Chasing Value: Not — WaMu one week later - ouch!

24 09 2008

Chasing Value: Not — WaMu one week later - ouch!

Posted by: in Companies Competitive Strategy

Filed under: Bad news, Rumors, Rants and raves, Competitive strategy, Scandals, Washington Mutual (WM), Chasing Value

No sooner did I post about Washington Mutual (NYSE: WM) last Friday (Chasing Value: Are you watching WaMu?) and buy it, I was undercut by the announcement of a change at the top.

The news just two days later read: Washington Mutual Will Name Meridian Capital’s Alan Fishman CEO, WSJ Says.

I have made some bad picks and had some bad timing but this must be the biggest blunder so far.

This morning I received the following comment to last Friday’s post:

Mike said; Ya, Wamu… Great stock. Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha

So I can’t hide from the truth and while their are brighter stock pickers on the Web then I, at least I can try to maintain the highest level of integrity. It is not so much that my commentary last Friday was unfounded or untrue, but that it appears from Wall Streets perspective to be another case of Washington Mutual doing ‘too little too late’. That clearly is also the opinion of the WaMu Board because the ouster of WaMu CEO Kerry Killinger is part of that story.

Mr. Killinger was apparently very swift to promote questionable lending practices and very slow to admit his blunders and take corrective action. While the bank may have many positive attributes, if it does not have the cash to survive the current industry and internal difficulties then as many think it won’t survive in it’s current form. I hope not to make the same mistake and that’s part of why I feel it is important to admit my errors responsibly and to also provide readers a forum to express their thoughts.

This morning there is plenty of banter about the company searching for a buyer, another idea Killinger resisted earlier in the year. Now whatever happens he’ll not be a part of the decision.

Last Friday WaMu closed at $4.27. It is trading $2.14, down $0.18 as of 11:55 AM EDT.

FINAL UPDATE: shut this day at $2.83, up $0.51 or 21.98% — go figure?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WM.

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