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  • The Emperor (Mr. Ackman) Has No Clothes [View article]
    Just a note on adjusted book value: MBIA in their last earnings release is now adding back mark to market losses to the extent they exceed impairments. So the adjusted book value adding back mark to market is 39.63. Over time, and in a best case scenario, the share price should tend back up toward that level.

    It is a testament to the strength of these businesses that they could make serious underwriting mistakes and then be subjected to merciless attack by short-sellers and rumour mongers, and when the smoke clears there is still this fabulous amount of value remaining.

    Steve, you identify the importance of present value - their contracts obligate them to pay pricipal and interest when due, and they cannot be accelerated against. This is one of the features of the business model that makes it so strong.

    I am long both ABK and MBI. I had the good fortune to be able to buy some options on ABK, Jan10 2.50 calls for .50. If this ever goes to zero, which I doubt, I lose .50. If it goes up to the adjusted book value, or beyond if mark to market reverses, I will get paid 30 X my investment.

    Aug 11 21:14 pm |Rating: 0 0
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