Countrywide Stock Is Rated A Good Buy, for Right Bank
Hochstein, Marc, American Banker
Countrywide Credit Industries has long maintained its intention to remain independent, even as the rest of the mortgage banking industry has been swallowed up by commercial banks.
But last week an equity analyst went on record suggesting that selling to a commercial bank could make sense, both for the Calabasas, Calif., home lender and the buyer.
"Countrywide would be a crown jewel for the right acquirer," Michael McMahon, an analyst at Sandler O'Neill & Partners LP, wrote as an aside in a research note.
The main purpose of the report was to initiate coverage of Countrywide with a "buy" rating. In an interview, Mr. McMahon was quick to say that his takeover theory is "not important at all" to his assessment of the stock. "I would never recommend a company based on (the possibility of) a takeover."
Rather, he says he is recommending the shares mainly because he feels they are undervalued. Countrywide's stock price has taken a beating in the last year, as rising interest rates clipped mortgage production. Friday morning the lender's stock was trading at $26.75, compared with a 52-week high of $48.
"The selloff of the shares of Countrywide ... is overdone, and the shares are currently cheap by any measure," Mr. McMahon wrote.
Countrywide is the only independent company among the top five originators and top five servicers. The rest are banks or thrifts, except GMAC Mortgage, which is a unit of General Motors Corp.
Through a spokeswoman, Countrywide chief operating officer Stanford L. Kurland said Friday:
"It remains our desire to grow the company independently and to build many of the ancillary businesses and create synergies that banks have. …