BOTTOM-DIVING AT WACHOVIA
Things have gotten so dire at Wachovia (WB) that it’s own partners are anxious to sell, even if it means getting out at the bottom. That’s the take of the braintrust at the New York Post, which has reported that Prudential (PRU), which is still holding a 23% stake in the banking concern’s retail brokerage operation, is anxious to unload its holdings. On some levels, of course, the argument would hold water: Wachovia has been throwing off a significant less attractive yield of late, since it cut its dividend 41% earlier this year in the face of some continuing housing distress. It’s been looking for new leadership since it ousted its chief executive earlier this year, and - like a number of banks - has appeared rudderless in the storm of housing distress. And the stock has traded at the lowest price it’s commanded since its transformation from First Union back in 1991. Of course, the latter reason is also the compelling argument against a sale. Who, exactly, ever got rich selling at the bottom? (Though there’s no guarantee - and perhaps not even much chance - this IS the bottom.) Foxx-Pitt Kelton warned that several banks could be at risk of further dividend cuts. Wachovia would make the list, even though it’s only yielding about 9% - which, disarmingly enough, isn’t spectacularly high by bank-yield standards. There’s also that other humbling question to be raised: who the heck would buy a quarter of a tumbling bank franchise, especially when any bottom fisher could afford to wait to scoop up the assets at distress-sale prices. Wachovia has fallen about 7%, Prudential has set a new low for the year.

Source: Blog Barrons