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Assured Guaranty- A Book Value Bargain

Headquartered in Bermuda, Assured Guaranty (AGO) is a provider of financial guaranty insurance. It guarantees the scheduled interest payments and principal on municipal bonds, public infrastructure and structured financing, notes Mark Skousen, editor of Home Run Trader.

This insurance protects debt holders from potential defaults. It also allows debt issuers to obtain capital at lower cost. This is a business that requires real industry expertise. And Assured Guaranty has it in spades.

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The company’s battle-tested business model, disciplined risk management and loss-mitigation strategies allowed it to maintain a strong financial position even during the depths of the Great Recession. 

Unlike many other companies, it did not have to cut its dividend during the 2008-09 crisis and Great Recession. In fact, it has increased its dividend. And with the economy now on solid ground, the company is stronger than ever. It has beaten Street forecasts for four quarters in a row.

Recently, Assured reported the best third quarter for new business since 2010. Larger transactions — along with its other competitive advantages — allowed the company to maintain its guaranty industry leading position with a 58% share of the primary and municipal bond insurance market.

The firm’s adjusted book value per share hit a new record high of $90.18. Yet — astonishingly — the stock currently trades for less than $50 a share. That is way cheap.

And the company’s Chief Investment Officer Andrew Feldstein knows it. Over the last month, he has purchased more than 81,000 shares for an investment of over $3.75 million. 

Feldstein is a big hitter. He came on board Assured Guaranty after the company acquired BlueMountain Capital Management, where he was co-founder and CEO.

See also: Invest like the "Super Rich"

Given the strong financial position of the company, its solid dividend and telltale insider buying, this is one we’re likely to hit out of the park. So, pick up Assured Guaranty Ltd. and place a sell stop at $40 for protection. 

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