Thornburg Mortgage (TMA – $1.60) has changed their bylaws to allow large shareholders. It seems that CEO, Brian Mcmahon, is really going to save this company. I admire him for being honest about the condition of the company and its margin calls back when the whole mortgage market started to melt down.
I’m willing to make a speculative bet that he will be able to keep Thornburg Mortgage solvent but at a very dear costs to equity holders, but just in case I’d rather buy the preferred stock (TMA_PRC – $4.59, TMA_PRD – $4.55). I’m assuming preferred would still have some value in a liquidation. If there is no liquidation and the company is saved, it could return shooting distance ($19.00ish) of the par value of $25.
Cramer pleaded for "someone to go bankrupt already" and puts Thornburg down as a hopeful. He may be right but I like the risk/reward trade off on this highly speculative trade.
Rob Chrisman from the Mortgage News Clips shows what might be in store for Thornburg employees, should the company go away.
Disclosure: I own TMA_PRC and TMA_PRD. My average cost in both is around $10.00 so clearly my confidence started earlier than today and was wrong. I bought more TMA Preferred D today. I do not own TMA common, though I might buy some for a quick speculation. I have traded TMA both long and short in the past year. Any investment in Thornburg Mortgage should be treated as highly speculative. Do not risk money you cannot afford to lose.
Definition of Speculative: You might lose everything you put in. Only play with a small amount that you can easily afford to lose and that won’t impact your life if you do.