I’m sorry that I am evidently disturbing so many people by worrying about Bofi. On the BOFI board Andy said to me: I am not sure why you are disturbed with people taking a different side from your views. I can understand stating your case, but after awhile it seems you want everyone to follow you into selling.
He then asked the following two questions:
1. Do you know that any of the articles are true?
2. Is anything that the bank is doing now different then when you first started investing in them?
Here are my attempts to respond:
Hi Andy, Let me try to answer your questions. You said I am not sure why you are disturbed with people taking a different side from your views. I can understand stating your case, but after awhile it seems you want everyone to follow you into selling.
Earlier today Pete, over on my board, said:
I continue to hold my “smallish” position based on financial fundamentals, but I recognize there are many risks.
I wasn’t disturbed with him taking a different point of view. I responded:
Hi Pete, Recognizing there are “many risks” but deciding to take your chances is a rational approach. I was worried about all the people who were in denial about the risks, saying it was “just a short attack” and not even reading the evidence.
Andy, I have lived through many short attacks. You have too. They are usually two or three articles saying this stock is overpriced for such and such reason, comparables are selling much lower, growth won’t last, PE is too high, too much debt, etc. The stock sells off a little, the shorts close their shorts, and life goes on. This bears as much relationship to a regular short attack as a 50-car pile-up on the expressway does to a little fender-bender in your driveway.
As far as your last questions:
Do you know that any of the articles are true?
OF COURSE I know they are true! They are all documented with copies of the documents. Haven’t you read them? What I don’t know is whether the things that they are doing are actually illegal or just shady and skating on the edge of illegal. Is it really illegal to have a convicted felon as one of your vice presidents? Is it illegal to hide risky loans in a different category in your reports, etc. I’m no legal expert on this kind of thing. Are you? But saying that this is just a short attack so we can ignore all these things doesn’t cut it. Not for me anyway.
Is anything that the bank is doing now different then when you first started investing in them?
My god, YES! It’s not that it’s DOING things that are different, but that back then I didn’t know about all the shady, quasi-illegal, and skirting-the-edge kind of things that they actually ARE doing. I thought that this was an honest, on the up-and-up, safe bank.
And look, for all I know this will all blow over. The stock may get down to $15 and then be back at $30 or $40 in a year or two. I don’t know. I do know that this much stuff won’t just blow over by next week.