My stock pick (fig) has dropped like a rock should I.............?

Question

Should I double up on this stock ?

This is an equity buyout company much like Blackstone. But unlike Blackstone * fig (Fortress) has made several good buys and has equity of their own but....

_ (yahoo finance)_
Fortress Investment Group (FIG - Cramer's Take - Stockpickr) was one of the few losers of the day, after some bad publicity in The Wall Street Journal. The hedge fund and investment management firm slipped 20 cents to $17.64 after the Journal reported subprime mortgage lending companies it owned were foreclosing on 34 New Orleans homes. The news proved embarrassing for Democratic presidential candidate John Edwards, a frequent critic of lenders foreclosing on Hurricane Katrina victims, who worked for Fortress after leaving the U.S. Senate in 2005.

Hey any suggestions will be very much appreciated/.

I bought this stock because I know that equity trading platforms are relativly new in the Exchange Traded Funds. I see the market in this for the future, so my idea was to buy long and trim, adjust as needed. Now is a critical time for purchase but I feel that I am missing some piece of the puzzle. and your answer to me was weak.

Answer 1

I'm not a huge fan of recent IPO's and while FIG had a good Q2 I don't think that I would double down at this point. The stock is trading at its 52 week low "never catch a falling knife" below the 50 DMA http://stockcharts.com/h-sc/ui?s=FIG&p=DAILY&b=5&g=0&id=p45095417840

Looks like FIG makes money by investing borrowed money, I'm generally staying away from the financials less BAC.

Morningstar assigns a FMV of 15.00 per share.

IMO this might be a nice play but it looks relatively risky to the other opportunities in the market. I really like oil and esp. natural gas right now CVX, HES, DVN other low risk undervalued stocks JNJ, CTAS, CX, PCG, MDT and others.

Remember diversify and good luck

Answer 2

I think you're confused about what Fortress Investment Group (FIG) does. First, it's not a buyout or private equity firm like Blackstone. It's a hedge fund. The difference? Hedge funds like FIG make money by trading and/or special situations (e.g. the subprime debacle they got into in New Orleans). Private equity firms buy companies, spiff them up for a couple of years and then sell them back out in an IPO. Hedge funds have to be great traders and use a TON of leverage to magnify returns (or losses). Private equity firms do something very different. They use their financial acumen to identify good buyout targets and to turn them around by hiring managers and building synergies. They get paid huge fees in the process and hope to make even more money when they sell the company back out.

Neither of these companies has very much to do with equity trading platforms and neither has anything to do with Exchange Traded Funds (ETFs).

Answer 3

I would definitely sell FIG. I shorted it on June 20th when it failed at the 50 DMA and still have a short position on it. Someone earlier posted that Morningstar had it's FMV @ 15.00. It could very easily go that low and probably further. The sub prime mess is far, far from over and these hedge funds that are involved are going to get crushed further. Remember, these hedge funds are leveraged at 10 to 1, so if the sub prime gets hurt further its a lot worse for the hedge funds. It may be too late to make a lot shorting FIG now (may not be, either), but don't see much upside potential (other than a technical bounce) on this one for quite some time.

p.s. It serves John Edwards right that this was an embarrassment to his campaign. He is the definition of hypocrisy!!

Answer 4

This stock is in a downward trend. I would have asked the question back in May when it failed to break out. As of 8-22-07, there might be a chance of some recovery. If did does continue up through the 20MA and then through the 50MA, hold on to it. Track it closely and if starts down now or later at all, SELL.

Answer 5

This stock has lousy fundamentals on the surface, and ranks lowest in it's industry group. It's been moving down below it's moving average since the middle of May. I may be an idiot but doing PUTs on this one was the way to go. At least until an up trend accusers

Answer 6

why did you buy it?
if this reason(s) not longer exits, sell out

what was your exit plan when you bought it?
if your stop has been hit, sell out

if you didn't have an exit plan and/or reason when you bought it, your plan was to spend your money on lessons in the RL stock market. If this is so, you're getting your money's worth.


:-)