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Assured Guaranty Ltd. Message Board

  • optionreports optionreports Nov 29, 2011 2:11 AM Flag

    Lehman lawsuit to destroy 7.64/share in value?

    Lehman Europe is claiming AGO owes it $1.4 billion. There are 183,300,000 outstanding shares. If Lehman wins its lawsuit, spreading the burden to the outstanding shares would mean taking a hit of:

    $1,400,000,000 / 183,300,000 shares = $7.64/share

    Monday's closing price was $9.43.

    $9.43 - $7.64 = $1.79 new AGO value

    Wow. Am I calculating this wrong?

    Obviously, the lawsuit has yet to play out in court, but if Lehman is even close to correct, this seems pretty catastrophic for the company.

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    • Using your logic : On April 14 2011 AGO's closing price was $14.05 . On April 15 they settled with BAC for $1.6 billion which equals $8.73 per share using your math the stock should be $22.78. This was a actual settlement not some pie in the sky lawsuit that has no merit. AGO is dirt cheap.

    • While your arithmetic is accurate, the market doesn't agree with you analysis. Had the market agreed even slightly with your analysis, the share would have sold-off a lot more. One thing is for certain, the $1.4B number is the largest number Lehmann could dream-up. IF the case goes Lehman's way, the amount will be much less. Finally, the market doesn't appear to believe the Lehman suit is much of a threat. Good time to go long here iffin you are not in a big hurry.

30.07+0.11(+0.37%)12:14 PMEDT