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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Ryan Hess who wrote (11709)	1/4/2001 12:58:15 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78565

rhess: <<behoove us to follow the situation>> Actually my point was to avoid the situation...and any other where regulators have profitability by the gonads.

To: Ryan Hess who wrote (11709)	1/4/2001 2:34:29 PM
From: Paul Senior	Respond to of 78565

rhess, thanks for the kind words. Re EIX and related. On the one hand, I saw the debacle coming, and I decided not to ride it out, and so I exited my small EIX position. On the other hand---dang! Maybe Jim Clarke is now proven way right in our several discussions of bond insurers - (his) Ambac vs. (my) MBIA. I hate to admit that -g-. Both stocks have been winners now for anybody who bought when Jim and I were buying or discussing them. I didn't buy ABK, and I don't want to go looking at comparative charts now (and maybe make myself feel worse -g-), but I'll give that ABK possibly has performed better than MBI -- I'm just going to count my blessings here and say that I'm happy for my profit, happy for Jim's profit, and I'm only sorry I didn't buy more MBI each time I averaged down or buy both stocks instead of just MBI. Here's the relevancy now: MBI has a big exposure to the EIX problem. ABK has lesser exposure, plus its exposure is fully secured (if these are the correct words). MBI's position is not fully collateralized: "only about two-thirds of MBIA's exposure is secured by first mortgage debt, while Ambac's is 100 percent secured by first mortgage liens." MBI says that that is not a problem. I say, "Oh, really?". Seems to me ABK is in a much safer position. (I'm interpreting all this from news articles - I'm no expert - and I certainly will defer to others who can speak more knowledgeably.) Meanwhile, MBI has come down somewhat from highs. I am suspecting that as EIX suffers, so it will cast a similar pall over MBI, thus dragging MBI down further. Reluctantly, I'm therefore selling most of my MBI that I worked to build up. Perhaps there are or will be some opportunities in all this, such as starting a position in ABK (I see ABK is down today also) and/or shorting (too risky for value investors!!) MBI. Paul Senior