Ambac: Undervalued Special Situation
Derek Pilecki, CFA
Derek Pilecki, CFA
Fri, Nov. 4, 1:00 PM
Fri, Nov. 4, 10:23 AM
- Q3 operating EPS of $3.23 cruised past Street estimates for $0.68 and his own estimates of $0.84, says BTIG's Mark Palmer. There was also a 7.3% Q/Q increase in adjusted book value per share to $32.12.
- A big part of the beat was a 23% Q/Q decline in operating expenses as the company lowered headcount. The company also cut its risk book by 8.4%, and its adversely classified credits by 3.4%.
- Sounds good, but Palmer remains Neutral on the stock, waiting for a catalyst in the form of either a settlement of rep and warranty claims with Bank of America, or the announcement of a deal facilitating the exit of the segregated account from rehabilitation.
- AMBC +10.5% to $19.62.
- Ambac Earnings Center
Thu, Nov. 3, 4:45 PM
Wed, Nov. 2, 5:35 PM
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Wed, Aug. 10, 11:21 AM
- Q2 operating earnings of $115M or $2.54 per share vs. $218.1M and $4.82 in Q1.
- Adjusted book value per share of $29.94 rose from $29.10. Current price is $18.49.
- The insured portfolio was reduced by $7B, or 7%, to $94B. Adversely classified credits cut by $1B, or 5.4%, to $18B.
- Actions on expenses during quarter will save $5M annually, representing 9% of total compensation expense.
- Also announced is a $60M settlement (not related to rep & warranty) with a RMBS counterparty.
- Buybacks: 228.5K warrants for $1.61M, leaving warrants outstanding at 4.2M; $7.4M in surplus notes along with $9.6M of accrued and unpaid interest on previously called surplus notes.
- Reiterating a Neutral rating on the stock, BTIG's Mark Palmer applauds management for creating value through "various self-help actions," while waiting for positive catalysts like the restructuring of Puerto Rico's debt, a settlement of the Bank of America rep & warranty case, and an agreement with holders of surplus notes and deferred payment obligations.
- AMBC -4%
Tue, Aug. 9, 4:24 PM
Mon, Aug. 8, 5:35 PM
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Wed, Jun. 29, 12:47 PM
- Cloture was invoked by a wider-than-expected 68-32 margin, putting the Puerto Rico debt relief bill on track to pass before the end of the week, when the Commonwealth's government says it will default on its most senior debt payments.
- The White House is a big backer of the bill, and the President is expected to sign quickly once the full Senate passes. The law doesn't authorize or prevent a default, but will provide Puerto Rico with protection from creditor litigation (i.e. hedge funds "suing the Commonwealth to death") while it works out a restructuring.
- It's good news for the bond insurers MBIA (MBI +2.9%), Assured Guaranty (AGO +3.9%), and Ambac (AMBC +5.3%), says BTIG's Mark Palmer, as it avoids what could have been a chaotic debt restructuring.
Wed, May 25, 3:45 PM
- While the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) made it out of committee today, don't look for anything to pass in June, says KBW.
- The team expects both parties in the Senate to have revisions and to propose amendments.
- This could be an issue as Puerto Rico has a debt payment of about $2B coming due July 1 - far more than payments it has already defaulted on.
- KBW still thinks we'll get a bill, just not before July 1.
- Interested parties: MBI, AGO, AMBC
Mon, May 16, 3:03 PM
- Noting Ambac's (AMBC -2.5%) recent appointment of two new board members and the company's acknowledgement that it can do more to reduce obligations, Canyon Capital withdraws from its proxy battle.
- Commenting, Ambac notes Canyon's board nominee has received less than 5% of the votes so far.
Wed, May 11, 10:52 AM
- Q1 operating earnings of $218.1M or $.482 per share vs. $481M and $10.64 in Q4.
- Adjusted book value per share of $29.10 up from $24.78 three months earlier.
- The company in Q1 bought back $512M in distressed obligations - the highest quarterly amount since emerging from bankruptcy three years ago. Included were $325M of insured RMBS and $168M of insured Local Media Insight bonds.
- The company also commuted $387M net par of its student loan exposure, bringing exposure down to $1.7B.
- The company estimates an IRR of 8.7% from these various moves.
- The annual meeting at which a board slate from Canyon Capital is challenging is next week.
- BTIG's Mark Palmer lauds the company's "self-help" in creating value, but retains his Neutral rating on the stock.
- AMBC -1.9% to $15.73.
Tue, May 10, 5:53 PM
- Ambac Financial (NASDAQ:AMBC): Q1 EPS of $0.21 may not be comparable to consensus of $1.04.
- Revenue of $16.9M (-90.1% Y/Y)
- Shares -4.2% AH.
Mon, May 9, 5:35 PM
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Mon, Apr. 4, 3:39 PM
- A group of hedge funds sued Puerto Rico's Government Development Bank aiming to halt the GDB from making transfer payments to selected creditors until after the bank's debt has been restructured.
- MBIA (MBI -5.9%), Assured Guaranty (AGO -2.7%), and Ambac (AMBC -3.9%) are all lower, but the suit isn't a negative for the insurers, says BTIG's Mark Palmer, noting media reports are describing it as applying to all of Puerto Rico's debt.
- He notes one reporter's tweet: “A group of hedge funds sues to keep Puerto Rico from making payments to creditors prior to restructuring its debt."
Tue, Mar. 29, 7:32 AM
- Amid a proxy fight from acitivst Canyon Capital Advisors, Ambac Financial (NASDAQ:AMBC) appoints former AIG CFO David Herzog to its board, along with Cornwall Capital's Ian Haft, with five shareholders representing 18.5% of the company's stock agreeing to vote for the duo at the annual meeting.
- Herzog has spent several months helping AIG deal with its own activist, Carl Icahn.
Mon, Mar. 14, 1:20 PM
- In a new presentation lambasting management at Ambac (AMBC -1.9%), Canyon Capital puts forth the names and summarized resumes of its three board nominees. They include Fred Arnold, who was on the post-emergence board of Lehman Brothers, and John Brecker, who was on the boards of ACA Financial and PMI Group.
- Responding, Ambac reminds of what it says is Canyon's conflict of interest - with 10x more credit exposure to Ambac's obligations than to the company's equity.
- Previously: Ambac to add two to board (March 14)