Based on fundamentals, this stock is underpriced by a factor of 100% because it is so massively misunderstood.
There seems to be a belief on this board that CSE is in the sub-prime business. It is not, never was and never will be so long as this company continues to focus on its core business.
Over $2.50 eps this year, on average beats estimates with probability it it could beat estimates next year. $2.90 next year on its growth rate path in the niche it is in should take this stock to $37.50 within 12 months.
Actually, it a way, the relatively high short position is a positive in this case. Misunderstood and high shorts provides a good supply of buyers when it is indeed understood.
this stock will trade about 30. by spring 08. people bail on stocks whenever they hit a bump in the road, cant be on top all the time, which is good for people who believe in cse, buy at discounted prices, make 20-30% next year. and while stock is low, use the div to fight off losses. 13%
I don't think most people in here believe CSE is in the sub-prime business. Even if that was true, what people believe on this board has nothing to do with the stock price of CSE.
First, you may have noticed that the "sub-prime mess" is now being called the "credit crunch". That is because adjustable rate mortgage lenders and interest only mortgage lenders have joined sub-prime loan lenders in the default swimming pool. CSE is going down because of fear that soon commercial lenders will be jumping in next, and if the country moves into a recession, commercial lenders will be jumping in from the 3 meter board.
The fall of CSE has nothing to do with what people on this board believe, the fall has nothing to do with the company not defending the dividend on a daily basis. It is all about fear, the fear of what happens next. Of course once we know if CSE will be involved in the credit morass, it will be too late to buy or sell. Now is the time to place your bets. If you don't think buying or selling CSE is a gamble, then tell me why. Really, I want to know.
I believe that even when real estate fell in the late 1990's, prime mortgages were defaulted at a rate less than 10%. If you only look at the prime mortgages on CSE's books of 2.6 billion, we can guestimate a worst case scenario. Assume that 10% defaults and that the value of the underlying asset will only payoff 80% of the mortgage.
2.6b x 10% x 20% = 52m
In other words, CSE could lose 52,000,000 if the situation continues to get worse. I do not believe that is material considering that they are actually in the commercial mortgage business. If the economies of the world go into a recession, then all bets are off. IMHO, CSE is a good bet.