Writedowns and Capital Raised by Financial Firms

From data compiled by Bloomberg, financial firms have now written down $399 billion, with much more expected in the coming weeks.  On the flip side, they have raised a total of $322 billion in new capital. 

Below we highlight the writedowns and capital raised of major financial firms around the world.  Citigroup (C) tops the writedown list at $42.9 billion, followed by UBS (UBS) ($38.2) and Merrill Lynch (MER) ($37.1).  Goldman Sachs (GS) and Wells Fargo (WFC) are at the bottom of the list with $3.8 billion and $3.0 billion written down respectively. 

In the table we also include the current market cap for each firm as well as the ratio of writedowns to market cap.  ETrade (ETFC) tops this list with a ratio just over two (writing down $3.3 billion with a current market cap of $1.6 billion).  Washington Mutual and Merrill Lynch are the only other firms that have written down more than their company is currently worth.  JP Morgan (JPM), Goldman and Wells Fargo have the best writedown/market cap ratios.

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Comments

[User 138602]

well WFC is a huge crying buy, no wonder Warren Buffet likes it so much. Big safe dividend should we say , good management team if you believe Buffet = can t miss opportunity . If we don t take advantage of this fire sale we will regret it for the rest of our life. I expect a lot of blablabla like( falling knife ,more write off,not done going down etc...) ,sorry but in 3 years time you won t have any hair left on your head

[Richard Wendling]

While this article tells you about the write downs of these firms they forget to highlight the most manipulative force behind the stocks declines and that is the specialist that runs it. For those individuals interested in my opinions as to where this issue will be moving in the short and long term go to the following site, bearfactsspecialistrep... and click on the stock reports section and read my opinions. It will cost you nothing except the amount of time it takes to read the report and any other information you find interesting on the site.

Thank you

Richard

[Zeninvestor]

What conclusions did you draw from this? Comparing write downs to 'current' market cap only tells me that some stocks may well be 'beaten down' more than they should have, or is that some companies have taken more write downs and therefore are safer from further write downs?

The facts as you have presented them are well known, and thanks for compiling them, but opining on their meaning would have added something to the bare recitation of facts you have presented for us to ponder on our own.

[I Should Know]

You’ve got to buy when everybody says "sell", and sell when the crowds say "buy". While watching the stock market and getting caught up in the dramatic rise in price and the buying frenzy, I asked my stock broker about Apple stock. He said it was a great buy so I bought 500 shares on 9/18/06 at $73.81 each or a total of $36,905. On May 14th 2007 my broker called and said the stock was up to $109.62, did I want to buy some more. NO way I said, too costly. Through Spring, Summer, and Fall of 2007 Apple stock was going through the roof; it was skyrocketing, it was Wall Street’s new favorite stock. I was really upset with myself because I felt like this express train to financial nirvana was leaving without me. I got caught-up in the herd mentality (sounds a little like the real estate market, doesn’t it?). On December 11th 2007 I frantically called my stock broker and told him to buy 1000 shares; I didn’t care what the price was, I wasn’t going to be left out of this market, these rising prices. The price was $194.75. In February and early March I was tired of the roller coaster ride and was ready to dump everything at about $120 a share; more herd mentality. I still own the stock, I like the company. Wells Fargo is a GREAT, well-run company that’s been around for 156 years. They have a well known and well respected brand name as well know world-wide as Coke and McDonalds. Sure, they are getting beat-up and will suffer additional losses due to the credit and real estate meltdown, but they will be left standing and strong, ready to gain market share from their competitors. I think Warren Buffet is its biggest investor and Wells Fargo & Co is his third most popular stock. I own some WFC stock and I’m not happy about its price reduction, but like Warren Buffet, I’m in for the long haul. When asked “When is the best time to sell a stock”, Warren Buffet answered “Never”.

[ETFC = $16 - $32]

ETFC current earnings estimates for 2011 are for $1.08/share.

www.nasdaq.com/earning...

At a PE of 15 that gives you $16.20.

But this a low-ball estimate as ETFC is paying down their debt at an accelerated rate and this estimate also understates ETFC’s true growth potential as being the best on-line trading platform hands-down.

$1.08/share could easily double by 2011.

Now you’re looking at a $32.40 share price, or least something in between $16.20 - $32.40.

This target will be reached before 2011, of course, as the market tends to race to true valuations prior to actual earnings materializing.

Also AMTD & other companies interested in acquiring ETFC are well aware of how rapidly ETFC share price is going to appreciate and have a vested interest in naked shorting the crap out of the stock down to levels that would make a cheap buyout offer appear reasonable.

(THIS HAPPENS ALL THE TIME)

So either way, short-term ETFC gets acquired for a decent return for shareholders, ($8.00 - $12.00) or she doesn’t get bought and appreciates on her own upwards toward $16.00 - $32.00 over the next 18 - 24 month.

The naked shorties know what this company is going to be worth and they want as many of your shares as they can possibly scrounge.

[squashnut]

Good luck staying solvent with Wells Fargo. They are overextended in the worst real estate markets with a growing percentage of non-performing loans. Alt-A will finish them off.

[squashnut]

interesting the way they decided to change their accounting so that loans are not delinquent until 180 days instead of 120. Very shady.
Also beware their black box of tier 3 assets.

[buyitcheap]

I might agree with squash...It could also mean that the firms on the right side of your graph haven't been as forthcoming with their writedowns as others and may just be the other shoe that drops late in the year.

[muley101]

Yep, I'd like to see a comparison of C and WM showing total loan portfolio vs % of writedowns. WM should have the same or more bad loans as C as a % of total, especially since most of their loans are on the west coast and Florida. It that is true then there is no way they can survive and their recent statements regarding sufficient liquidity should send their board to jail.