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If you look you can find all sorts of news quickly on the internet. Here is one about the broken dreams of some people that includes retirees. I already been seeing some of this activity to the side of my specific interest areas and not ever taking any serious interest until this subject line appeared. I take time away from my narrow and selfish focus to learn about the mistakes of others and how it applies to my situation.
If you take time to understand how it affects others, it may let you see a little more into the trouble some people now find themselves in. For every dream that is realized there are probably many, many others that lie broken in forgotten and unseen places. That people take the time to see the value in sharing this part of life means there is something positive to be gained through the effort.
Msg: 38615 of 38705 2/23/2007 10:19:09 AM Recs: 7 Sentiment: Not Disclosed
By: grandpatb Send PM Profile Ignore Recommend Add To Favorites
DREAMS FALL ON NOVASTAR REIT WRECK (NY Post)
Msg: 3325 of 3327 2/23/2007 9:41:41 AM Recs: 1 Sentiment: Not Disclosed
By: brother_humv Send PM Profile Ignore Recommend Add To Favorites
Posted as a reply to msg 3324 by grandpatb
DREAMS FALL ON NOVASTAR REIT WRECK
NY Post
February 23, 2007 -- This week's stock-price meltdown of a small Midwestern real estate investment trust has proven devastating to the hundreds of shareholders who've frequently visited a little-known Internet message board.
Falling victim to the sharp deterioration in the subprime mortgage loan sector, NovaStar Financial unexpectedly announced a $14.4 million loss Tuesday afternoon.
At the same time, the company also warned investors that its rich dividend was in peril because of a grim outlook for the company's taxable income, which is required for a REIT to make dividend payments. NovaStar also said it might be forced to surrender its REIT status.
The string of bad news has almost halved the company's value since Monday - closing yesterday at $9.34 a share.
NovaStar's investors, many of whom rely on the REIT's dividends to fund their retirement planning, have been devastated.
In addition, NovaStar's enthusiastic shareholders were frequent visitors to an Internet message board called InvestorVillage.com, whose content was plastered with bullish views on the stock.
The leader of this group of burned investors is a veteran of the anti-naked short-selling movement, a man The Post identified in 2005 as Philip R. Saunders. The West Coast-based Saunders posted messages under the moniker "Easter Bunny."
In 2003, Saunders helped launch a Web site called
www.nfi-info.net (NFI is NovaStar's ticker symbol) to help combat bearish sentiment on the company.
For more than three years, Saunders and a handful of other Internet posters were correct about Kansas City, Mo.-based NovaStar, which kept increasing dividends. But that winning streak petered out as NovaStar began to suffer from problem mortgages tied to borrowers with poor credit histories.
Saunders, though, continued to tout the stock, dismissing warnings posted on the message boards as short-seller propaganda.
"Figure this out, people," said a typical posting on Feb. 2. "They are creating a crisis in confidence when the company isn't allowed to say anything. The company is doing well. Business is good. [Mortgage] originations are growing."
On Feb. 13, another poster, "MarionPolk2000," suggested message board readers buy NovaStar stock using their credit cards.
For those who followed their advice, financial devastation followed.
A poster named "Bubbygator" wrote yesterday to say he had lost 40 percent of his net worth, or $335,000. Another poster, "Sealman," said he sold out his 21,000 share position yesterday, convinced that the "income stream" for retirement was gone.
Other posters told The Post that NovaStar's collapse would affect their ability to fund their IRAs.
While no one blamed Saunders, they did confess to being unaware of the declining subprime mortgage sector.
Mary Helburn, who owns 60,000 shares, told The Post that she was down nearly $500,000 in a week, but is optimistic on NovaStar's future. "I'm holding for the long haul," Helburn said. "I don't blame [Saunders] at all."
Saunders wrote on Investor Village that he has been "body-slammed by this." In an e-mail to The Post, Saunders stood by his criticism of NovaStar skeptics, but acknowledged, "I, and many other investors, lost a lot of money. Many of those are retirees that can't start over."
