Shares of Countrywide Financial Corp., the biggest U.S. mortgage lender, rose as much as 5.7 percent on the New York Stock Exchange today on speculation Warren Buffett may buy the company.
Countrywide climbed 42 cents to $20.23 in 10:16 a.m. composite trading, after reaching $20.93 earlier today. The company’s shares have lost more than half their value this year as waning demand for mortgages reduced profit and cut off access to funds needed to make new loans.
Buffett’s Berkshire Hathaway Inc. may purchase parts of Calabasas, California-based Countrywide, the Wall Street Journal reported today, citing investors speculating on what Buffett might do with his company’s $47 billion in cash. Countrywide’s debt-servicing business and its investments in high-quality mortgages may be attractive to Berkshire, the newspaper said.
“Given Countrywide’s prominence in the mortgage business, it must be doing something right,” said Charles Crane, who helps manage $265 million as founder of Scotsman Capital Management in New York. Crane said speculation about Buffett is driving the company’s shares higher today, after they dropped in seven of the past nine days.
Countrywide said last week it tapped $11.5 billion in emergency credit lines to weather the collapse of the subprime mortgage market. More than 90 home-loan companies have closed or put themselves up for sale since the start of last year, according to data compiled by Bloomberg.
Amber Cousins, a spokeswoman for Countrywide, didn’t return a call seeking comment. Buffett didn’t respond to a request for comment yesterday through spokeswoman Jackie Wilson.
Federal regulators said they have had an “ongoing presence” of examiners at the company since it converted to a thrift charter in March.
“We’re monitoring the situation closely,” said William Ruberry, a spokesman at the U.S. Office of Thrift Supervision.
Ruberry said the presence of federal examiners at Countrywide isn’t unusual.
“We maintain an ongoing presence at all our large institutions,” he said. “Countrywide is one of our larger institutions. That’s our supervisory strategy.” While the agency doesn’t have an office at the company, regional OTS officials are visiting the lender and conducting examinations, he said. Ruberry declined to say whether the OTS has recently assigned more examiners to Countrywide.
Frederick Cannon, an analyst at New York-based KBW Inc., yesterday cut his rating on Countrywide to “underperform” on concern the company’s liquidity crisis may be spreading to its bank unit.
—With reporting by Elizabeth Hester and Josh P. Hamilton in New York.
