Something strange is going on. Stock has been steadily declining absent of any news other than the MBI crap. Today it implodes again with no public news. I really wonder if there is insider info trading going on here. No munis have defaulted today.
AGO is a high beta stock. The cost of insuring portfolios is going UP, just look what the VIX has done over the past week, it has gone UP. That puts pressure on stocks like AGO.
In addition, Meredith Whitney lit-up the stage again this past week reiterating her deeply bearish call on munis.
All-in-all, it has been a very crappy set of weeks for equities. AGO faces some head-winds as we look to S&P credit rating change. We should hear about that in July. Any decrease in AGO's credit rating will temporarily cause the stock to plunge.
If you believe as I do, that growth is going to be closer to 4% in the second-half, then AGO could easily move north of $18/share is S&P doesn't slap them too hard.
As far as defaults, I am not too worried about the states near as much as some of the municipalities. On the good side of that, AGO (if anybody) knows who is and isn't at risk of a default and are probably prepared to deal with it.
I sold at $17.10 two weeks ago and started rebuilding my position in AGO. I'm about 25% back in, but I am buying a lot of stuff here. I am looking for a rebound as 2nd quarter earnings get underway. I will reload my AGO to 50% at $14. Long-term I know I want to own lots of AGO.