2007 was definitely a tumultuous year for companies heavily vested in the mortgage industry. No major player escaped unscathed by the events and happenings of the mortgage secondary market. However, there were companies that navigated the troubled waters better than others. Why?
In my humble opinion, they were the companies that mitigated their credit losses and took a level headed approach to the zeitgeist mania that powered the Alt-A and Subprime frenzy of 2002 - 2006. While others chased the easy short-term profits and loan volume, a select few maintained credit risk discipline.
Who and what companies escaped the credit crunch relatively unscathed and who are those struggling to survive?
Here's a look at the performance of the leading mortgage-related stocks over the past year. Each company has been color coded based on their stock performance from 1/3/2007 to 1/3/2008. The companies highlighted in yellow are those that lost less than 20% of their stock value. While a loss of up to 20% of value sounds high, the environment for companies heavily vested in mortgage related industries were such that a loss of up to 20% is actually quite exceptional.
Yet, if one where to look at the companies that lost more than 50% and 75% respectively of their stock value during 2007, I believe a trend can be identified.
Below is an explanation of what the last two columns represent.
- Retained Value = 2008 Stock Price / 2007 Stock Price (Higher the better)
- % Change = % Drop in 2008 Stock Price over 2007 Stock Price (Lower the better)
Below is a color coded alphabetic list of the biggest mortgage related stocks (see legend at bottom).
| Top Mortgage Related Stock Performance | ||||
| Year Ago 1/03/2007 | Today 1/03/08 | Retained Value | % Change | |
Bank of America |
$53.33 | $40.56 |
76.05% | 23.95% |
| Barclays | $59.43 | $39.90 | 67.14% | 32.86% |
| Bear Stearns | $162.83 | $85.30 | 52.39% | 47.61% |
| Citigroup | $55.25 | $28.92 | 52.34% | 47.66% |
| Countrywide | $42.11 | $9.00 | 21.37% | 78.63% |
| Credit Suisse | $70.11 | $59.68 | 85.12% | 14.88% |
| Deutsche Bank | $135.34 | $129.06 | 95.36% | 4.64% |
| Downey Financial | $72.17 | $30.23 |
41.89% | 58.11% |
| E*Trade | $22.91 | $3.42 | 14.93% | 85.07% |
| Fannie Mae | $59.86 | $37.46 | 62.58% | 37.42% |
| FBR Inc. | $8.11 | $3.12 | 38.47% | 61.53% |
| Fidelity National | $23.69 | $14.32 | 60.45% | 39.55% |
| Flagstar Bancorp | $14.94 | $6.56 | 43.91% | 56.09% |
| Freddie Mac | $67.89 | $32.74 | 48.23% | 51.77% |
| Fremont General | $15.75 | $3.57 | 22.67% | 77.33% |
| H&R Block | $23.20 | $18.61 | 80.22% | 19.78% |
| HSBC | $92.97 | $82.44 | 88.67% | 11.33% |
| Impac Holdings | $8.72 | $0.59 | 6.77% | 93.23% |
| Indymac Bancorp | $45.19 | $6.48 | 14.34% | 85.66% |
| JPMorgan Chase | $48.07 | $42.17 | 87.73% | 12.27% |
| Lehman Bros. | $78.63 | $62.19 | 79.09% | 20.91% |
| Luminent Mortgage | $9.50 | $0.77 | 8.11% | 91.89% |
| Merrill Lynch | $93.61 | $52.76 | 56.36% | 43.64% |
| MGIC Investment | $63.46 | $21.81 | 34.37% | 65.63% |
| Morgan Stanley | $81.62 | $50.95 | 62.42% | 37.58% |
| National City | $36.95 | $15.59 | 42.19% | 57.81% |
| New Century | $31.30 | $0.01 | 0.03% | 99.97% |
| NovaStar Financial | $105.80 | $3.10 | 2.93% | 97.07% |
| PHH Corp. | $29.21 | $17.10 | 58.54% | 41.46% |
| PMI Group | $48.02 | $12.72 | 26.49% | 73.51% |
| Radian Group Inc. | $55.18 | $11.61 | 21.04% | 78.96% |
| Stewart Title | $44.60 | $25.84 | 57.94% | 42.06% |
| Thornburg Mortgage | $25.33 | $9.75 | 38.49% | 61.51% |
| UBS | $61.39 | $45.79 | 74.59% | 25.41% |
| Wachovia | $56.81 | $37.17 | 65.43% | 34.57% |
| Washington Mutual | $45.47 | $13.72 | 30.17% | 69.83% |
| Wells Fargo | $35.74 | $29.10 | 81.42% | 18.58% |
| Color Legend | ||||
| Lost < 20% of Stock Value | Best | |||
| Lost >20% & < 50% of Stock Value | ||||
| Lost >50% & <75% of Stock Value | ||||
| Lost > 75% of Stock Value | Worst | |||
Hat Tip: The Truth About Mortgages
Another post from The Mortgage Cicerone.
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