95. Stocks of other public newspaper companies, JRC and Gatehouse, are already below a dollar because of falling advertising revenue and high debt service costs. Shares of newspaper chain McClatchy (MNI) have been as low as $1.45 down from a 52-week high of $15.25. If NYT does not find a way to handle its own debt and cut costs at its regional papers, traders will sell the shares down the way that they have other newspaper stocks.

A deep recession coupled with a lack of availability of credit has pulled some large and well-known companies down. That process is not over.

Douglas A. McIntyre

Thornburg Mortgage (TMA), a highly risky mortgage company stock is up sharply.

Several chip firms lead by Marvell Technology (MRVL) are down on negative brokerage reports.

American Eagle Outfitters (AEO) is off after earnings.

Douglas A. McIntrye

Huntsman (HUN) Apollo walks on buy-out deal. Falls to $12.15 from 52-week high of $28.40.

Coventry Health Care (CVH) Cuts guidance. Sells off to $30.10 from 52-week high of $64.

Unitedhealth Group (UNH) Concerns about slowdow in the health insurance sector. Dives to $26.94 from 52-week high of $59.46.

Motorola (MOT) Competition keeps coming out with strong products. Falls to $7.61 from 52-week high of $19.68.

XM Satellite (XMSR) Goldman says merger with Sirius (SIRI) will not help company’s prospects. Plunges to $7.95 from 52-week high of $16.44.

Sirius (SIRI) sells down to $1.97 from 52-week high of $3.94.

Douglas A. McIntyre

Thornburg Mortgage Asset  (TMA) Ongoing concerns about company losses. Drops to $.64 from 52-week high of $28.23.

Whole Foods Market (WFMI) Big earnings miss. Sells off to $28.96 from 52-week high of $53.65.

Uranium Res (URRE) Company does private placement at low share price. Dips to $4.06 from 52-week high of $14.99.

Douglas A. McIntyre

Despite the fact that many big financial stocks are already close to lows, traders were willing to bet that they would fall off further. Shares short in Washington Mutual (NYSE: WM) moved up 15.9 million to 168.8 million. The short interest in Citigroup (NYSE: C) jumped 7 million to 125.6 million. For Wells Fargo (NYSE: WFC) the number added 9.3 million to 117.5 million. For Countrywide (NYSE: CFC) the figure was up 9.3 million to 111.5 million and at Wachovia (NYSE: WB) shares sold short were up 2.2 million to 105.4 million.

Other notable financial stocks with large increases included Fannie Mae (NYSE: FNM), up 11.4 million to 78 million, Thornburg (NYSE: TMA), up 11 million to 25.8 million, and CIT (NYSE: CIT), up 10 million to 20.1 million.

Troubled firms that have recently had bad news were hit very hard. Shares short in Sprint (NYSE: S) moved up more than any other NYSE-traded company, jumping 30.1 million to 75.2 million. Shares sold short in Blockbuster (NYSE: BBI) increased 8 million to 57.8 million.

Shorts moved out of Micron (NYSE: MU) where the number fell 4.3 million to 87.5 million, Wal-Mart (NYSE: WMT) where short interest dropped 3 million shares to 45.1 million, CBS (NYSE: CBS) which lost 2.7 million shares short falling to 29.2 million, The New York Times (NYSE: NYT) with shares short dropped 2.8 million to 30.6 million, and Time Warner (NYSE: TWX) which saw its short interest drop 2.2 million to 38.5 million.

Source: NYSE

Douglas A. McIntyre

The company announced that it has entered into an agreement for 364 days with 5 of its remaining reverse repurchase agreement counterparties and their affiliates, who are providing approximately $5.8 billion of reverse repurchase agreement financing.   These counterparties agreed to a contractual reduction of margin requirements and agreed to a suspension of their rights to invoke further margin calls and related rights. This includes subsidiaries of Bear Stearns, Citigroup, Credit Suisse, Royal Bank of Scotland, and UBS Securities LLC. 
While Thornburg has already made reductions, it must further reduce its current reverse repurchase agreement borrowings outstanding with two reverse repurchase agreement counterparties by an additional $1.2 billion combined.  This will be achieved either through asset sales or transfers of collateral specified.

