Morgan: Short Golden West

Published March 02, 2006, 3:00 p.m. EST

1 Min Read

Morgan Stanley is recommending to clients that they short the stock of Golden West Financial Corp., Oakland, Calif., one of the nation's largest originators of adjustable-rate mortgagesIn a research note released March 2, analyst Ken Posner suggests that the company is overpriced compared with two of its peers, Countrywide Home Loans, Calabasas, Calif., and IndyMac, Pasadena, Calif. (All three lenders are active ARM funders.) Both Countrywide and IndyMac trade at 1.6 times book value, compared with 2.6 times for Golden West. In addition, the market is valuing GWF's production franchise at twice that of Countrywide's -- $7.7 billion versus $3.8 billion, according to Morgan Stanley research. At midday Thursday, GWF's shares were trading down 47 cents, at $70.40.

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