Who's Filing Now?

Once again, as Wall Street waits for happy hour, we Fools wade into 8-K filings that, if the timing is to be believed, executives would rather you not read.

Filings like this one from one-time undiscovered growth stock and VoIP provider iBasis (Nasdaq: IBAS  ) , which revealed that the SEC has decided to formally investigate its stock option practices. What's that? You thought the stock options scandal was over? Silly Fool.

Thanks for not taking us for a spin
Of course, most 8-K filings are innocent. Take Time Warner's (NYSE: TWX  ) announcement that Motorola (NYSE: MOT  ) CEO Ed Zander wouldn't stand for re-election to its board of directors. The rationale for the move is sad but clear. Quoting:

"On March 29, 2007, Edward J. Zander notified the Board of Directors of Time Warner Inc. ("Time Warner") of his decision not to stand for re-election to the Board of Directors...in light of the increased challenges facing Motorola, Inc. and the additional time commitments associated with his position at that company." [Emphasis mine.]

I give Zander points for honesty even if his hometown newspapers don't seem willing to give him credit for much else. Chicago Sun-Times columnist Brad Spirrison, for example, recently likened Zander's plight to that of former Cubs manager Dusty Baker, who never really recovered from inflated expectations and a devastating playoff loss to the Marlins in 2003.

Prime time for sub-prime?
But my favorite filing this week comes courtesy of M&T Bank (NYSE: MTB  ) , which is a well-known holding of Warren Buffett's Berkshire Hathaway (NYSE: BRK-A  ) . Management said that "adverse market conditions" would affect its first-quarter results.

A flood of media reports have since speculated that the greatest fear of investors -- that the meltdown in sub-prime lending would affect prime lenders -- has been realized. Blunt language in the 8-K probably didn't help assuage fears. Quoting:

"Recent, well-publicized problems in the subprime residential mortgage lending market have had a negative effect on the rest of the residential mortgage marketplace, specifically with regard to alternative ("Alt-A") residential mortgage loans that M&T actively originates for sale in the secondary market. Alt-A loans originated by M&T typically include some form of limited documentation requirements, as compared with more traditional residential mortgage loans ... At a recent auction of such loans fewer bids than normal were received and the pricing of those bids was lower than expected."

My guess is that investors think of "Alt-A" loans exactly as they do loans packaged and sold by sub-prime sufferers like Accredited Home Lenders (Nasdaq: LEND  ) and Novastar Financial (NYSE: NFI  ) . But that's not entirely accurate. Instead, "Alt-A" loans are for those with clean credit histories but who have limited income documentation -- newly self-employed individuals, for example.

At least, that's how it used to be. As Foolish colleague Nate Parmalee points out here, some have to come to think of "Alt-A" loans as the highest class of sub-prime. M&T's woes contribute to the theory. Thus, M&T shares are down more than 8% since Friday's close.

But that smells like an opportunity to me. Why? Take a closer read of the press release. Quoting once more:

"Management of M&T believes that the value of the Alt-A residential mortgage loans it holds is greater than the amount implied by the few bidders presently active in the market. As a result, $883 million of Alt-A loans previously held for sale (including $808 million of first mortgage loans and $75 million of second mortgage loans) were transferred in March to M&T's held-for-investment residential mortgage loan portfolio." [Emphasis mine.]

Translation: We're not panicking, and we won't shortchange our investors. Sounds like a good idea to me.

That's all for this week. Think you've found a late filing we Fools should see? Let me know.

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Fool contributor Tim Beyers, who is ranked 1,348 out of more than 25,400 in our Motley Fool CAPS investor intelligence database, usually favors two scoops of ice cream over the inside scoop. Tim owned shares of Berkshire Hathaway at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on SEC filings, Foolishness, and investing in general may be found in his blog. Berkshire Hathaway is an Inside Value pick. Time Warner is a Stock Advisor pick. The Motley Fool's disclosure policy may be filed under "F" for fair, or Foolish.


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