any comments, thoughts, on this stock.

i did, per above at 139.3 ...... very briefly sp dropped to 121, but happy enough to see post-auction finish at 132.1

and here's the clue as to why ......

Spanish businessman Jose Maria Ruiz-Mateos has informed Northern Rock's advisors that he is no longer interested in acquiring a stake in the stricken UK mortgage lender, Thomson Financial News has learnt ...... "The circumstances for the bank have worsened noticeably, and that obliges me and the group of investors that accompany me not to continue with the proposed investment."

Looking terminal to me .Do you think we will be asked to observe a minutes silence or applaud ?. Perhaps that would depend on whether you are short or long. Got out
at 1.85 on Friday ( thank god.)

At the end of the day this is a gamble with great odds, its not often you get to bet on one of the giants falling..... Golden rule, only gamble what you can afford to lose... Regarding Jose Maria Ruiz-Mateos more likely the vulture was told to f#$c off as he only wanted a 10% stake and five minutes of fame!!.

Not necessarily terminal, and may even be worth a punt.................
Heres the reasoning.
We have focused our attention on the NRK mortgage book. Delinquincy set to rise, though there are worse out there. Over exposed from a LTV point of view and poor underwriting. They also have minimal deposits for a lender of their size.
But these are not the only assets.
There is a limited high street presence, but an excellent on-line product. There is also a very large (due to their aggression) unsecured book, which has the luxury of not being of a fixed term or rate.
If the mortgage book was sold off at less than value (they usually sell for more, but these are troubled times), one wonders whether they could negotiate the sale of the unsecured book, which is unusually attractive, to the same bidder. This would possibly offset the loss on the secured book and return the bank to level pegging.
Now I do not know the figures and these are just guesses on my part, but I do know that much of their high LTV lending was done on an unsecured basis for much of the loan, and it has a clause in it that states if it is not repaid with the mortgage the rate becomes very high. I also know it is NRK standard practice to offer credit cards to non delinquent borrowers at attractive rates, with the rider that the rate may be changed at any time.
So we have large amounts of saleable debt that can be restructured by a prospective purchasor, and lots of unsecured debt that is very unlikely to be kept at its current 6.99% for long, as mortgagors move on or default.
The unsecured debt is seperate from the mortgage, can be reassigned and has the benefit of being instantly securitisable.
it may be possible for NRK to negotiate decent rates for these to those getting the mortgage book for a song, and then starting allover again as a slimmed down operation.
Whats that worth? No idea, but if they can break even on the sale, then the rest of the company must be worth something. Still waiting for the water to clear before I make any great decisions.
Alan

alan ... i was under the impression that mortgages were sold on at a DISCOUNT of about 5%, not a premium, and it is that primarily that makes most of the world believe the company is effectively insolvent and that consequently the shareholders of all types will get zilch .... if what you say is true, then why are not the other banks and financial institutions buzzing round the rotting carass like flies? ..... i am always happy to be corrected by you, for you are far more knowledgeable.

cynic,
Like most things...........it depends!!
Think of a mortgage book as a bond.
NRK are currently trying to sell a bond with a coupon of probably about 5.5%, with the associated costs and risks of collecting the interest. Par value is the amount outstanding on the loans.
18 months ago this was attractive (compared to bonds) and selling at a premium, thats how banks made money. Particularly the higher rate sub-prime stuff.
Now it is unnatractive. Not so much for the rate, but for the uncertainty surrounding the payments.
Sub prime and prime do not operate in isolation. If sub prime borrowers struggle, prime ones probably will too. This is where I think NRK has unrealised potential. The unsecured stuff is more like 7%, which is much more attractive, and is variable.
In simple terms, NRK had 3 areas where it was being foolhardy with its lending criteria.
1) Long term fixes at silly low rates (mine is 4.99%). This is poor and will take a hit.
2) Very high income multiples and so increased risk. Again very unattractive and will take a hit.
3) 125% LTV lending. This looks outrageous and would be very unattractive, but.........only 95% of the LTV was secured. The remaining 30% was unsecured, with the option of securitising if required. There may be value there. In the event of any misdemeanour on the account the rate for the 30% can be raised to SVR+2% (almost 9%). Now a 6.5% (or thereabouts) secured bond on 95% LTV with an extra 30% at a potential 9% that can be secured looks more like an attractive proposition, especially when that 30% is variable and on full status, prime customers only.
If NRK can stop this becoming a distressed purchase where the vultures cannot cherry pick at any price they fancy, this could be NRK's saving grace.
The first 2 are reasons why the book will sell at a discount and the third is why they often sell at a premium.
Sorry if it is a bit muddled but it is a very complex area without the exact figures to hand.
Alan

