Washington Mutual - interesting statistic

Jim Cramer, the founder of TheStreet.com, and CNBC Mad Money guru, had an interesting piece on Washington Mutual this afternoon, with Jim in fact playing the stock the exact same we are: Jim is waiting to see what q1 '07 earnings look like.

However, CreditSights, a Wall Street fixed-income research firm which does great research (better than a lot of equity analysis in my opinion) wrote a piece on WM when the subprime issue broke in late February saiying that WM has as much as 15% risk to eps from subprime, which is less than I thought, and likely leaves the dividend intact (in my opinion).

Another interesting stat on WM: Oakmark Select, one of the family of Oakmark funds run by Harris Associates here in Chicago had a 15% position in WM stock as 2/28/07, per the recent Morningstar data sheet that Morningstar publishes monthly on many mutual funds.

Bill Nygren, a brilliant value investor, and the lead manager of Harris Associates Oakmark Fund has been bulling Washington Mutual since 1997, saying that the stock is worth between $70 - $80 on a takeout by a larger bank. (Oakmark and Harris Associates are classic value investors, along the Warren Buffett line.) Along with the Oakmark's Select's 15% position in WM, WM holds the #2 position in Nygren's fund with a 2.54% position as of 2/28/07.

At $40 per share, WM is yielding over 5% with the annual dividend better than $2 per share.

The thing is, the subprime blowback might be the catalyst to finally motivate WM to sell out, and realize some of this undervaluation. Investors have been waiting for years for the thrift to get taken out.

Technically, WM is getting oversold on the weekly chart, as it tests its 200-week moving average near $40.91.

position in WM