Wilmington Trust's $3.84 Take Under Catches Morgan Stanley's Pate, Suntrust's Hodgson And 9 Other Sellsiders With Pants Down

Tyler Durden's picture

By now everyone is aware that M&T bank acquired Wilmington Trust in today's version of Merger Monday... however this time with a twist. The company was acquired at a 40%... discount. That's right, as shareholders were happy with their WL positions at close yesterday, it appears the financial firm, and its acquirer were all too aware that the sellside pump syndicate was woefully wrong on the name, and 11 analysts had an average target on the stock of $10.31. The question then becomes if Wall Street is so very wrong in evaluating one of its own to the tune of a 40% plunge to closing price, and 60% to the target consensus, just how overvalued are all other financial firms, all of which continue to trade based on circle jerk rating boosts by one another, even as those behind the Chinese Wall (such as M&T management and WL executives) know all too well the fair value of assets is way below where the gullible public is buying the stock. Which is why we present some of the most egregious examples of sellside hubris and pumpatude disclosed by this price discovery event: below are the hall of shame analysts who missed this take under by about a mile.

At the top: SunTrust's Mac Hodgson whose latest price target on WL was $22... just over 80% where the company ended up being acquired! Going down the list we see such other wizards of financial modelling as Keefe, Bruyette's McGratty who has a $13 PT, RBC's Cassidy who recently reiterated a price target of $12, Credit Agricole's Ruthschow with $11, Morgan Stanley's Pate with $10, B Riley's Stapp with $9, and so forth. One wonders if this cadre of hall of shamers was so very wrong on WL, just how correct their other buy "calls" must be...

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Turd Ferguson's picture

Hmmm. Looks like acquisition was not "priced in".

What an absolute farce this has all become.

Cursive's picture

All that is left now is the long, hard slog to the other side.  Where/When is that other side?  Dunno, Japan has been looking for it for over 2 decades now.  Many of us probably won't live to see it, but persevere we must.

Cognitive Dissonance's picture

While Japan might be looking for "it" for over 2 decades, Japan's equity market seems to know where Waldo is.


CitizenPete's picture

LMAO: "One wonders if this cadre of hall of shamers was so very wrong on WL, just how correct their other buy "calls" must be..."


Punch them in the forehead Tyler!

prophet's picture



For the record I'm exiting flat my 1188 SPX short idea - time based stop. 

SheepDog-One's picture

All longs AND shorts will soon be devoured, thats the endgame to all this.

Xedus129's picture

M&T is a horrible bank.

doolittlegeorge's picture

I think they're one of few that hasn't repaid TARP.  In fact I think they took the TARP with "the stated intention of going on a bank buying binge."  I don't recall that being the concept behind the legislation.  Insofar as a "take under" this is a total rip off of shareholders.  Obviously M&T soared on the news.  Isn't it normally the other way around?

plocequ1's picture

Whatever, Just put it on my fucking tab. What is it, $8,000 so far? Ill put it on my Credit card

buzzsaw99's picture

They know nothing. [/crammer]

Captain Willard's picture

Given that the bank had nearly 4% loss reserves as a % of loans, you have to wonder what this implies for the carrying value of the typical bank's loan portfolio.

M&T looks like they marked the WL loan portfolio to 8% losses. If this could be extrapolated to the typical medium-sized bank, we face a mini Apocalypse Now in regional banking.

101 years and counting's picture

They may have cost their clients a lot of money, but how cash did their firms make by shorting the crap out of this company?


truont's picture

That's right, as shareholders were happy with their WL positions at close yesterday, it appears the financial firm, and its acquirer were all too aware that the sellside pump syndicate was woefully wrong on the name, and 11 analysts had an average target on the stock of $10.31.

You can't make this $h!t up...

Still long US Equities?  Bwaaaa Haaaaaa Haaaaaa!

plocequ1's picture

Yes, It is now offical.. All bad  news now entered into Hal 2000s Processor. Its all good.

curbyourrisk's picture

Wonder when others will start wondering about their bank investments......

rapacious rachel wants to know's picture
rapacious rachel wants to know (not verified) curbyourrisk Nov 1, 2010 12:09 PM

Ask Meredith Whitney

Pining for the Fjords's picture

Insanity made manifest, and proven beyond doubt for the world to see.  How many trillions in misallocated capital "invested" into fraudulently pumped-up companies do these clowns think the system will take before implosion?

I believe the only rational response is for all of us, in unison, to gleefully scream "JENGA!!!" as all of the pieces of this farce come crashing inexorably down around us. Wheeee, this financial apocalypse stuff is fun!

ghostfaceinvestah's picture

Look at ABK today too, how was that trading at a $200M+ market cap when it was effectively insolvent.

