I had reservations on whether to post on here since my views are not positive, and the longs will certainly bash me as a manipulator, short in disguise or whatever other phrases used on these boards. The reason I am posting is that every once in a while these boards do add value, and at a minimum, can give you something to think about even if it is contrary to your position.Many on here seem to be excited that NFI is not tanking the way NEWC and LEND are. The simple answer is, management is completely non-communicative, and unless they are FORCED to make an announcement, they will continue to stay radio silent. If you wish to interpet this as "no news is good news" please do so at your peril. I will also issue a FULL RETRACTION if anyone can reach Investor Relations and get any questions answered, I had been a LONG holder of NFI for months (management knows me) and have now tried calling for the past 2 weeks and have never gotten a return call, a good sign that management has nothing positive to sayMore relevant is the following. The market has always perceived LEND to have the best loan portfolio among the "Big 3". LEND was "lucky" enough to sell their current Loan for Sale portfolio at 94 cents on the dollar, which should set a CEILING for NFI NEW FMT FBR and others in the space. Prior to this sale, the market rate was 97 cents on the dollar. A quick look at the blance sheets of NFI or NEWC shows you the sensitivity of each 1% discount. At 97 cents, there was marginal equity value to either company, at 95 cents, equity is worthless in both, and at 91 cents (which i assume is the best price NFI will see) the equity and preferred are worthless. Also keep in mind, that even if/when these companies do get liquidity, the cash burn rate for the next year will be tremendous (there is almost ZERO origination and these companies are no longer competitive in the market place for what business there is left) so the cash burn and book value deterioration will be tremendous.On the positive side, the company DOES have cash from 2006 that was required to pay out dividends in 2007. I suspect mgmt is being quiet since they are trying to figure out a way around distributng that cash to keep the company alive. There is no doubt that in an evironment like this, NFI cannot afford to have $200mm leave the company is the form of dividends but IRS rules force the company to pay out this money. Also, if you notice, the company no longer calls itself a REIT, another sign to me that mgmt is trying to see a way out of distributing out this $$$...My guess is that mgmt prepares a shareholder vote to either issue more shares and/or to resind the dividend for liquidity purposes, neither being a good SHORT TERM solution for equity holders. Finally, from my sources on the MI side, I can tell you that NFI DID have decent underwriting standards, and should not be lumped in with NEWC, but was probably not as good as LEND, and since LEND was first to market to sell its loans, and there are many fire-sale sellers out there and just a few SMART buyers, I do not see NFI getting more than 93 cents on the dollar for its portfolio.One freebie to end things, NEWC is a certain bankruptcy, sometimes even stocks like Enron got a final bounce before filing, but it is simply a matter of time, so if you are hanging on to any residual shares, please dont be too greedy in selling them.I hope this post provides a good lay-mens view on how we see the sub-prime debacle in the hedge world. For full disclousre, I am short NEWC, and out of LEND and NFI but will look to short or sell calls into any strength in either name.

¶ 11:54 PM

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