Conseco Hammered on Downgrade, Resignation
Conseco's (CNC) shares tumbled Friday after an analyst told shareholders they should sell the company because of ongoing credit and cash-flow problems. Investors were also spooked by the resignation of a top executive.
The battering, in which Conseco's shares fell 69 cents, or 16%, to $3.56, came one day after rival GreenPoint Financial (GPT) said it would stop making loans for manufactured homes, citing subpar returns. The decision exacerbated concerns about Conseco's own finance unit, which makes similar loans and whose top executive, Bruce Crittenden, quit Thursday.
Investors bailed out en masse Friday after Salomon Smith Barney analyst Colin Devine lowered Conseco to sell from underperform and recommended it as a short sale, saying the shares "offer little, if any, value." Devine, a long-time critic of the company, said liquidation is a possibility.
"Conseco continues to face myriad credit-quality challenges relating to its subprime consumer finance unit, ongoing weak operating ratios at its life insurance operations, and self-acknowledged cash-flow deficiencies at its holding company parent,'' Devine wrote.Conseco's shares have lost about 90% of their value since the company purchased the finance arm, then Green Tree Financial, in 1998. TheStreet.com has repeatedly raised
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV