Accredited Home Lenders: Bottom Fishers' Delight

Subprime, But Alive
It is not surprising that no Street analyst has a buy rating on Accredited Home Lenders Holding (LEND ), one of the few still-standing companies in the besieged subprime mortgage lending business. But some hardy bottom fishers are buying. They are betting not necessarily on its recovery but on its being bought out at a price higher than where it is now. It plunged from 58 a year ago to 11.62 on May 2. Vincent Carrino, president of Brookhaven Capital Management, which owns shares, says lots of value remains in Accredited's portfolio. "It was one of the best-run companies in the sector and in its heyday earned $7 a share," he notes. Matthew Howlett of investment firm Fox-Pitt Kelton says the outlook for Accredited "is more upbeat now," since it received $230 million in financing in April from Farallon Capital Management. Still, says Howlett, "a sale is the most likely long-term strategic option" for Accredited, whose buyout value he puts at 14 to 16. Others value it at 20. Second Curve Capital raised its holdings from 8.5% to 11.2% in April.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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