NBD - NB Capital Corp

Is anyone here familiar with this stock and if so, do you know what has happened in the last few weeks that has suddenly caused it to drop so radically? The drop is way greater than the overall market drop.

Louise

Reply to
louise
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According to Yahoo, it is a REIT that holds mortgage backed securities. It is probably caught in the sub prime mess. Either it holds some sub prime securities or investors are worried that it might.

-- Doug

Reply to
Douglas Johnson

Per finance.yahoo.com (under "Profile"), NBD is in the category of REITs that makes most of its money through financing mortgages, apparently in Canada. In the U.S., as you may know, Many more mortgages than usual are being foreclosed, due to rising interest rates on ARMs; home "owners" taking on more than they can afford; a bursting housing bubble (in many places), which means people who have to sell are often doing so at a sizable loss. I suspect NBD (a subsidiary of the National Bank of Canada) is being dragged down simply like other world markets, particularly so since it's in the finance and mortgage lending industry. It's also likely reflecting that Canada has also had problems with a housing bubble. Googling for {"housing bubble" Canada} yields many hits saying a housing bubble did occur in the last few years in Canada. Being just across the border, it is often very reasonably argued, results in Canada's economy reflecting certain trends of the U.S. economy.

On November 6, NBD announced it was paying its usual dividend.

According to Wikipedia, the National Bank of Canada is a very old, large one. This slump might last several years; it might not. It's hard to say, though I would say largeness and a long record of previous soundness is indicative of more safety than less. If you have a horizon of over five years, I would be inclined to continue to hold this stock. (My own banking stocks have taken quite the hit. But I have always been braced for it in any category of stocks, and hence I am diversified such that the hit is not too taxing on my overall portfolio. Not that I care too much, since I invest for the long run. I also do not expect a dividend cut from my banks.)

Finance.yahoo.com is a decent, quick and dirty starting point for researching a stock, though for foreign-based stocks, info is often particularly sparse.

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All this loose credit that was floating around is reminiscent of what sparked the 1929 stock market crash. The money turns out to actually be non-existent (either by way of unrealistically inflated home prices or by way of loans that cannot be paid, etc.), and of course many lose their shirts, people panic, etc. This won't be a depression IMO (thanks to regulatory agencies and the ousting of fools), but it might be a rough few years for certain factions.

"louise" wrote

Reply to
Elle

Thanks for your help and assessment.

I wasn't aware of the housing bubble in Canada and as a result, didn't understand why this had fallen so badly. I own a good chunk if their preferred stock with a return of

8.35% - something I'm not in a hurry to give up - but loss of principle is nevertheless quite unsettling and I'll keep an eye on it - maybe sell a part if I get too nervous.

Louise

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Reply to
louise

"louise" wrote

All preferreds (and other interest paying focused hybrids) are down to near record lows. IMO this is more of an offshoot of concern about world credit in general (which of course relies heavily on the large U.S. credit market), rather than a reflection on the preferred's issuing company (be it a bank or whatever). I own a good chunk of Prudential's (the life insurance company) preferred stock. The yield based on my original purchase price is about 6.6%. It too is way down. The position is conservative and so for income. Whereas most of my portfolio is in non-preferred yada stocks. I think the preferred Prudential stock will come back. If it does not, given that it pays a "qualified" dividend (low tax rate here in the U.S.) and given its maturity in I dunno something like 20+ years, I can live with it. I am holding. This is a time to buy, not sell, from my viewpoint as a mostly value investor. I hold for the long run unless a stock maybe shoots way up beyond its company's valuation. Even then, I am more inclined to hold, since this approach could be said to be a bit of a timer's approach, and so has all the attraction and danger of gambling.

Reply to
Elle

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