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Assured Guaranty Ltd. Message Board

  • wilsonrusty2 wilsonrusty2 Jul 23, 2009 12:40 PM Flag

    Trading The Pinks

    I bought 500 shares of an Ameren utility sub today on the OTOTC, I put aqn order in at the last executed price and received an almost instantaneous execution not much different than the NYSE- if this is as bad as it gets all this panic selling based on liquidity concerns seems very misplaced.I think this is particuarly true since the two market makers, Citi and BAC, are very highly rated and should strive to maintain an orderly market. Admittedly this security is actively traded but an orderly market is being maintained.I will keep combing Quantum to see what other utility buys are in the pinks as that is what I want right now. FSA bonds will still be listed on quantum and shoppers will be checking them out. My guess is when they see the credit rating and the yields the will also be buying. RRW

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    • What is an aqn order type?


    • Well it looks to me like this traded on the NYSE today at least that is what Ameritrade is showing. I should have picked up on this when Tony said he was still getting a PSE quote since the stocks will not be listed on any exchange. Delisting effective as of close is what is happening I guess- this would also explain the downward tone of trading- last stragglers getting out. Anyone have a different take?RRW

    • Trading in the FSAs today did not appear to be unusual in any way. I see on my Vanguard website the bid and ask prices from the PSE and OTC, respectively.

      • 1 Reply to tony27719
      • Very smooth transistion. Volume very light but that is to be expected. I think it will take some time for these to settle in. I would not sell into this light volume. We get earnings next month maybe that will give us a boost.Everything looks fine to me.
        Just out of curiosity I dug a little on Northwestern. Turns out they were a former Lehmann recommendation ( validating your opinion). Anyway they are alive and well. Looks like the preferred holders wound up getting common so they probably took a hit but were not wiped out. Wonder how Marty missed that one- maybe it was later than he spoke.
        There is no end to management incompetence- their ute operations were sound but they decided to form a national plumbing franchise which broke them. Unbelievable. RRW

    • I will answer my own question, a South Dakota Utlity, Northwestern, did declare bankruptcy in 2002 and I really have no idea how that all turned out. Never say never. Good Luck. RRW

      • 1 Reply to wilsonrusty2
      • MBIA pay a loss on AHERF, then did a reinsurance deal to try to erase the loss from their books, but got in trouble over it. I think financials had to be restated.

        Assured and FSA definitely managed themselves massively better than the others, but the situation is not as safe as you seem to think. There are likely billions of unreported mortgage-related losses. If these need to be booked at the same time that one or two other structured deals falls apart, and munis starts to default, you could be looking at multiple notch downgrades and the debt dropping to $3 again.

        When you get a chance, look at MBIA's muni book, or Assured's recent muni deals. To me it looks like there are tons of revenue deals (stadiums, military and other housing, toll roads) that are far from rock-solid. And if they fail to generate enough revnue, I don't see many states or cities stepping up and taking the losses on these deals to protect investors. They have too much to worry about on their own. Perhaps a real muni expert can educate me if I am wrong.

        I have owned these baby bonds on a couple of occasions in the past, and I don't think theu are a bad deal now. They just aren't the home run that some on these board seem to think.

    • Jim- have not heard of the hardware company. Sounds like you hit a big lick- congrats. Will take a look for that can of yield. You might look at PSEC for a flier- last I heard it was yielding over 18% and had increased its dividend every quarter since it was founded. Not a preferred but what the heck. I got tied up with AGO about the time I was looking at it and did nothing which probably means it has gone through the roof. Good Luck

    • Yes- "utes" is "utilities" in my poor English.
      Several years ago a couple of brothers mismanaged a utility they ran called Aquilla. The preferreds plunged and, as is my habit, I immeadiately began buying them. I was joined by legendary investor Marty Whitman and it was he who in a shareholder report, which I ran across, pointed out there had not been a default or missed payment in a public utility preferred for decades. I have applied this fact (even before I read the report) to nice gains in Aquilla(Now a part of Great Plains), Middle South (now Entergy); Central Hudson, New York State Electric (now National Grid), Sierra Nevada( now Nevada Power), Westar ( the old Kansas Power and Light) Duquense, and even S. Cal Edison.They have all seemed hopelesss for a variety of reasons but all have survived and prospered and never missed a preferred payment. Show me a public ute in distress and I will show you an almost guaranteed way to make some money if they have preferreds you can trade. I particuarly remember Westar, I loaded up on their preferreds in the 12-13 dollar range and a couple of years later they called them at par- that I think is my all time favorite. Anyhow after fooling with those kind of walking deads, buying a going concern like Cent. Ill. is no big stretch for me.It may be for other investors which I understand.
      You are wise to be wary of "enhanced" anything but I like the company and the yield so I took the plunge.Glad you are smart enough to DOD.
      We are off to the pinks with AGO-I was really looking for a last gasp selloff- didn't happen.Should be interesting when we get a trading symbol.
      KNO had a nice pop- XFD appears brain dead. Good day for almost everything.Good Luck RRW

    • Rusty,

      Just curious. What ticker symbol did you use?

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