Commentary - 12/04/2007

Novastar: Somebody Knows

Could not resist commenting on today's story in the Kansas City Star, Page D3:
NOVASTAR: NYSE wants an explanation

The New York Stock Exchange asked NovaStar Financial Inc. to explain any developments that might have precipitated a 69 percent jump in its stock price Monday.

The unusual trading activity came three days after a waiver deadline [Nov-30] set by Wachovia Corp., NovaStarís principal lender.

The Kansas City-based subprime mortgage lender responded publicly that its policy is not to comment on unusual market activity.

Well, of course not. Besides, looking at the chart above, that sure is an interesting curve. If there wasn't so many other nasty stuff going on in Kansas City, I wouldn't give this a second thought. It simply seems that Connecticut Yankees, known as carpetbaggers in the old days, seem to be swarming all over Kansas City at this point in time. For example: Let's get back to NovaStar. For a company that's been severely hurt in our current real estate fiasco, there's certainly been a lot of BIG Eastern interest in this Midwestern company. To start with, Wachovia seems to hold the thumbs-up thumbs-down power. So who's has a financial interest in Wachovia?

Symbol Name Of Corporation

Wachovia Corp. (As of 30-Jun-2007) (As of 30-Jun-2006)
Top 10 Institutional HoldersShares2007Value2006
Barclays Global Investors UK Holdings Ltd96,736,6495.08%$4,957,753,2615.62%
Capital Research And Management Company60,600,3273.18%$3,105,766,7581.28%
State Street Corporation57,554,6763.02%$2,949,677,1452.93%
Dodge & Cox Inc56,574,7792.97%$2,899,457,4232.13%
Vanguard Group, Inc. (The)54,079,7032.84%$2,771,584,7782.59%
FMR Corporation (Fidelity Management & Research Corp)49,396,3112.60%$2,531,560,9383.03%
Goldman Sachs Group Inc39,414,3532.07%$2,019,985,591-.--%
Davis Selected Advisers, LP35,956,9851.89%$1,842,795,481-.--%
Morgan Stanley26,029,8641.37%$1,334,030,530-.--%
Mellon Financial Corporation24,702,3321.30%$1,265,994,5151.16%
% of Shares Held by All Insider and 5% Owners:2%-.--%
Top 10 [1%] of 1009 Institutional Holders Control26.32%23.42%
Percentage of Barclays and "Associates" Control12.84%10.95%

Now this is where I think it gets interesting. A whole lot of positions obviously have been closed in Novastar, as it crashed and burned this year. However, as of 30-Sep-07, there's a whole lotta NEW positions. Take a look here at this spectacular list. Then notice those names of the players at the top, and how all the rest fall into this conga line. Now here is the list of the major players inside NovaStar:

Symbol Name Of Corporation

Novastar Financial Inc. (As of 30-Sep-2007)
Top 10 Institutional HoldersShares2007Value2006
Goldman Sachs Group Inc900,9839.54%$7,991,719-.--%
Bank Of America Corporation686,1657.27%$6,086,283-.--%
State Street Corporation406,4014.30%$3,604,776-.--%
Barclays Global Investors UK Holdings Ltd274,5592.91%$2,435,338-.--%
Babson Capital Management Llc201,9002.14%$1,790,853-.--%
Renaissance Technologies Corp169,5501.80%$1,503,908-.--%
Vanguard Group, Inc. (The)165,2961.75%$1,466,175-.--%
Parametric Portfolio Associates146,1861.55%$1,296,669-.--%
Lehman Brothers Holdings Inc.126,4571.34%$1,121,673-.--%
Wachovia Corp New112,8391.20%$1,000,881-.--%
% of Shares Held by All Insider and 5% Owners:9%-.--%
Top 10 [14%] of 71 Institutional Holders Control33.80%-.--%
Percentage of Barclays and "Associates" Control26.56%-.--%
NOTE: Goldman Sachs also indirectly owns 779,638 shares, or another 8.25%.
Therefore, the TOP 10 actually control 42.05% of NovaStar.

So I would think that the NYSE should ask some other folks the question, "What and who is responsible for this perfect U turn?" Maybe they already know the answer, as there are some familiar names here, too.

Symbol Name Of Corporation

NYSE Euronext, Inc. (As of 30-Jun-2007)
Top 10 Institutional HoldersShares2007Value2006
Atticus Capital LP *15,049,8525.68%$1,191,496,782-.--%
AXA (Paris, France)12,372,2504.67%$979,511,032-.--%
Horizon Asset Management, Inc./NY *10,995,9584.15%$870,549,994-.--%
Kinetics Asset Management Inc. *9,385,7203.54%$743,067,452-.--%
General Atlantic LLC *8,061,7043.04%$638,245,105-.--%
Jennison Associates LLC6,002,0192.26%$475,179,844-.--%
Credit Suisse Switzerland5,942,7342.24%$470,486,250-.--%
Barclays Global Investors UK Holdings Ltd4,715,3831.78%$373,316,872-.--%
Merrill Lynch & Co., Inc.4,217,8561.59%$333,927,659-.--%
Goldman Sachs Group Inc3,773,5521.42%$298,752,111-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [3.2%] of 316 Institutional Holders Control30.37%-.--%
Percentage of Barclays and "Associates" Control7.05%-.--%

© 2007 by Edward Ulysses Cate
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