Bookkeeping: Shorting More Capital One Financial (COF)

Only in George Costanza world can the President putting restrictions on your business be a good thing - Capital One Financial (COF) has surged (yet again) nearly 20% as the meeting of Obama [Apr 19: Obama v Credit Card Companies] and the credit card companies goes on. I am adding to my short here - if anything great was coming out of this Discover Financial (DFS) should also be running hard - it is up 2%. American Express (AXP) reports after the bell.. so some risk there.

I bought two batches, $16.30 which was underwater in seconds, and $16.80 - taking this up to a 4%ish type of short exposure. With analysts expectations of a stellar profit of... oh wait, -$1.18 in profits for 2009, the PE ratio for COF is... umm... nevermind. Well there is still 2010 when analysts estimate that COF will make $0.09. I will let you do the math on that PE ratio. But never fear, shorts are being run out of the building.... keep bidding it up, why not $30? 2011 should be a very profitable year. If not 2011, profits roll in 2012.

From Reuters

• President Barack Obama urged U.S. credit card company executives on Thursday to stop unfair rate increases and be more transparent and accountable, tapping into popular outrage over abusive lending.
• Obama said he wanted new legislation being considered by the U.S. Congress to protect consumers against unfair rate increases and ban "abusive fees and penalties."
• "The days of any time, any reason rate hikes and late fees has to end," he said, as he sat at a long table surrounded by the credit card executives.
• He also wants the legislation to ensure that credit card forms and statements are in plain language. "No more fine print, no more confusing terms and conditions. We want clarity and transparency from here on out," Obama said.
• Executives from Bank of America Corp (BAC.N), American Express Co (AXP.N), Citigroup Inc (C.N), Wells Fargo & Co (WFC.N), JPMorgan Chase & Co (JPM.N), Capital One Financial Corp (COF.N), Visa Inc (V.N) and MasterCard Inc (MA.N) were among those due to attend the White House meeting.
• The meeting came a day after a House of Representatives bill to curb credit card fees and limit penalties cleared a key panel. Lawmakers have expressed outrage that many of the card-issuing banks are the same ones that have received government bailout money, paid for by the U.S. taxpayers who use the cards and are being saddled with the high fees.
• Banks say the tighter rules for card issuers would hurt fee income when they are trying to climb out of a financial hole created by the collapse of the housing boom.

Again, how this is "good" is beyond me, unless the Costanza logic is that by putting in new curbs and lower fees, the consumer could actually pay back their debt hence lowering delinquencies. But that sir... is a stretch with the unemployment rate heading to double digits. And with so much money in this business made on egregious fees - what's that? late by 1 day? $39 to us! (99.9% profit margin) Next!

Short Capital One Financial in fund and personal account