Washington Mutual's (WM) stock has to recover

Panic has set in, Washington Mutual, Inc. (NYSE:WM) and shady Countrywide Financial (NYSE:CFC) are being trashed by the media and their stock prices are pushing new 52-week lows by the hour.  However, WaMu shares which are now in the $28 range are more valuable for investors, there's a bounce play coming.

Yesterday (10/23) WM got another downgrade, this time from Lehman Brothers and they reduced their target price from $45 to $30. Lehman says that given the rapid weakening in HPA in areas where WaMu lends indicates the possibility for more severe credit losses going ahead. They are convinced there is no near-term catalyst for Washington Mutual’s share price. An acquisition of the company does not seem to be in the offing, Lehman Brothers adds. The EPS estimates for 2007 and 2008 have been reduced from $2.60 to $2.40 and from $4.00 to $3.20, respectively.

If I was holding WM shares today and before the stock dropped 20% in the last 30 days, I would not be recommending 'staying the course - George Bush' style.  But as the Masters know, we love feeding on wounded prey, and WaMu is that zebra left for dying on the plain after the lion has finished its feeding.  The vultures are circling now and Washington Mutual is laying their, waiting to be put out of their misery. 

Splits:18-Feb-92 [3:2], 16-Aug-93 [3:2], 02-Jun-98 [3:2], 16-May-01 [3:2]

You think you got problems? WaMu's board is under tremendous pressure to lift their stock price and put all the subprime issues behind them.  This $24.7 billion market cap financial player has to get it's act together, there are no other choices. 

Just consider in the last six months the 'Insiders' at WaMu have took the money and ran, 59,000+ shares sold and only 1,000 bought.  They have to save face and they will do so at any cost.

Going back in the last year and CEO Kerry Killinger has sold out for some major bucks, before the stock dropped into the $20's.

Kerry congrats on stuffing your pockets but now investors want their payback, so do your 49,000+ employees -- so what you gonna do?

Stodgy Bankers got your tongue?

The stock is going to bounce America, and while you wait, cash in on the 56 cent quarterly dividend. Sell of the Home Loans division, sell this part, sell that, and believe me Masters, they will.  Cut jobs, outsource more, sell off your divisions or better yet, just sell the company.  The more they do, the better news for the stock.

WaMu is the angry and scared dog backed into the corner and they have to get out.

Washington Mutual's (WM) stock has to recover, otherwise - hello Enron-like-publicity and WaMu's Board members will have a hard time getting a job at Burger King (but McDonald's is always hiring).

Short the stock then ride it back up, because its going to recover at the expense of their major investors, employees, and every other golfing buddy Kerry and his pals promised it was 'such a great investment' to six months ago.

Well today everyone hates WaMu and is lumping them with Countrywide, its time for action. Oh, and Kerry, your days may be numbered as CEO, people are pissed.