Judging From Short Traders, Imperial in for Longer Fall.WITH the benefit of hindsight, the key clue turned out to be the huge short position in the stock of Torrance-based Imperial Credit Industries Inc., the diversified business lender. Shareholders in struggling Imperial Credit have watched as their stock tumbled from more than $27 a share in 1997, to under $1.50 in recent trading. And yet on Oct. 16, there was still a huge, 600,000-share short position in the stock. The position was unsettling un·set·tle v. un·set·tled, un·set·tling, un·set·tles v.tr. 1. To displace from a settled condition; disrupt. 2. To make uneasy; disturb. v.intr. given that an investor might well wonder why short-traders hadn't already collected their winnings and gone home by now. (Short traders place financial bets that a stock price will go down, not up. They borrow and sell a stock, hoping to buy it back and return it later at a lower price). Several weeks ago, I asked Imperial Credit Chairman Wayne Snavely, via e-mail, about the large short position. He replied directly and honestly, if obliquely, that short-traders were happy enough not "to cover" their positions, which means to buy back shares and return them to original owners. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently , they were sticking with their positions -- meaning the shorts were betting Imperial stock would get even sicklier. The shorts bet right, as it turned out. Snavely issued another bombshell announcement last week, this time to the effect that Imperial Credit would take a $25 million write-down for bad loans and leases, another $3 million for problem assets, and $7 million to settle litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . He also said the third quarter ended Sept. 30 would be another money-loser. It was the second such announcement in recent weeks. On Aug. 18, Imperial Credit had dramatically restated earnings (which became losses) for the second quarter ended June 30, after an EDIC EDIC Economic Development Information Center EDIC Explain Demonstrate Imitate Critique (military aviation training method) audit forced it to declare an unexpected $56.1 million write-down on suspect loans. That event turned the second quarter into a money-loser. The recent announcements come after two years of financial setbacks, mostly after Imperial Credit ventured into consumer lending Consumer lending or consumer loans refers to any type of loan product that is not a mortgage; such as a car, boat, manufactured home, home equity loan, home equity line of credit, signature loan, signature line of credit, recreational vehicle, or Certificate of Deposit loans. , in particular the sub-prime auto lending market. The lender has since retreated to its roots in business lending. In trading after last week's news, Imperial Credit stock sank toward $1 a share. Contributing columnist Benjamin Mark Cole Mark Cole is a multi-instrumentalist blues and roots musician based in Gloucester, UK Music Mark primarily writes and performs blues music but also writes and performs music influenced by other American roots music genres such as americana, cajun, zydeco, bluegrass and writes about the local investment community for the Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. Business Journal. |
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