Common Sense

2 Comments

    • Global Financial Performance [view article]
      The shorts are the only thing pushing Ambac down to the current levels. When the shorts scramble to cover, you will see where the true value of the stock lies. I must say, the shorts that are still in Ambac at this point have a pain tolerance that is much higher that the average investor. When they start covering, the current price of just over $1 is going look a little silly. When covering starts you are going to see a gap of around 25% to the up side. With out shorts, Ambac would be priced north of $5 right now, most likely around $12. If you are long, you really can not beat the shorts out, they are too strong. Some advice would be to dollar cost average your position and take advantage of the under weight price provided to you by the shorts. When they decide to leave, you will be very happy that you did.

      On Jul 02 10:12 AM Ishortyou wrote:

      > In respect to AMBAC and MBIA, they need to keep and save all the
      > cash possible including stop paying dividends, deleverage AGGRESSIVELY
      > from all their risky liabilities specially those CDS-CDO's, RMBS-ABS
      > of uncertain value, in order to remediate their book values, once
      > their book values are sound they need to reinstate their triple A
      > rating again to write new low risk public bond insurance business.
      > They can also open or extend a line of credit to make sure to continue
      > operations and dissipate doubts. This will also prevent further downgrades
      > from rating agencies.
      >
      > They are already doing these, so it will take some time to deleverage
      > their books from uncertainties and rewrite new business again. This
      > coming back will be the best advertisement to recruit new clients.
      >       Jul 02 10:55 AM
    • Outlook Remains Grim for MBIA, Ambac [view article]
      Fear and greed drives markets.
      There is absolutely no way AMBAC or MBIA will to go to zero there fore they will eventually go back up. They will however have to restructure and get back to their original business of insuring low risk and low margin public bonds. Their greed got the best of them and they became overweight in risk, but now there is enough fear to not let it happen again. I am not suggesting that they will not continue to dip lower in the near term. What I am suggesting is that the next 36 months these stocks could possibly be in the high teens, low twenties.
      There may be government intervention of some sort to assist them in regaining their AAA rating. After all we saved Harley Davidson and that had very little reach into the stability of the market. Figure out how many companies will be affected if MBIA and AMABC fail completely. Figure out the overall ramifications of a complete failure on the overall market and you will begin to understand that it will not be allowed
      Jul 02 01:54 AM
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