Gtarras

Why I'm Starting a Stake in Assured Guaranty

Mark
I'd be very careful and tried to learn as much as you can about AGO's TruPs exposure. this asset class might cause major damage to their book. while AGO's subordination is very high in these transactions, the underlying quality is deteriorating rapidly (regional banks). deferrals are a credit event, and many banks are taking that path. my personal opinion they will take bigger hits there than the market estimates now (subordination is eroding rapidly, and we've had 130 bank defaults so far with 4x as many expected to follow).. HELOCs are also an issue. i'm also looking into AGO, but decided to stay away for now.

MBIA and BofA: Thoughts on Litigation

thanks Tom
Problem (and maybe a blessing) with CDO of ABS is that this product is super sensitive to assumptions in individual mortgage losses. Subprime losses seem to be leveling off though, so I wanted to give MBI another look. Did not know the BV is mid-30s per their calc. Could be close to the fair value because their major problem is CDO of subprime ABS.. hmmm... Thanks!


On May 14 11:37 AM Tom Armistead wrote:

> dok tari and Gtarras,
>
> Reason to be long, nonGAAP metric adjusted book value stands at 37.61,
> and does not include any possible recoveries from litigation. In
> the past MBIA traded at roughly 1X this metric, so a successful resumption
> of writing municiapl bonds and a resolution of the questions about
> the cost of their CDO liabilities could entail a recovery to that
> area.
>
> There are a lot of uncertainties but it's a 6 bagger if it works
> out, from 5.90 as I type this.
>
> I have a negative reaction to BAC due to the situations noted in
> the article, whether they can create value from what they bought
> is not something I want to guess at, hence neither long nor short.
>
>

MBIA and BofA: Thoughts on Litigation

Tom
would be interesting to know your thoughts on WHY you are long MBI (hopefully for other readers as well). Maybe you can write it up? :)))

I have thought about buying MBI long time ago, but after some research realized that without knowing details of their complex CDO transactions, it is impossible to figure out how much value it is there. I am not sure MBI themselves know. I tend to think they will climb back to $30-440 range but it is a game of hide-and-seek.

Btw, i would not listen to anything Ackman says. He is all about show. So completely wrong with MBI and ABK back in 2002!! Yes it did work out for him in 2008 because they plunged into CDO of ABS disaster (from 2005 on), but Gotham were laughable in their attempt to bring these two down 7 years ago...

Economic Themes for 2009

what is your definition of "skyrocket"? while I agree with thesis that elevated inflation is a given, once we deal with the current mess, let me remind you that $1 trillion dollars is only 7% of US GDP.

Oh, and the current US debt to GDP ratio of 65%-70% is not even close to, for instance, Japans, which is north of 300%...