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Jim Cramer's Stop Trading! 1/31/08: Buy a House

From Wall Street Journal.....

Rescue Plans Won't Prevent Downgrades
By Karen Richardson, Liam Pleven and Carrick Mollenkamp
Word Count: 931 | Companies Featured in This Article: MBIA, Financial Guaranty Insurance, Credit Agricole, UBS, Citigroup, Barclays, Security Capital Assurance
Rescue plans are starting to take shape for struggling bond insurers, but they aren't likely to prevent further ratings downgrades for many of the companies.

At least one such company isn't waiting around. In an effort to raise capital, MBIA Inc. yesterday said it would issue $750 million of common stock, a bigger offering than the $500 million issue it had initially planned.

The company also said it will revise its fourth-quarter loss of $2.3 billion, cutting it by $65 million. MBIA also added $100 million to its loss reserve, bringing the total special addition to $200 million

Jim Cramer's Stop Trading! 1/31/08: Buy a House

Was easy Jim...Moody's news will hurt all banks with this...
Some bond insurers may lose AAA ratings: Moody's
Companies could go into 'runoff,' leaving fewer participants, agency says
By Alistair Barr, MarketWatch
Last update: 11:57 a.m. EST Feb. 1, 2008Print E-mail RSS Disable Live Quotes
SAN FRANCISCO (MarketWatch) -- Some bond insurers may lose their highly coveted AAA ratings and go into "runoff," leaving fewer active players in the $2.4 trillion industry, Moody's Investors Service says.
The influential ratings agency also increased its estimate of losses on subprime mortgages originated in 2006 to a range of 14% to 18%, up from 6.6% to 15% late last year. That's important because higher subprime losses will likely feed through into mortgage-backed securities and also hit more complex securities known as collateralized debt obligations, or CDOs.
Bond insurers have already suffered big losses from guarantees they sold on CDOs -- and there's concern more losses could follow.
"Some existing firms may be unable to restore financial strength to levels consistent with a Aaa rating and be downgraded," Moody's said in a report late Thursday. "This could possibly lead them to pursue a more narrow business focus or enter runoff."
Runoff occurs when an insurer stops taking on new risks and slowly shuts down, allowing current policies to expire while paying any claims.
"The industry is likely to undergo a restructuring, resulting in fewer active players," Moody's added.
Such bond insurers as Ambac Financial Group Inc. (ABK:AMBAC Inc
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Last: 12.83+1.19+10.22%

11:45am 02/01/2008

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ABK 12.83, +1.19, +10.2%) and MBIA Inc. (MBI:MBIA Inc
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Last: 16.19+0.69+4.45%

11:45am 02/01/2008

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MBI 16.19, +0.69, +4.5%) have been hit hard by the mortgage crisis. Rising mortgage-related losses have already caused some companies in the business to lose their AAA ratings.
Without those top ratings, bond insurers' business models may be imperiled.
Moody's said it will finish a review of its ratings on bond insurers by mid-to-late February but also noted that it may take rating actions sooner if some companies appear to be struggling to raise new capital.
Alistair Barr is a reporter for MarketWatch in San Francisco.

Citi Analyst on Ambac Got It Way Wrong

Private equity companies, including TPG Inc., value investors such as Wilbur Ross and asset management firms are considering launching new bond insurance companies rather than invest in the existing ones, the Financial Times reported Friday.
The FT said such a move could hamper efforts to aid troubled incumbents such as Ambac Financial Group Inc. and MBIA Inc.
Private equity executives say with total exposure becoming impossible to calculate, it is more attractive to start a new enterprise than to invest in existing firms, according to the FT. See full story
Greg Morcroft is MarketWatch's financial editor in New York.

Jim Cramer's Stop Trading! 1/10/08: Shotgun Marriages for Financials

Also Mike Perry CEO of IMB plan for January 2008

read....

"With that said, management and certain key employees (about 130 employees total) have over $40 million in the deferred compensation plan, and the company has arranged to be able to “open this plan up” and for individuals to be able to use these funds to purchase IMB stock….and several of us, including myself, plan to do this (personally, I am planning to invest more than $1.5 million)."



Shareholder’s Email:

Mike,

It’s been some time since we’ve had a chance to meet and talk. I’m a shareholder once again … While I realize that the decline in IMB’s stock price has been painful to you in many ways (not just financially) I think there can be no stronger message about the viability of IMB as an institution than significant insider buying at these depressed levels. If management can’t step up at these levels, then imagine what a “leap of faith” it must be for outsiders to purchase the stock at these levels. Thanks for taking the time to read my email in what must be an incredibly hectic time for you. Best of luck.

Mike Perry’s Response:

I completely agree with the point of your note. I think you know I bought $1 million of our stock earlier this year at $29. In addition, we have had a lot of other managers and some directors purchase this year, too.

Also, management and the board have lost more personally this year than anyone else by far…as most of us have not sold any stock or options in 2006 or 2007 (no sales from the CEO, President and CFO during this time). As a result, most of us are not in a personal financial position to purchase shares…even though we would like to.

With that said, management and certain key employees (about 130 employees total) have over $40 million in the deferred compensation plan, and the company has arranged to be able to “open this plan up” and for individuals to be able to use these funds to purchase IMB stock….and several of us, including myself, plan to do this (personally, I am planning to invest more than $1.5 million).

Unfortunately, our window for insiders to trade IMB stock is currently closed.

I would expect that the window will reopen once we release 4th quarter earnings in late January, and I would expect to see myself and other insiders purchase in a material way (for management) at that time. I hope that makes sense.

mike

Jim Cramer's Stop Trading! 1/10/08: Shotgun Marriages for Financials

www.financialfreedom.c.../

Jim Cramer's Stop Trading! 1/10/08: Shotgun Marriages for Financials

Jim you always....put down IMB but i found something for you....

www.indymacbank.com/

Indymac has an inner GEM call Financial Freedom??

Do you copy?? Nope?? Let me explain...you know with aging population....we have "REVERSE MORTAGE" with growth over 20%...you follow???

Here for you...

Unlocking of Value

Another intriguing part to Indymac that’s not well appreciated is a business it owns, a reverse-mortgage originator called Financial Freedom, that sits on its books for $80 million. Financial Freedom is the largest player in the reverse mortgage space. This is an area of tremendous opportunity and market focus. As the population ages, the reverse-mortgage business has been booming and is widely expected to grow at 20% or more annually for years. There’s lately been a lot of interest both from private equity and strategic buyers. For example, earlier in the year Seattle Mortgage, the third-largest player, was bought by Bank of America.

Indymac had bought Financial Freedom from Lehman Brothers for $112 million in 2004. The acquisition has been a home run: last year First Freedom earned $54 million. Should Indymac decide to sell this business, it’s not hard to imagine a price of, say, 15 times trailing earnings, or $800 million. To put that into context, Indymac’s total market capitalization is $420 million. For myself, I’d be delighted to see the company sell a minority stake to show the value of this business.