Ambac Insiders Reject Buffett, Step Up to the Plate

Billionaire investor Warren Buffett has recently offered to assume risk in the $800 billion of municipal bonds guaranteed by three troubled rivals, MBIA (MBI), Ambac (ABK) and FGIC. The deal is not exactly charitable, as Mr. Buffett's newly formed bond insurance company would, for $5 billion in capital, capture a third of the municipal-insurance market. As for the insurers, the deal would steal the best part of their businesses, leaving them to deal with their heavy exposure to subprime assets.

Not surprisingly, Ambac rejected the offer, leaving everyone wondering what steps they would take to maintain their crucial AAA rating. It became clear this Friday as the New York-based bond insurer's underwriters priced a sale of 171.1 million shares of the company's stock at $6.75 per share.

Additionally, Ambac's insiders have clearly indicated that they are willing to put their money where their mouths are and significantly increased their holdings by purchasing at the offering price.

Eight of the company insiders have purchased shares in their own company, including:

• Michael A Callen, Chairman, President and CEO purchased $168,750 increasing his holdings by 104%
• Henry D G Wallace, Director purchased $67,000 increasing his holdings by 117%
• Thomas C Theobald, Director purchased $135,000 increasing his holdings by 87%

Shares of Ambac moved +2.08 (+28.03%) on Friday.

Disclosure: none

Comments

[panitaxx:]

come on... that's peanuts for this guys.

2008 Mar 11 01:15 PM