Investing to Wealth

Washington Mutual Inc. (OTCPK: WAMUQ)

Washington Mutual Inc. is in bankruptcy. Investors should be cautious in buying common stock of companies in bankruptcy. It is extremely risky and is likely to lead to financial loss.

Washington Mutual Inc. (WAMUQ) is a consumer and small business banking company with operations in U.S. markets. The Company is a savings and loan holding company. It owns two banking subsidiaries, Washington Mutual Bank (WMB) and Washington Mutual Bank fsb (WMBfsb), as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets; and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. In September 2008, it filed for Chapter 11 bankruptcy.

Washington Mutual Inc. was founded in 1889 and is headquartered in Seattle, Washington.

Source: Reuters.com, SEC Filings.

Financial Summary

WAMUQ is now owned and operated by JPMorgan Chase.

Source: Reuters.com, SEC Filings.

Analyst Consensus

No chart available.

Source: www.ft.com

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=WAMUQ.PK

Investment Highlights

WAMUQ has tentatively resolved disputes with JPMorgan Chase & Co. and the Federal Deposit Insurance Corp. over some $4 billion at issue in the bank holding Company’s Chapter 11 bankruptcy, a WAMUQ attorney said last week. The FDIC seized Washington Mutual’s flagship bank in 2008 and sold its assets to JPMorgan for $1.9 billion. The sale resulted in the two banking companies and the government agency trading lawsuits over roughly $4 billion in disputed deposit accounts.

WAMUQ attorney Brian Rosen told U.S. Bankruptcy Judge Mary Walrath on Friday that JPMorgan has agreed to turn over the money to Washington Mutual after deducting $172 million as its share of tax refunds received. In return, JPMorgan will get 70% of expected tax refunds resulting from WAMUQ’s prior operating losses that are valued at about $3 billion, with Washington Mutual getting 30%. WAMUQ also will get about 40% of a second round of operating-loss tax refunds valued at about $2.6 billion, with roughly 60% going to the FDIC.

The settlement negated the need for a hearing Friday on WAMUQ’s request for a judgment that would have forced JPMorgan to surrender the deposits, and on the FDIC’s request that it be allowed to hold the funds pending resolution of related lawsuits. Rosen said the deal, which could result in the dismissal of three lawsuits pitting WAMUQ, JPMorgan and the FDIC against one another, also is contingent on the resolution of claims from holders of billions of dollars of bonds issued by Washington Mutual Bank, or WMB. Without the bondholders’ approval, or the disallowance of their claims in their entirety, the settlement could turn to “vapor,” Rosen said outside court.

Evan Flaschen, an attorney representing institutional investors who hold about $2 billion in WMB notes and were not part of the settlement negotiations, expressed disappointment at the announcement. Flaschen said the FDIC appeared to be more interested in getting released from WMI’s claims that it improperly sold WAMUQ assets to JPMorgan at a “fire sale” price after the largest bank failure in U.S. history, rather than exercising its fiduciary duties to the bank’s creditors.

Washington Mutual shareholders (Stock Symbols: WAMUQ, WAHUQ, WAMPQ, WAMKQ) and WamuTruth.com staff said they were shocked to discover on Friday that Brian Rosen, council for the Company, has agreed to a proposed “settlement” with JPMorgan and the FDIC of all outstanding litigation and claims without consultation or discussion with the Official Equity Committee of Washington Mutual. This unprecedented surrender involves giving away all of the Company’s rightful assets and claims for a pittance to the detriment of all equity stakeholders in the company. This proposed settlement was clearly done with no regard to the rights of the true owners of the company due to the inexcusable nature of how these negotiations were conducted. If this proposed settlement is approved by the board of directors, their actions should be considered illegitimate by Washington Mutual shareholders and the court as an annual meeting to elect the board has not been held, contrary to the company’s bylaws for over two years.

Source: https://www.chase.com/wamuwelcome3/

Technical Analysis

Source: http://stockcharts.com

WAMUQ’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, WAMUQ is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

WAMUQ’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9-day moving average or signal line. This suggests that positive momentum has begun to slow.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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