Earth to Tom Brown…..

June 10, 2008

tbrown.gifGive Tom Brown credit for his convictions.

The financial stocks maven and head of hedge fund Second Curve Capital LLC is hanging on to names the market is pummeling. We’re talking such train wrecks as First Marblehead and CompuCredit. And in recent months, Second Curve has picked up bond insurers including Ambac Financial Group and MBIA Inc that have done nothing but fall.

Brown, who regularly appears on CNBC (including Monday night) to talk about the coming turnaround in financial stocks, has seen the value of his holdings fall from $852.7 million as of Dec. 31, 2006, to $139.3 million as of March 31, 2008, according to regulatory filings.

Now Wall Street admires investors who stick to their convictions, particularly if they turn out to be right. But how much do you have to lose of your investors’ and your own money before you decide that the financial stocks rout of the last year might — just might — be more than just a temporary blip?

Yet Brown, the high-profile commentator who operates the Web site, sticks to his guns. The market, he says, is wrong. The mortgage credit crisis that brutalized financial stocks seems close to being resolved, says Brown.

“We’ll keep saying it until we’re blue in the face,” said Brown in a June 4 post on “Subprime mortgage loss estimates are too high…. The reason why they’re too high is simple, too. They assume that last year’s credit performance will persist far into the future. Only it won’t.”

Let’s see: the economy is slipping, energy prices are skyrocketing, U.S. government and trade deficits are ballooning, inflation and unemployment is rising, housing prices are falling, consumers are spending less, residential and corporate credit defaults are rising. And Brown is saying that the mortgage credit markets are poised for a turnaround? Defaults have washed through the system?

I don’t know, but if I were a Second Curve investor, I’d vote with my feet.

Brown did not return requests for comment.

4 comments so far | RSS Comments RSS

it’s funny how tom brown declares weekly winners and losers on his site, yet has yet to nominate himself, his fund, his picks, or some of his holdings (FMD, CCRT, LEND, IMB, NTBK), I could go on….

he is truly clueless and i appreciate the fact that someone has the stones to call him out on it.

Posted by charlie stevens | Report as abusive

Now is the time to buy when the market is beat down. This is the bottom. Blood is in the street and everyone I talk with is buying the banks. By the time you think market conditions are right, I will be selling to you at a huge profit.

Posted by Warren | Report as abusive

Warren says now is the time to buy because there is blood in the streets YET everybody he talks with is buying bank stocks? Ummmm is that a bit of a contradiction? I’ll spare Warren any further criticism for I fear he has sustained enough pain when viewing his statements.

I have NO RESPECT for Tom Brown. You could not do worse than he has if you tried. Unfortunately for him hat is not an exaggeration. This guy basically ran his fund into the ground with one bad pick after another yet he is quick to attack others. Recently he has been going after Meredith Whitney and stating she is completely wrong.


How in the hell does this guy get off by criticizing others? Tom when your fund closes due to your losses I will have a drink in your honor a******.

Posted by Greg Harrison | Report as abusive

Great Call T Brown….maybe you and your ego can your horrible record can stop making wrong calls with such conviction. Stop yapping and give some useful information. I think most people are getting sick of arrogant self absorbed stock pickers who obviously have trouble making right calls. Maybe you should check with M whitney for some advice after you told her how stupid she was with your bottom call. How in the world did you get to run a hedge fund??????

Posted by workedlate | Report as abusive

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