These are going to be suspended later on to day, and then broken up, no value left for share holders?? get out now while you still can. IMHO

falling sharply again...good shorting...113p now

alan .... many thanks for your explanation; my very limited intellect just about coped.

hyleo ..... i thought i was being brave to foolhardy topping up my short late yesterday at 139.3 .... clearly not ...... does one short further? ..... quite possibly ..... in fact, just sold another goujon at 121

Heres a thought though, cynic.
If NRK are going through the mill, then in the absence of any other variables, any other lender with the same model must be too.
I am not very good with balance sheets and the like but I know of 3 lenders who jealously eyed the NRK success in lending out money and tried to copy the products, so what must they have to reveal?
The companies are;
Coventry, but their underwriting was more robust and they are mutual anyway.
Mortgage Express. I forget who their owners are but I will try to find out. However their rates were a little higher, but their borrowers less prime.
Birmingham Midshires (part of HBOS). Also very aggresive and very similar product and underwriting to NRK. In their favour, they have the clout of HBOS behind them, but it may still show up badly on the HBOS books. Secondly, they were less exposed to retail and more exposed to BTL lending. This may have insulated them a little, but I think that may come home to roost soon.
On balance, HBOS might be worth a close look with a view to shorting any hint of bad news.
Alan

alan .... interesting thought though next bank reporting season is a little way off

What do we think about reports that other lenders are going to the ECB, rather than BoE for a loan, in order to keep it their little secret? Could it be that NRK are simply the most transparent (or naive)? Or is it simply the rumour mill going into overdrive?

not rumour ... it's in Telegraph this morning

NRK only the tip of the iceberg IMO. ECB keep things quieter I believe

So if it is not rumour, then the smart money will be looking for the similar models to short, because even if it is kept mum for now, it must be reported at some stage, even if only on the results.
On the high street, I will go against conventional wisdom and go for HBOS (only with play money - I don't generally short). Off the high street, I will have an each way bet on a rank outsider - GMAC-RFC, wholly owned by General Motors.
Ladies and Gents, place your bets for a very interesting banking season!!!

EDIT - And the announcement of a review of the FSA, followed by a break up of what it regulates into seperate authorities - back to the 80's!!

The BOS part of HBOS has been very aggressive in the corporate leveraged debt field, so if you add in possible problems at Birmimgham Midshires, you may be right Alan. I have a feeling that this issue has surfaced just in time to save the whole sector from meltdown and that the recent knocks to the bank shares might provide a good buying opportunity for the patient. If only we knew......

In hindsight, we all have 20/20 vision, and looking back at my analogy of a mortgage book being comparable to a bond, we should have seen it coming long ago. After all, a sub prime or delinquent or low rate mortgage book is no more than a junk bond, and look what happened to them. And the repurcussions afterwards.
Scary if it played out fully.
Alan

rumour that shares are being called in - don't know why? - therefore I've closed short

wonder if that is a move prior to formal suspension ...... seems the most likely, though do not understand what is meant by "called in" as if someone has a short option or cfd it is not subject to arbitrary cancellation by the stock-lender

I assume (but could be wrong) that people (institutions) who have lent out shares (for the purposes of shorting) have called them in (i.e. want them back).

Only guessing though....

Perhaps someone better informed could comment.

Strawbs