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

To: Spekulatius who wrote (52358)	9/11/2013 11:09:14 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78753

Re AMBC - so the issue appears to be AMbac's Puerto Rico exposure: bloomberg.com Not sure why it impact AMBC price right now, since the Puerto Rico issue has been going on for weeks. 2.5B$ gross exposure but a lot of it is high grade debt secured by income streams. And even if Puerto Rico defaults, recovery rates are typically fairly high, so pot. Net exposure is going to be way less than 2.5B$. This seems overdone. AMBC is basically a profitable runoff business, with 3.4B$ or 4B$ (depending on the source) in NOL and nice call options on pending lawsuits. It's been unusually quiet after the re-emergence from bankruptcy and there is virtually no research on this company. After a bankruptcy and especially with such a checkered past, I imagine that management has any incentive to get rid of legacy issues and keep the upside, which is why I believe there is value there. Just imagine they over reserved their 6B$ in loss reserves a bit. With only 45M shares outstanding and <900M$ in market cap, we could be talking significant $/share here very quickly. It's possible that it's a bummer stock too (impossible to tell from the convoluted balance sheet) but I'd say the incentives of the stakeholders are stacked against that.