(1) The NY Federal Reserve has chosen the firm to manage the $30B portfolio of assets previously owned by Bear Stearns (double positive of prestige plus more fees)
(2) Creating a joint venture for a firm that buys distressed mortgages.
This continues to be one of the few financial firms out there that has the top notch leadership, and apparent trust of the higher powers that be in this country. I did sell some today due to the large move up of late in all things financials, but it has been an amazingly sturdy financial stock in a sea of malcontents. I did pull back a few weeks ago when even Freddie Mac and Fannie Mae paper was freezing up [Mar 4: Cutting Blackrock Exposure], but frankly we appear to be in a new era where we have a Federal Reserve willing to loan against any junk paper so perhaps one must be nimble and adjust strategy. As I said last week when I was prematurely bullsh (which of course the market fixed by selling off 300 points) there appeared to be an air of bulletproof-ness, especially in financials i.e. we can do anything now and the Fed will fix us, because we are too big to fail. So this backstop makes me have to rethink many things. Once again, everything learned for many years unfortunately must be tossed to the garbage in this new era of government supported stock market. I feel like a newbie now.
I highlighted an interesting quote in green below - while people are (once again) calling the bottom for housing off to today's "great news" (by great news we mean, terrible numbers in the housing market beat analysts expectations of horrendous numbers) - some of the smarter guys in the room believe "dramatic" growth in non performing mortgages (i.e. defaults). I'll take these guys view over the herd.... even though the herd moves stock prices.
I also believe this new firm could be direct competition for the mortgage REITs, if I am understanding it correctly, and we're seeing some weakness today in this battered group.
- Money management firm BlackRock Inc (NYSE:BLK) and hedge fund Highfields Capital Management are backing a new firm that will buy up distressed mortgages, betting that investors are ready to snap up bargains in the beaten down sector.
- The new company, Private National Mortgage Acceptance Company, which will be known as PennyMac, plans to raise capital from private investors and will help borrowers restructure loans to avoid foreclosure.
- BlackRock and Highfields executives picked industry veteran Stanford Kurland, who spent 27 years at mortgage giant Countrywide Financial Corp (NYSE:CFC), as the new company's chairman and chief executive officer. David Spector, who used to oversee global residential mortgages at Morgan Stanley, will be the chief investment officer.
- "Over the next two to three years, we anticipate that the volume of bank-held nonperforming mortgages will grow dramatically," Highfields co-founder and Senior Managing Director Jonathon Jacobson said. "PennyMac will be extraordinarily well positioned as both a buyer and servicer of these assets," he added.
- New York-based BlackRock made the announcement on the same day it was tapped by the Federal Reserve Bank of New York to manage a roughly $30 billion portfolio of assets once owned by Bear Stearns.
Long Blackrock in fund; no personal position
