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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: TRINDY who wrote (86814)	12/13/2000 6:37:08 PM
From: Knighty Tin	Respond to of 132070

Trindy, MBIA is MBI on the NYSE. I was long this stock for years several times in the previous 3 decades. I like Nolan's analysis most of the time, and though I mentioned that I like both Ambac and MBIA here for puts, I disagree with his doomsday scenario. First of all, what he says about these two cos. can be said of all insurance cos. Their risk is far greater than their capital because they diversify it rationally and do extraordinary research. Basically, these guys insure municipal bonds. You may think of Orange County, but the great majority of munis never come close to default. Ambac, MBIA and their G.E. owned competitor, FGIC, insure bonds that without insurance carry an average rating of "A." Not exactly a high risk scenario. Also, they have top legal support. On the few defaults they do get, they nearly always sue the issuer and nearly always win and receive their money back. O.K., that being said, the stocks are way overpriced. We are at the peak where nobody considers any risk at all of default, and that is nonsense. If the economy turns, and I think it will, folks will give these cos. the hairy eyeball and I don't think their PE ratios have any risk discounted in them. So, I disagree with the doomsday scenario, but I do think there is big money to be made here.