I know that when people don't read or hear what they wish to, it is considered bashing or cheer leading. But, the reality is that during times like these, investors should be asking the tough questions.
Is everything OK at SWS? If they are, then why did they lose their long-time employee and CEO recently? Why did they lose their long-time employee and CFO recently? Why did they slash their dividend -89%? Why is the stock price unable to regain the levels it was at just a few days ago, before the announcement of the convertible senior note deal? They said in their own deal announcement that the bank's balance sheet needs to be shored up by at $75 million. Where is that money going to come from now?? Does the bank suddenly not need the money anymore? What if account holders get nervous and begin taking their money out of the bank?
CEO and CFO are gone because they were asleep on the job. While all other banks were pulling in the reins, they were full speed ahead. Management must have thought Texas was immune to the financial crisis. Next they make a brokerage guy the CEO brought on from the board of directors. The same board mind you that didn't see this crisis coming to SWS.
Now the CEO announces that they are going to do a convertible offering of 4% of assets that will more than likely dilute the company in half. This convertible is being offered while the stock is at its lowest price. What did he think was going to happen?
The right thing to do is either get normal bond financing (albeit at high rates) or sell assets. They have 4 different companies.....
You find out what type of management you have(both executives and directors) when that rare crisis presents itself. I think that has been answered.
I read the 10Q when it came out and it was painful to read as an investor. However, they still have the assets to get out of the mess they are in. Let's hope they perform better going forward.
Well I think folks are on the right track - no doubt senior management (certainly the exiting CEO and CFO) needed to go - new CEO seems a lot less flashy and generally more on top of things. Nonetheless, to this point, nobody has been able to frame the worse case at the bank. As another poster pointed out, they need to raise capital for bank.. no doubt.. the other question I have is whether as most presume the deal was cancelled for a lack of demand or general frustration at the board level that they'd be diluting everyone down. There is always the possiblity they could sell themselves but with an anchor around them in the bank afraid nobody will step up without a relief pacakge in place for bank liabilities. I'm just amazed how bad management and the BOD have been here - the question now is what is the worse case? and is there anyway to raise this much needed capital w/out diluting everyone else? I suspect we'll all know more soon.
Stokker3, are you short a $4 ? SWS is a basket case but I think it's a bad bet that it will go to zero. I agree with you that there is very little encouraging about the outlook. Banks get away with misleading investors supposedly to protect depositors leaving stockholders trusting in hope. I'm into this company at $8.43/shr and will get a haircut even if it eventually rebounds. I think it will hold up around $4 for now. Many people on margin are out since the stock isn't marginable and no doubt many have lost considerably and been sold out. WW