This column was originally published on RealMoney on April 4 at12:18 p.m. EDT. It's being republished as a bonus for readers. For more information about subscribing to RealMoney, please click here .

Once more into the breach. With fears that the growing subprime catastrophe is about to upset other companies in the financial industry (if not the entire U.S. stock market and economy), insiders at several of the firms supposedly on the front line of any contagion are fighting the perception that their stocks are just so many dead men walking.

In the wake of the severe market selloff at the end of February, there was notable purchasing by executives and directors at:
  • American Home Mortgage (AHM)
  • CBRE Realty Finance (CBF)
  • Inland Real Estate (IRC)
  • IndyMac (NDE)
  • American Capital Strategies (ACAS)
  • JER Investors Trust (JRT)
  • Bear Stearns (BSC)

And that's just for starters.

The actions of these insiders seem to indicate that fears of a subprime-triggered market meltdown are overblown, and that the attractive indicated yields on most of these securities are very real.

When asked his opinion of whether the more-than-16% indicated yield is sustainable on the punished stock of American Home Mortgage, analyst James Ackor at RBC Capital Markets quickly answers, "No." But not for the reason you might expect: "I think the stock will go up," he says firmly.

In stark contrast to high indicated yields often presaging a future reduction in payout, AHM's earnings and distribution are very likely to increase yet again in 2007, says Ackor.

Not that he thinks everything is hunky dory. He fully expects increased write-offs, reduced demand in the secondary market, higher insurance costs and a lower volume of originations to be par for the course this year for mortgage players. But Ackor calculates that these risks "should be manageable and not have a severe impact."

So it's a matter of the degree to which the impending (and fully acknowledged) negatives will actually affect earnings in the sector. And in weighing the factors, most of the industry watchers and insiders I spoke with echoed similar sentiment. To wit: Most of the financial stocks that have been hit by the subprime pin action now have the known risks more than priced in.

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