Subprime squabble.New Century Financial Corp. could have a fight on its hands. Hedge fund hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" manager Greenlight Capital Inc. of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of has taken a shot at the Irvine-based subprime mortgage lender, saying New Century's executives haven't done enough to boost its stock. Greenlight principal David Einhorn David Einhorn may refer to:
The inflammatory statement, made last month in a filing with the Securities and Exchange Commission, has fueled speculation about what Einhorn plans to do next. Greenlight "may make proposals to (New Century's) management and its board of directors, and may engage financial, legal and other advisers, to explore value-creating alternatives," the company said in its filing. Those alternatives include "changes to the overall strategic direction of (New Century), corporate structure, capital allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as , capital raising activities, declassification de·clas·si·fy tr.v. de·clas·si·fied, de·clas·si·fy·ing, de·clas·si·fies To remove official security classification from (a document). de·clas of the board, board and management composition and related topics." Greenlight is New Century's largest shareholder holding 9 percent of its shares. New Century's shares surged last week with the broader market rally, but they're down 19 percent since the beginning of the year, closing at $48.88 May 19. In an e-mail, a New Century spokeswoman said, "we are confident that executing our business strategy as planned will create long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. stockholder value." The subprime market is showing signs of strain as the spread between what lenders take in as interest on mortgages and what they pay out to bond holders narrows. Bond payments are tied to the London Inter-Bank Offered Rate, which has been rising, eating into profits. --Orange County Business Journal |
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