WaMu’s Precipitous Fall

I thought financial stocks were cheap in February/March, but some have sold off quite a bit more since.

Patrick Kavanagh just told me to check Washington Mutual’s share price out, and OUCH, has it been hurt!

WaMu is down more than 88% in the last 12 months, which means that if you were to buy shares now for $4.80, and WaMu was to recover to its 52-week-high (around $43), you’d be rewarded with a ~900% return.

To accomplish this, WaMu would have to avoid bankruptcy, not get bought-out on the cheap by a competitor, cut costs, and improve the quality of its loan portfolio (easier said than done).

After this sobering realization, this hypothetical 900% gain seems extremely unlikely.

No comments yet.

Leave a comment