Grad #1: Kevin from the University of Florida Warrington College of Business Administration
Here’s the scenario:
In a possible scenario raised Wednesday by Merrill Lynch, Countrywide Financial (CFC), the biggest US mortgage lender, is forced by creditors to sell mortgage assets at rock bottom prices and is pushed into bankruptcy. What are you buying and what are you selling as this scenario unfolds?
Kevin is buying traditional lenders such as Freddie Mac (FRE), Fannie Mae (FNM) and Wells Fargo (WFC) as well as Bank of America (BAC) and Washington Mutual (WM). He’s selling DR Horton (DHI), KB Homes (KBH) and other companies which cater to first time homebuilders. And he’s buying Berkshire Hathaway (BRK).
Guy Adami gives Kevin a “B+”.