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).
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.
Stock price of FBR has shot up in the past couple weeks, despite the subprime crisis.
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