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Crystal River Capital Inc. Message Board

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  • alta10bc alta10bc Nov 22, 2007 8:07 PM Flag

    Take your profits....

    There was a reason why CRZ was trading at $28.00 not long ago. They are being drug down by the Sub prime stuff and liquidity just like every other financial stock! Have you seen their dividend reduced lately?

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    • CRZ was cheap even at $25. They will wind down the Agency RMBS portfolio (assume some hit on this in 4Q07, due to GSE drama) and redeploy into more commercial assets.

      My predicton for 4Q07, is some hit on the agency portfolio, further MTM on the non-agency portfolio, possibly some deterioration in the CMBS portfolio.

      But overall a smooth quarter without any meaningful impairment to earning assets.

      • 2 Replies to dividendaristocrat
      • Q4, a smooth quarter?

        Did you even read the Q3 10-K report?
        CRZ's derivative book is blowing up.
        They are sitting on a credit default swap
        position that is going bad. This is not
        a vanilla hedging position where CRZ
        would protect itself from potential
        credit defaults - no, rather CRZ took a
        bet that credit default rates would
        remain small (they expected a soft landing).
        They bought those swaps to increase CRZ's "yield".
        Now, CRZ had to backstop those swaps by depositing
        an extra $37.6M in Q3. That's not pocket change.
        The level of derivative disclosure is pretty crummy in
        the 10-K ...

        Also, I can't understand why they ended up
        buying the illiquid Millerton CDO preferred shares
        from Hyperion - are the independent directors
        really "independent"? Those preferred shares
        are toxic to start with and they are pretty
        much worthless. Similarly, BAM managed to monetize
        its stake in BREF One LCC by transfering it into CRZ.
        How much more illiquid assets are they planning to
        stuff into the carcass of CRZ?