Los Angeles-based home lenders suffered a mostly down stretch on Wall Street last week where continuing big mortgage industry losses sent the Big Board tumbling hundreds of points.
But there was one seemingly odd exception: troubled Fremont General Corp.
The Santa Monica-based financial company saw its own shares soar 46 percent after reporting that its third quarter profit had declined but that it was significantly cutting losses from its shuttered subprime lending unit.
The company managed to report a profit of $18.3 million that largely reflected gains from the sale of its $6.27 billion commercial real estate loan portfolio. Despite the fact the company is actively seeking to restructure itself, shares rose 84 cents to $2.66 at the close of trading on Nov. 8
However, that price is only a fraction of the company’s 52-week high, which topped $17 about a year ago before the subprime mortgage industry fell apart amid mounting loan losses.
It was more of a mixed bag for IndyMac Bancorp Inc. The Pasadena lender announced third-quarter losses that were five times bigger than projected, but shares in the company initially rose on the company’s optimistic outlook.
Chief Executive Michael Perry issued a statement blaming the $203 million loss on “deteriorating mortgage delinquencies and a declining housing market combined with an unprecedented collapse in the secondary market.” But Perry profitablility within five quarters.
The company saw investors bid up its shares as much as 13 percent last Tuesday. But the next day Washington Mutual announced it expected loan losses well into 2008, and IndyMac’s stock fell along with the rest of Wall Street. IndyMac closed at $10.38 on Nov. 8, down almost a dollar for the week.
Other local stocks losing ground for the week included Calabasas-based Countrywide Financial Corp. and local homebuilders KB Home and Ryland Group.
Charles C. Schwab analysts Liz Ann Sonders and David Kastner said they expect the stock swings to continue. “The market remains focused on the stream of bleak housing news and swelling indications of weaker consumer spending,” they wrote in a research note.
