Street Capitalist: Event Driven Value Investments

Wisdom on such diverse topics as: spin-offs, merger arbitrage, post-bankruptcy equities, global macro commentary and short ideas.


Street Capitalist: Event Driven Value Investments

Sep 26, 2008

Washington Mutual Credit Default Swaps

The demise of Washington Mutual (NYSE:WM) is being well covered in the financial press today. When I heard about it, I wondered what would happen to the company’s credit default swaps. If you remember, Fairfax Financial (NYSE:FFH) may own some of these securities and stands to profit from the company’s fall.

Here’s a look at the WaMu’s credit default swaps:

Hopefully Prem and the rest of the team Fairfax will keep us in the loop as they do some selling, they did so last week and it was great news to shareholders who have been patiently holding the company. I still think Fairfax is undervalued, the company is still not trading like its peers (1.5X book value) but I’m extremely pleased with the progress that we’re making right now.

It feels good to own a company that is well protected from Mr. Market’s turmoil!

Category: Global Macro, Panic of 2008, Value Investing

  • Helen

    I’m wondering what WAMUQ.PK is all about and if it’s worth investing in on the chance that it goes to $1.00.

    What’s your opinion?

  • Helen

    I’m wondering what WAMUQ.PK is all about and if it’s worth investing in on the chance that it goes to $1.00.

    What’s your opinion?

  • http://www.StreetCapitalist.com Tariq

    Helen,

    WAMU.PK is basically what’s left of WaMu (since JP Morgan picked up their deposit assets) that’s trading while in bankruptcy.

    I don’t suggest on investing in it, chances are that this will be a 0, common equity holders are usually wiped out in bankruptcy so the probability of going from 9 cents to $1.00 are pretty low.

  • Tariq

    Helen,

    WAMU.PK is basically what’s left of WaMu (since JP Morgan picked up their deposit assets) that’s trading while in bankruptcy.

    I don’t suggest on investing in it, chances are that this will be a 0, common equity holders are usually wiped out in bankruptcy so the probability of going from 9 cents to $1.00 are pretty low.

About Me

My name is Tariq Ali, I run Street Capitalist. I recently graduated from the University of Texas at Austin. There, I stumbled onto value investing via the school library. I read everything I could and now I'm here, writing out my thoughts and investment ideas.


I have a lot of heroes when it comes to investing, it seems like every investor has some kind of niche. Some, whose books and writings have had the biggest impact on me are: Warren Buffett, Benjamin Graham, Joel Greenblatt, Seth Klarman, and George Soros.


Have any questions? Want to stay in touch?
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