MBIA, Ambac Fall as Buffett Starts Up Bond Insurer
- Thread starter Retired
- Start date
these stocks are BROKEN. Don't expect a major bounce until/if the foreclosure crisis passes without incident.
They will just be play things for short term traders off any news headlines in the coming months.
Just like CFC WM ETFC IMB HOV KBH BZH TOL etc etc
Enjoy the volatility while it lasts.Because it never does.
Fact: ABK and MBI must come up with more cash, or they will be downgraded by the rating agencies.
In this market, ABK and MBI have as much credibility as Countrywide Financial since the disclosure of additional CDO exposure.
Go back and read my 2nd post of the tread. Silk's long-winded posts don't change the facts.
You know nothing idiot.
hes wrong. the business model of insuring risky structured finance deals assuming losses reserves of 4 basis points is not wrong or incorrect it is INSANITY.
silk is obvisly long the stock and is letting the pain(and ilusions of low 'valuations') take over analysis. the 'cheap' PE ratio has nothing to do with 'earnings', MBIA and Ambac were borrowing against the future in order to report accounting 'profits', well future now is knocking on the door and asking for his money back with interest. if you believe in the free market(that is how the market is currently valuing the structured finance securities) then MBIA and Ambac shareholders equity is less than 0 right now. Even if the market is wrong its probably not that wrong which means there is almost no equity left(that is book value). Take a look at enron 'valuation' on the way down, 'cheap' is a pretty subjective thing
Part of the reason why investors over the past few years were willing to buy risky bonds in such large quantities is because insurance was so damn cheap.
The costs associated with risk in the current credit markets are going to be passed onto the insurers who were willing to take it in exchange for low premiums.
To be frank, I don't see how any of the insurers that are mentioned in this thread will be able to survive. We've had an insane situation in the credit markets where participants were willing to take on a large amount of risk in exchange for premiums that were at record lows.
This situation is correcting itself and Warren Buffett knows it. Most players in the bond insurance markets will be washed out and there will be a huge flight to safety. Insurance rates will go up and Berkshire Hathaway will be one of the few remaining players who's financial strength will be unchanged.
The costs associated with risk in the current credit markets are going to be passed onto the insurers who were willing to take it in exchange for low premiums.
To be frank, I don't see how any of the insurers that are mentioned in this thread will be able to survive. We've had an insane situation in the credit markets where participants were willing to take on a large amount of risk in exchange for premiums that were at record lows.
This situation is correcting itself and Warren Buffett knows it. Most players in the bond insurance markets will be washed out and there will be a huge flight to safety. Insurance rates will go up and Berkshire Hathaway will be one of the few remaining players who's financial strength will be unchanged.
Looks like we are finally getting close to the end of these insurers.
Their AAA ratings are pretty much worthless now.
http://biz.yahoo.com/ap/080117/ambac_ratings.html?.v=3
Their AAA ratings are pretty much worthless now.
http://biz.yahoo.com/ap/080117/ambac_ratings.html?.v=3