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  • hounddawgie hounddawgie Mar 4, 2009 1:00 PM Flag

    MBI up and AGO down

    There is absolutely "forced selling" happening. Some of the selling could easily be Fidelity Investments and Legg Mason, but they aren't doing it in a big way. AGO, although the volume is higher than normal, we are not seeing mass liquidation.....they may come later (grin).

    I own a "boat-load" (not so true now)of AGO and just refuse to get squeezed out at this point. However, I accept the fact that the "insured bond" business could get a lot smaller very quickly if things don't change. It does feel like that might be the case here. AGO is definately not THE PLACE TO BE right now. Let's not kid ourselves, the future for bond insurers is very much hanging by a thread here and it doesn't appear that there are many investors willing to "buy" the stocks. Financials are all getting ignored by buyers today and we have, like you said, numberous "forced sellers".

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    • I don't agree with your seuugestion that the industry is in peril. There are lots of smart people saying that the demand for muni bond insurance will be much lower in the future than it was in the past, and I suspect they will be right. But AGO's market share has gone from ~ 10% to ~ 70%, which has more than offest the decline on the overall market...they have a very viable business going forward, and a very strong book value. So unless someone knows something significanly bad lurking around the corner that I don't know about, I'd say this is a 10 bagger wiating to happen.

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