I thought that today's ABK conference call was positive and there's possibilities for recapitalization or buy-out. Bankruptcy seems to be an overreaction. Their slide show shows book value of $22/share and adjusted book value (for discounting of future premiums) of $55/share.
MBIA Rebounds on Down Day for Market
BOND INSURER MBIA surged Monday after losing 60% of its value late last week. The rally follows a positive take from Barron's on MBIA stock.
In "MBIA: Priced for Catastrophe," Barron's Senior Editor Jonathan Laing argued that investors had overreacted to negative news last week when Moody's put MBIA's credit rating on review for a downgrade.
MBIA surged 40% to $12.01 in mid-day trading Monday, with the help of the Barron's story and news from Ambac Financial Group, the other major bond insurer, which announced that it does not expect to pay much in claims related to bad bonds and the value of its assets is far higher than the market believes.
In his article for Barron's, Laing suggested that MBIA is less exposed to "really-troubled subprime paper" than rival Ambac Financial Group. Also, he wrote that MBIA's triple-A rating "seems to have passed muster with both Fitch and S&P."
Having written negatively on MBIA in the past, Laing wrote, "We can't say that Barron's was surprised by MBIA's fall from grace." He added, "Still we find the current price levels of its debt, credit-default swaps and, yes, even its stock to be absurdly low."
Laing pointed to estimates that give MBIA a conservative liquidation value of $30 to $40 per share. "If true, it would appear that MBIA has a long way to go on the upside, dead or alive," he wrote. |