The continued effectiveness of this agreement is contingent upon a variety of factors, most importantly one that requires that Thornburg Mortgage raise a minimum of net proceeds of $948 million in new capital within seven business days.  It must also establish and maintain a liquidity fund in the amount of $350 million, and to maintain an amount in that fund equal to 5% of the monthly outstanding borrowings of its reverse repurchase agreement counterparties in investments.

You should read through the full press release because the terms go on and on.  Thornburg shares are down over 10% at $2.60 in early trading.  It looks like the initial fears about having to give away the keys to the castle may be more prevalent than the original filing from 2 days ago to raise capital.  The situation at Thornburg may be getting tougher before getting easier.

Jon C. Ogg
March 19, 2008

This filing does note that certain selling security holders may also sell from time to time an unstated amount of securities.  According to filing, Thornburg will use the majority of proceeds to finance the acquisition or origination of additional adjustable rate mortgage (ARM’s) assets.  It may also use a portion of the proceeds for other general corporate purposes, which were noted as repayment of debt maturities, debt redemption, acquiring assets, capital expenditures and working capital, and for liquidity needs.  As normal, no proceeds from the sale of securities by the selling holders will go the company.

Thornburg Mortgage Inc. shares closed down 1.3% at $2.25 today, and shares have traded in a 52-week trading range of $0.69 to $28.40.

Jon C. Ogg
March 17, 2008

• Cal Dive International (NYSE: DVR) Raised To Overweight at JP Morgan.
• Genomic Health (NASDAQ: GHDX) Cut To Neutral at JP Morgan.
• KLA-Tencor (NASDAQ: KLAC) cut to Underperform at Oppenheimer.
• Kroger (NYSE: KR) cut to Underweight at at JPMorgan.
• Liberty Capital (NASDAQ: LCAPA) cut to Hold at Deutsche Bank.
• Lowe’s (NYSE: LOW) cut to Underperform at Morgan Keegan.
• Nokia (NYSE: NOK) raised to Outperform at Oppenheimer.
• Permian Basin (NYSE: PBT) cut to Hold at Citigroup.
• Thornburg Mortgage (NYSE: TMA) Raised to Peer Perform at Bear Stearns.
• UBS (NYSE: UBS) cut to Underperform at KBW.

Jon C. Ogg
March 12, 2008

Citigroup (NYSE: C) sells off because bank may have to raise more money. Down to $19.74 from 52-week high of $55.55.

Level 3 (NASDAQ: LVLT) loses its president, raises issues about next quarter. Sells down to $1.87 from 52-week high of $6.46.

Fannie Mae (NYSE: FNM) drops on negative comments in Barron’s. Sells off $18.50 from 52-week high of $70.57.

Thornburg Mortgage (NYSE: TMA) Capital calls raise concerns about bankruptcy. Goes down to $.75 from 52-week high of $28.40.

Keryx Biopharmaceuticals (NASDAQ: KERX) Big clinical trial falls short. Shares trade off to $.60 from 52-week high of $11.70.

Douglas A. McIntyre

CIT Group (NYSE: CIT) Lehman Brothers cuts price target. Drops to $15 from 52-week high of $61.47.

iStar Financial (NYSE: SFI) Price target cut by Citigroup. Falls to $12.71 from 52-week high of $49.84.

JP Morgan (NYSE: JPM) Worries about more write-offs. Sells down to $37.15 from 52-week high of $53.25.

Citigroup (NYSE: C) Concerns about need to raise more capital. Down to $21.11 from 52-week high of $55.55.

Merrill Lynch (NYSE: MER) Another candidate for big write-downs. Down to $45.73 from 52-week high of $95.

Fannie Mae (NYSE: FNM) Mortgage business slightly out of favor. Falls to $21.21 from 52-week high of $70.57.

Wachovia (NYSE: WB) Money center banks all dropping. Sells down to $27.36 from 52-week high of $57.45.

Lehman Brothers (NYSE: LEH) Joins investment banking low club. Drops to $45.20 from 52-week high of $82.05.

Morgan Stanley (NYSE: MS) Ditto. Down to $39.46 from 52-week high of $90.95.

Omrix Biopharmaceuticals (NASDAQ: OMRI) Misses on earnings. Falls to $13.88 from 52-week high of $40.90.

PETsMART (NASDAQ: PETM) Pets stop shopping. Earnings off. Drops to $19.64 from 52-week high of $35.48.

Douglas A. McIntyre