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 questions about the company's ability to meet its debt obligations through existing cash flow; the company could face up to $1.39 billion of debt payments this year.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $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
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV