Revaluation Ripples Will Spread

The ripples of this Fremont (FMT - commentary - Cramer's Take) move, on top of what's happening in Accredited Home Lenders (LEND - commentary - Cramer's Take), can be seen everywhere.

Moody's (MCO - commentary - Cramer's Take) and McGraw-Hill (MHP - commentary - Cramer's Take) (Standard & Poor's) were downgraded and shorted on the concept that there would not be as much securitization of residential mortgages. I believe that's just plain wrong in light of these restructurings. Sure, there will be a let-up in no-documentation loans, but that will be easily trumped by all the debt that is about to be issued as the private-equity deals continue to overwhelm the debt market.

Or how about MGIC (MTG - commentary - Cramer's Take) or PMI Group (PMI - commentary - Cramer's Take), the mortgage insurers. I suggested that MGIC was too high off that earnings miss. Doesn't look like it now.

Or the credit card companies. they can't be overlooked, either. Capital One (COF - commentary - Cramer's Take) has been hammered relentlessly by its twin exposure to mortgages (Northfork and Hibernia acquisitions) and by its dreaded credit-card business, which was supposed to be levered to subprime. Maybe that discount -- it trades for just 9 times earnings! -- is too punitive.

We will see this reevaluation throughout the market. It may not be countered by the kind of shortfall we saw in M&T Bank (MTB - commentary - Cramer's Take), which was quickly extrapolated to all lenders.

We could go up for days on this revaluation, because it infected so many different areas of finance.

Look for the revaluation more toward the multiples we see in Wells Fargo (WFC - commentary - Cramer's Take) and away from the steel-like multiples we have seen from this group.

Random musings: Speaking of steel multiples, the revaluation continues there, too. The cheapest remains Reliance (RS - commentary - Cramer's Take), although it has moved up a great deal.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Accredited Home Lenders to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Cramer was long Capital One.

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