One of the big recent movers is IMPAC Mortgage Holdings (IMH). It jumped 25 percent and is up 162 percent for the year. This is one of those cases where penny stocks does phenomenal gymnastics, but IMPAC hasn’t always been in the under-$5 crowd ("penny stocks" used to be under a dollar, inflation you know).

The September quarterly report said they blew through some $2.6 billion in cash. Their allowance for loan losses when from $3.6 million (restated) the year before to $979 million. Credit ratings are sinking like a brick. Owners equity is a negative number. So why, then, are people paying a premium price?

Kelly Capital just bought some 3.8 million shares. That is almost the same number as the 3.8 million shares that HBK Investments bought in 2002. William Ashmore, IMH president recently bought some of the company’s stock, but an inconsequential amount. Perhaps the idea that people are buying is making this cheap stock interesting.

Part of what I see is that despite the dismal results, the company still has some $18 billion in assets, still. The average loan is some $282 thousand. The delinquency rate has risen from 5.6 percent to just over 11 percent. Still, the yield on the mortgages is 5.56 percent. That is down from 6.12 percent the month before, but an enormous revenue body. Just as the banks that had been so terribly (but deservedly) punished have risen recently, so is this. (See Industry comparison chart)

I suspect this cash cow was being punished for not giving milk, but some are wondering if the cow is still giving some, just not as much, perhaps they have been too hard on IMH. Five percent of eighteen billion is still a lot of bucks. If things turn around, the $1.47 might still look cheap.

I’m not personally interested because the profit party IMH might be holding will be a long ways into the future, but then that is what the mortgage REIT business is for, the long run.