Still plenty of examples left out there.  I think one or more of the mortgage insurers will soon be forced to merge at a haircut - the FHFA could easily force this to happen.

OutLookingIn's picture


 Welcome to the "New Normal"! Yes Sir! Step right up. No need to fear!

Bigger Dickus's picture

Hi guys, I have just woken up from a great night's sleep. I am so glad I went all in just before another POMO day. Thank you Bernanke.

Oh well, how is my massive position in WL calls doing today?


Bigger Dickus's picture

Lady Gaga seems to be branching out into Chinese foodstuffs. Leo, are you th one who told her to invest in this shit?


doolittlegeorge's picture

not quite as good as your massive short position in M&T.

StychoKiller's picture

What?  Wigs made from Chinese noodles?

Justaman's picture

I think this is common knowledge, but for what it's worth, I can say (by having been on the sell side at one time) that the analysts are only good for one thing...industry background information, i.e., market, distribution, and products.  Price targets are jokes.

SheepDog-One's picture

Lookin like a fool wit yo PANTS ON THE GROUND!

jus_lite_reading's picture

Which adds more fuel to my analysis, that the entire ponzi stock market is overvalued by - drum roll please - 65-70%.

Nothing but one giant pumped up scheme to get retail investors to part with their money at  very high, and overly inflated prices, so the insiders and Whore Street can sell SELL SELL! Which is exactly what they are doing. ALL stocks in real time, are worth less and less every single day. Never more on a long time frame.

ghostfaceinvestah's picture

TD, your scorn is way misdirected.  The analysts are paid shills, everyone knows that.

Much like the idiocy of Bill Miller (largest shareholder in FRE when it was taken down), the most ridicule should be reserved for the morons who actually owned this stock.

Especially those who participated in the secondary offering in March at $13.25 per share.  Who were those morons???



12. Capital In March 2010, we completed an underwritten public offering of 21,706,250 shares of common stock. The offering was priced at $13.25 per share and raised $274.0 million, net of $13.7 million of underwriting discounts and commissions. The proceeds qualify as both tangible common equity and regulatory Tier 1 capital." http://www.sec.gov/Archives/edgar/data/872821/000095012310047156/c99916e...
SheepDog-One's picture

Longs today would have to all be considered 'morons' then, as they're in their positions based upon the reasoning that this is the 'new normal, stocks just dont go down any longer, Bernanke will prevent it'...meanwhile death by 1,000 papercuts is going on every day in individual stocks.

ghostfaceinvestah's picture

I dunno, I think idiots who buy into a secondary of a failing company are in a special class.

Look at Bonderman when he headed a $7B investment in WaMu - six months before it collapsed.  And arguably that was a better deal - at least WaMu at the time was considered too big to fail.

Who in their right mind would pour $250M into Wilmington Trust when the FDIC is shutting down 6 banks a week?  Only a special class of moron would invest in that secondary.

Vampyroteuthis infernalis's picture

1000 paper cuts will turn into a lot of blood. Bring on the massacre!

TooBearish's picture

So much for "book value" valuations in bank stocks - wheres Dick Bove on this pig? All -in px target 30?

Ned Zeppelin's picture

Wilmington Trust, in Ned's area of operations, has been on a death watch for some time now, although the expected bidders (Bank of Montreal and TD) were no-shows and instead M&T, a Buffett investment, claims the "prize." Autopsy revealed that a bad dose of residential development projects in the First State, especially down near the beach, were the primary cause of death.  But it does go to show, as to those TBTFs, what a cancer bad residential deals are and how they inevitably claim the host, it's just when not if.  As we say in residential real estate, the money is made (or lost) on the land buy.  And when the bank holds the paper for 85-90% of the purchase price, say goodnight, Irene.

andyupnorth's picture

Management cashes in their corporate stock options (money that can be freely sucked out of the ponzi scheme/stock market), and then throws out the carcass...

johngaltfla's picture

You just have to wonder:

Is the FASB about to surprise the world and grow a pair of balls in Jaunary?

goldmiddelfinger's picture

If STI's target was $22 and it is trading at $4 then he misses by 450 pc not 80pc. No?

ziggy59's picture

oh i get... M.T. Bank...is the '&' a typo?


cripes arent they all M.T. Banks?

DonutBoy's picture

Holy Smokes.  I never even heard of anything like this.  Sounds like lawsuit city.

lolmaster's picture

we all live in a golden parachute! a golden parachute! a golden parachute! 


obv massive shareholder lawsuits incoming

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