I threw a dart and chose Prudential ... this is a VERY volatile group and basically trades with banks. When Kool Aid is high, they run - when not they drop.
I am starting with a 3.1% exposure around $20.40, and this will be a long term short I will trade around. I actually dislike HIG even more but its so volatile I don't want to lose 30% in 1 day - just for reference so I can look back in a few months HIG is currently in the $8.90s, and MET is in the $23.10s. Prudential it is for my proxy.
- March 18 (Reuters) - Prudential Financial Inc (PRU.N) was downgraded to the second-lowest investment grade by Moody's Investors Service on Wednesday, which cited the large life insurer's reduced profitability and potential for more capital strain if conditions worsen.
- Moody's lowered Prudential's senior debt rating by two notches to "Baa2" from "A3," and the insurance financial strength rating of its Prudential Insurance Co of America unit by two notches to "A2" from "Aa3." The outlook is "negative," meaning another cut is possible within two years.
- Moody's said Newark, New Jersey-based Prudential is being hurt by "very substantial exposure" to variable annuities with guarantees, as well as increased investment losses.
- It said the two-notch downgrade, as opposed to a one-notch downgrade, reflects Prudential's greater sensitivity to falling stock prices than that of many peers, along with "sensitivity to further capital strain if conditions worsen."
- He also said Prudential Funding retains access to the U.S. Federal Reserve's Commercial Paper Funding Facility. The parent lost access following a Feb 19 downgrade by Fitch Ratings.
- Prudential Funding had $4.35 billion of commercial paper and "master note" borrowings outstanding at year end, according to Prudential's annual report.
Short Prudential in fund and personal account
3 comments:
You've got to be drubbing the indices by a metric ton with your recent performance. Congrats.
Except for MOnday I am drubbing
When the mkt is a straight shot up I will always lag
on slower moves, sideways, or down I am doing quite well.
+14% YTD. I will have the next update this weekend as the next 4 week cycle ends Friday.
Interesting because if your thesis is correct, Heeb's would have already dwindled down/started a rotation out of this sector, yet he had that 8% up move on Monday when financials exploded. I realise you're only picking this one equity.
CGMFX had focused in on HIG, MET, PRU, AFL, and BRK.A, with its little exposure to Geico.
I have just finished reading about shorting stocks and one pundit said that approximately 7 months after a stock has come down is when shorts were most beneficial to short. I wish I could recall the source and more specifics, as their was more to it than that, but it was well documented, and was part of some abstract paper I was reading.
You know that some days it's all a blur.
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