The Bull Case for Chimera

In this video, Motley Fool financial analyst Matt Koppenheffer discusses Chimera Investment (NYSE: CIM  ) , and its big problem. The story behind Chimera is that it has come out and said that much of its accounting was unreliable and needed to be redone, which then means the accounting based on the new numbers will need to be redone as well. Normally a stock is delisted from the exchange for something like this, but the New York Stock Exchange has granted Chimera several extensions. Matt highlights the work of his fellow Fool John Maxfield in discussing the risks here, but he also wants to take investors through what he sees as the bull case for the stock.

It's hard to miss the massive double-digit dividend on Chimera Investment, but when investors start to dig in, it's also hard to miss the fact that it's been more than a year since the company has filed audited financials with the SEC. Should you follow the dividend's siren song into Chimera's stock? To help you figure out whether the stock is a buy right now, The Motley Fool has just released a new premium research report on Chimera. Click here now to claim your copy of this must-have investor's resource.


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  • Report this Comment On January 17, 2013, at 4:44 PM, MoolaMonster wrote:

    Chimera trades at a discount to book value as reported by the company.

    Understood. However, it's tough to understand a bull case (if there is one) concerning (1) interest rates and monetary policy, (2) the housing market, and (3) CIM's investments (mix & management).

    With the stock up 36% since August's low of $2.15 I'm becoming more and more bearish on CIM. In my mind the stock has traded higher mostly on speculation that the company will finally issue much overdue financial statements. A misreporting overhang is no reason to own a stock. Really, CIM should not even worthy of our Foolish attention until the company issues financial statements. But, even if this day is soon, macro headwinds for the company do not appear favorable.

    That said, I could turn foolishly bullish if Chimera's CAPS rating (3 Stars) could in some way be correlated to the surging value of Chimera on the Washington Caps. (Jason Chimera had 20 goals for the team last season, his best ever!) ;)

    Joking aside, I believe it's time for me to say goodbye to CIM's addictive dividends in my portfolio. I sold CIM today. I also bought a pair of Caps/Rangers tickets.

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