NOVEMBER 20, 2008 (Dow 7552, down 445) - The Second Great Dpression is on the table. The government can't let the large financial institutioins fail; must make sure the annuities and life insurance are there for beneficiaries; stabilize housing prices through tax credits for buying new homes; use TARP money to buy toxic mortgage securities from the banks; must back Fannie and Freddie bonds with an explicit guarantee to lower mortgage interest rates; modify existing mortgages so they are affordable; set up tax credits for hiring people to stabilize unemployment; provide debtor in possession (DIP) financing for the auto companies and guarantee their warranties; start a trillion dollar infrastructure program to put people to work and push the European Central Bank (ECB) and the Bank of China (BOC) to lower rates to 2.00% to reignite growth in their economies. THese actions may remove systemic risk and cause some of the money on the sidelines to buy riskier assets. Still like the quality high yielders (see recent recommendations). The SEC chairman is in the pocket of the short sellers.
hated stock is taking share in the tax preparation business & is turning around - sold its mortgage servicing business (Option One) for $1B - could be used for a buyback - beat the Street last qtr & raised full year guidance - stock did well in the 2001 recession (up 45%) - sells at only 12.9x 2009 estimates - think the numbers are way too low - like CEO (former SEC chairman Breeden)
20.32
0.00%
03/20/08
next day close
21.09
+3.79%
09/04/08
would buy on its numbers miss today (stock down 9%) - the selling was overdone - either presidential candidate will be changing the tax code - that will be good for HRB over the longer term - the co is executing a strategy of exiting the mortgage business to make it a pure tax play again - is acquiring 385 branches from a competitor that will become H & R Block offices - has a $2B stock buyback (25% of the shares) & a 2.3% dividend yield - would buy at these levels
Back to Top