Bookkeeping: Taking Half Off the Table in Thornburg Mortgage (TMA)

This position has been a disaster but in the past 2 days it has become somewhat less of a disaster. With the stock up 350% (after falling 90%+!) in the past 2 sessions, I am going to take half of my position off the table, and eat a huge loss... but a bit less huge than when it traded below $1.00. Bear Stearns helped to juice the shares today with an upgrade.

• Bear Stearns upgraded "jumbo" mortgage lender Thornburg Mortgage Inc (TMA), saying mortgage market liquidity appears to have improved significantly a day after the U.S. Federal Reserve announced moves to pump liquidity into the financial system.
• Shares of the Santa Fe, New Mexico-based Thornburg, a lender whose survival is in question, more than doubled to $3.50 in morning trade on the New York Stock Exchange. The brokerage raised the stock to "peer perform" from "underperform."
• "The Federal Reserve's Term Securities Lending Facility should provide a significant benefit to Thornburg as liquidity is restored to the non-agency mortgage market," analyst David Hochstim wrote in a note to clients. "Just as price declines were compounded by a reduction in the liquidity available to finance the company's low risk assets, the Fed's willingness to lend against these securities for 28 days... appears to be dramatically improving the liquidity and valuation of these mortgage securities," Hochstim said.
• "While we don't know how much the company has sold this week, the ability to obtain financing through dealers until early April should enable the company to develop alternative sources of financing on a more orderly basis," Hochstim said.
  

I am selling 1750 of 3500 shares in the $3.10s. This reduces my exposure from 1% of the fund to 0.5%. As I stated last week, at this point Thornburg Mortgage (TMA) is a lottery ticket but since NOTHING is going out of business these days, and the mortgages they own are still quality names, there was a good chance for at least some sort of buyout. The stock price is more a reflection of confidence now, nothing to do with fundamentals, so I am going to mitigate my loss here, take half off the table, and hope for some more uptick in the stock price. If not, and it goes to $0, at least I have less exposure. Simply trying to make a bit of lemonade out of a bushel of lemons.

• Thornburg Mortgage Inc (TMA), a lender whose survival is in question, on Tuesday restated 2007 results to reflect a $676.6 million write-down for adjustable-rate mortgages, 58 percent more than it had projected just four days earlier.
• On March 7, the Santa Fe, New Mexico-based company projected a $427.8 million write-down. The lender said it increased the amount to comply with accounting rules, because it may be unable to hold the affected home loans to maturity.
• Thornburg is now reporting a fourth-quarter loss of $605.9 million, or $4.74 per share, after previously reporting a profit of 33 cents per share. The full-year net loss rose to $12.97 per share from $7.48.
• Thornburg also reported that lenders had agreed not to make further margin calls through Monday, March 10. It did not say whether the waiver had been extended. Spokeswoman Suzanne O'Leary Lopez declined further immediate comment.
• Thornburg provides loans to help people buy expensive homes. It has said it cannot meet its own lenders' demands for $610 million of cash or collateral. In a statement, Chief Executive Larry Goldstone said Thornburg is talking with lenders to address the margin calls, avoid forced asset sales at large losses, and resume its lending business.

Long Thornburg Mortgage in fund; no personal position