I'm just the messenger. Puerto Rico is at the heart of MBIA's difficulties in attracting investor interest.
Ironically, each of the major bond insurers, Ambac, Assured and MBIA's National, have a PR muni bond insured exposure that exceeds $5 billion, or $16 billion plus in total. While I believe the market has priced in the Commonwealth problems currently there is not much room for new negatives. So failing to solve this, IMO, virtually strips out new investor interest.
This may have been what motivated Warburg to appoint Timothy Geitner as President effective 3/1/14. They have to get a handle on this potential tsunami.
Tommy: What updated liquidity report are you referring to? And, if we don't know the actual hard settlement amount (ResCap estate to MBIA) and the schedule for payment how useful would a liquidity report be?
Recent weakness is probably attributable to a report seen last night on Bloomberg that Moody's is reviewing Puerto Rico munis for possible downgrade to junk status.
Hasn't the market already priced in "junk." Do you know of any recent new issues? My understanding is that Puerto Rico has been borrowing from commercial banks rather than paying the high coupon the market would demand.
Some muni bond funds are precluded from owning anything but investment grade so a downgrade could have consequences in forcing out large blocks of bonds. There are a number of PR issues so not all of them would likely be affected.
With $2.4 billion in cash either in-house or almost banked it's hard for me to see this decline further. I'd say $11.30 holds.
Agreed. After the close we get new set of short interest numbers and while I expect these to be down they still might be at or near 17 million. Tomorrow as you point out the ResCap hearing and that hardly is expected to be negative. We are ever closer to the three month time frame CEO Brown indicated as decision time with S&P's on a AA rating for Natl.
There is someone nearly everyday ready to apply blunt force trauma to the bid side of this stock. Whether it is a short trade, mm or tax-loss seller it is steady and persistent. Just a few days ago we were at $13 and small change but without any spot/specific news we are back to the mid-12.20's. Biggest problem is that we have some of the same phenomenon in the muni side that we had to endure with structured finance. The later is improving and probably doesn't represent headline risk but that isn't true today in the monoline side even though the risks, once presented, appear manageable. Only actual loss to date that I am aware of is with the Stockton arena bonds, plus legal costs in remaining defensive.
If the very near term prospect is to receive $800 million cash and the stock cannot act better than this it casts real doubt on the plausibility of a meaningful rally into 2014. But I still remain hopeful.
My guess is that this is institutional tax-loss selling. It is discouraging in the short run but will fade as this month progresses. There has been too much good news in the past few days to justify the selling. Assured Guaranty, for example, is close to its 2013 high and others in this space acting well.
WSJ reports "he will serve as president and managing director, not the kind of figurehead or advisory positions that public-sector figures often land after government stints. Mr. Geithner, 52 years old, is expected to work on mapping the firm's strategy and management, investor relations and on matters related to the firm's investments."
"When they approached me, they clearly wanted me to play a substantive role in helping them manage the firm," he said. Citing the firm's global reach and "low key" nature, he said Warburg is "culturally very compatible with what I am looking for."
Warburg, Pincus owns 24% of MBIA. I believe this is a very constructive move.
I completely agree, you saw it ystda and its right in your face again today. Once this logjam is pierced better sessions will lie ahead.
I had thought that the run-up in short activity was Puerto Rico based since it occurred during the recent media headline barrage in October. Now I am not as certain, believing it is partially the result of professional traders attempting to blunt the advance from the recent low below $10 and shorting into the rally. That's a big increase, from 12.3 million at end of September, to 17.8 million at mid-October and now just north of 20 million at Oct 31st.
Score another strong point for Dell when he talks about the overall professional market activity and manipulation in MBIA. Did you see where OptionMonster reported that almost 57,000 option contracts were written yesterday (on earning's and conference call eve) vs. an average of 4,500 daily contracts in the last month. This skews the normal trading action on the NYSE which Dell has been pointing out for weeks. In addition, those traders act out in subsequent sessions to protect and trade their financial interests.
I think overall that MBIA keeps their cards close to their vest. That doesn't mean that its entirely clean but on an overall basis they are well above average in being tight with the info.
There's lots of news this AM. AGO beat and is trading 7% higher on strong volume this morning. A WSJ story, also 11-12, on more aggressive stance by hedge funds towards muni bonds and 2 million share gain in MBIA's short interest to better than 20 million shares.
Volume since Nov 5th has been below 2 million shares daily which suggests a potential short squeeze. Today's volume will likely exceed 2million, perhaps over 3. We are also now quite close to matching the 200 day moving average.
Dell, hope you are right. You've been spotlighting the market manipulation in these shares for a long while now and perhaps the upside stars are getting realigned more favorably.
Kbkhkmartz---you're always asking for info but rarely provide anything in return. Earlier, you were asking for info on 3rd qtr earnings and in this post you were trying to qualify on-going dvid policy from NPF to MBIA. How 'bout we get some concrete assessments from you. What are your thoughts as to what might be revealed in tomorrow's earnings report and the follow-up conference call Wednesday? What do you see as the significant catalysts that will lift the stock in 2014. Or do you see MBIA declining in the months ahead?
There is also the short interest to consider. That is currently nearly 18 million shares. That adds to the aggregate float even though these shares were never issued, only borrowed. After the close today we will get a new reading following the 5 million share bulge that occurred in the 10-15 period when Puerto Rico concerns peaked. I think it will show a decline but am hoping is still north of 15 million.
When I posted MBIA was near the low of the session, $11.11 or so. I think the earnings will not be as relevant as the guidance. Investors want to hear about the talks with S&P's, the extent of the draw down in the BofA credit line, progress on commutations and also at what cost (+ or - reserves), NPF reserve changes, if any, for wrapped portfolio, further debt reduction, cost/charges for headcount elimination at the end of 2nd qtr.
I'd also welcome comments about MBIA's thinking on retaining the residential/commercial real estate side. They talk about National re-entering the insured muni market but never talk about their plans for the structured finance side. Now that the risk profile is far more favorable do they plan on raising addtl capital by an outright sale, possibly consider a spin-off as others have argued or do they have plans to re-enter this business also? Shareholders are entitled to know.
This is just old fashioned tax-selling this morning. Both Ambac and AGO are higher in contrast. There is a buyer at these prices who will vacuum up all the to be abandoned shares. Wait until the replacement buyers come in a month or so from now---it will be an entirely different story.
If "they" the MBIA theorists (analysts) have already arrived at the offering price have they also determined the number of shares to be offered? That's important as it would tell us how much additional capital would be necessary to bring Natl to "AAA." Think your post is bunk anyway. Natl is not going to raise public equity capital while wholly owned by MBIA.
Tommy: Should have inserted "be" between will and subject, so that it reads, "and then will be subject to an . . ."
Tommy: What leads you to believe that National will be spun off from MBIA, and then will subject to an initial public offering in 2013 or 2014?