Allied Capital

Allied Capital (ALD) has been down as much as much as 15.7% in the past two days. Why? Because one of their investments, Business Loan Express (BLX), is in trouble. However, this is totally overblown. Even if they lose their entire stake, it's only 6.2% of Allied's portfolio, according to Allied's press release. Herb Greenberg thinks this justifies the shorts against Allied. Let's see if he's right. He says that he first wrote about BLX's fishy lending in 2003. Let's hope he shorted ALD in December of 2003 at it's yearly high of $28.74. If he covered it at the open today, at $27.79, that would be a 3% lower. Over 3 years! Wow. 1% a year. That's great Herb. What about dividends? They come to $3.58. Now you're talking about a loss of 9%. Well, if by justified, you mean losing money, here's to you Herb.

What this really is, is a golden opportunity to buy a $33 stock at $29.