What is Countrywide Worth?

Last summer I wrote two posts on Countrywide: Absurd CFC Rumor Presents Shorting Opportunity (August 21, 2007 with CFC at $21.79) and Why Countrywide is Done (August 28, 2007; $19.31).

My view then and now is that CFC is a zero barring a government intervention/giveaway like the Bear Stearns deal:

I just saw something that makes me much more confident in my Countrywide short and put options position. The manager of Second Curve Capital appears to be a Countrywide sympathizer.

Today in the WSJ I see that this viewpoint is continuing to take hold:

Investors remain skeptical that Bank of America Inc. will end up acquiring Countrywide Financial Corp. at the estimated $7.16 a share price agreed to months ago, and the company’s stock is continuing to sink in trading today.

Wednesday, Standard & Poor’s equity analysts chimed in, saying they believe Bank of America “will renegotiate a lower price due to large losses in CFC’s loan portfolio.” They value shares at $6 a share, on the expectations that the deal will be reworked.

In their research note An Involuntary Transaction: Why BAC + CFC May Never Close, Institutional Risk Analytics writes, "Given the outline above, our view is that the equity of CFC is worth $0."

I have no position in CFC but I own puts on a number of other lenders: BKUNA, CNB, COF, DSL, and SOV.