Whenever a buyback is announced, it is always a good idea to check out the company, its fundamentals and its prospects. Let's take a look at one company that has recently announced a buyback: Friedman Billings Ramsey Group (FBR). (On Stockpickr, you can see the rest of the insider trades and buybacks).

Friedman Billings Ramsey's board has raised its buyback authorization for Class A shares to 100 million, from the earlier approval of 50 million. FBR has already bought back 23.6 million shares under the earlier authorization.

The company has suspended dividend payments for the current quarter. The last quarterly payment of 5 cents a share was made on Oct. 31 for the quarter ended Sept. 30, 2007.

The company's net loss expanded to $214.7 million, or $1.28 per share, in the third quarter, with heavy writedowns and losses related to its on-balance-sheet securitized loan portfolio. FBR expects its losses to narrow in the fourth quarter to $38 million. The company has completed the sale of its on-balance-sheet securitized loan portfolio and is currently negotiating the sale of the remaining $48 million of the mortgage loans.

FBR has certainly felt the pressure of the housing and financial-market turmoil, but some may feel this one is drastically undervalued because it is currently trading below book value per share.

However, for the past 12 months, I have questioned the accuracy of book value in these types of companies. I expect to see further writedowns in '08, as assets are written down closer to actual value.

There are several investment funds that own FBR and you can glance through the list of these at Stockpickr.com.

One fund that owns the stock is WisdomTree SmallCap Dividend ETF. This fund replicates the performance of the WisdomTree SmallCap Dividend Index, by matching its portfolio with that of the index. The fund also owns American Financial Realty Trust ( AFR) and Nationwide Health Properties ( NHP).

Another fund is Royce Financial Services Service, managed by Charles Royce. This fund has a Morningstar rating of four stars, and has three-year returns of 16.55%. The fund also owns SEI Investments ( SEIC) and Westwood Holdings ( WHG).

While the stock is trading much lower than its 52-week high of $8.39, I would still be wary of buying into FBR right now. I would rather wait for an improvement in the economic environment.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Friedman Billings Ramsey Group 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, Raznick had no positions in the stocks mentioned, although positions may change at any time.

Jason Raznick is president of Easy Stock Alerts and has been involved with the capital markets for several years. He has worked for Merrill Lynch, Dynamis and Tricap Holdings, a joint venture with Fortress Investment Group. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Raznick appreciates your feedback; click here to send him an email.

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