Sunrider Posted November 21, 2012 Share Posted November 21, 2012 Volatility - gotta love it. Any news I haven't seen that explain the race out of the gate this morning? Short covering? IB indicated a few days ago that the stock was hard to borrow, no longer the case today. thanks - C. Link to comment Share on other sites More sharing options...
JRH Posted November 21, 2012 Share Posted November 21, 2012 Volatility - gotta love it. Any news I haven't seen that explain the race out of the gate this morning? Short covering? IB indicated a few days ago that the stock was hard to borrow, no longer the case today. thanks - C. Could be related to bond trades/prices? (I don't have access to bond prices that I know of) See this tweet from around market close: @cherzeca: last sale price of the $mbi 5.7% '34 is par. someone is in the market Pricing in MBIA (& friends?) fighting BAC's tender offer? Link to comment Share on other sites More sharing options...
ShahKhezri Posted November 21, 2012 Share Posted November 21, 2012 BTIG was recommending Shorting the bonds, long equity. "So what should a holder of the 5.7% Notes do? While simply accepting the 100 cents on the dollar that BAC is offering certainly appears attractive, there is another course of action that could be even more profitable. Here’s a modest proposal/trade recommendation: we believe 5.7% noteholders could benefit by buying a significant amount of MBIA common stock (or call options), shorting the 5.7% Notes, and then voting in favor of MBIA’s consent solicitation rather than accepting BAC’s cash tender." Look at the call volume, Dec 12, strike 8. Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 21, 2012 Share Posted November 21, 2012 Nice move! Link to comment Share on other sites More sharing options...
ERICOPOLY Posted November 21, 2012 Share Posted November 21, 2012 BTIG was recommending Shorting the bonds, long equity. "So what should a holder of the 5.7% Notes do? While simply accepting the 100 cents on the dollar that BAC is offering certainly appears attractive, there is another course of action that could be even more profitable. Here’s a modest proposal/trade recommendation: we believe 5.7% noteholders could benefit by buying a significant amount of MBIA common stock (or call options), shorting the 5.7% Notes, and then voting in favor of MBIA’s consent solicitation rather than accepting BAC’s cash tender." Look at the call volume, Dec 12, strike 8. I guess I don't understand. If the notes are shorted, and then delivered to BAC (the buyer of the notes you are selling short), then how does this stop BAC from getting all of the notes that they want? Or perhaps the person who buys them out of the short sale then tenders them to BAC. Link to comment Share on other sites More sharing options...
Kraven Posted November 21, 2012 Share Posted November 21, 2012 BTIG was recommending Shorting the bonds, long equity. "So what should a holder of the 5.7% Notes do? While simply accepting the 100 cents on the dollar that BAC is offering certainly appears attractive, there is another course of action that could be even more profitable. Here’s a modest proposal/trade recommendation: we believe 5.7% noteholders could benefit by buying a significant amount of MBIA common stock (or call options), shorting the 5.7% Notes, and then voting in favor of MBIA’s consent solicitation rather than accepting BAC’s cash tender." Look at the call volume, Dec 12, strike 8. I guess I don't understand. If the notes are shorted, and then delivered to BAC (the buyer of the notes you are selling short), then how does this stop BAC from getting all of the notes that they want? Or perhaps the person who buys them out of the short sale then tenders them to BAC. I had to think about this one. I think the point is that the bonds have been sold for 100 cents on the dollar and worst case when covering you pay the same 100 cents on the dollar theoretically. But you have the upside of the long on the common. If the consent goes through, the common drops and the bonds drop. I have no idea whether the common would drop more than the money made on the short or not. I guess query too how easy it would be to cover that trade. Link to comment Share on other sites More sharing options...
muscleman Posted November 21, 2012 Share Posted November 21, 2012 BTIG was recommending Shorting the bonds, long equity. "So what should a holder of the 5.7% Notes do? While simply accepting the 100 cents on the dollar that BAC is offering certainly appears attractive, there is another course of action that could be even more profitable. Here’s a modest proposal/trade recommendation: we believe 5.7% noteholders could benefit by buying a significant amount of MBIA common stock (or call options), shorting the 5.7% Notes, and then voting in favor of MBIA’s consent solicitation rather than accepting BAC’s cash tender." Look at the call volume, Dec 12, strike 8. I guess I don't understand. If the notes are shorted, and then delivered to BAC (the buyer of the notes you are selling short), then how does this stop BAC from getting all of the notes that they want? Or perhaps the person who buys them out of the short sale then tenders them to BAC. Yeah.... The only possible way to do this is to buy the notes, submit the vote, and after the voting deadline, sell the note, short it, and buy the stock. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted November 21, 2012 Share Posted November 21, 2012 Suppose you vote early and then sell the note before the voting deadline. Can the new holder of the note reverse the previously submitted vote? In other words, can a note be voted multiple times with only the last submitted vote counted? Link to comment Share on other sites More sharing options...
Kraven Posted November 21, 2012 Share Posted November 21, 2012 Suppose you vote early and then sell the note before the voting deadline. Can the new holder of the note reverse the previously submitted vote? In other words, can a note be voted multiple times with only the last submitted vote counted? My recollection is that BAC requires anyone who tenders to them to covenant that they won't sell the note in a way that the vote could be changed. I might be remembering that wrong. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted November 21, 2012 Share Posted November 21, 2012 Suppose you vote early and then sell the note before the voting deadline. Can the new holder of the note reverse the previously submitted vote? In other words, can a note be voted multiple times with only the last submitted vote counted? My recollection is that BAC requires anyone who tenders to them to covenant that they won't sell the note in a way that the vote could be changed. I might be remembering that wrong. So if you short a bond, how can you be sure that the bond you located and borrowed is a bond that hasn't voted yet? In other words, how can the buyer at the other side of the short sale be certain that he can tender it? And if he can't tender it, it's damaged goods. Link to comment Share on other sites More sharing options...
Kraven Posted November 21, 2012 Share Posted November 21, 2012 Suppose you vote early and then sell the note before the voting deadline. Can the new holder of the note reverse the previously submitted vote? In other words, can a note be voted multiple times with only the last submitted vote counted? My recollection is that BAC requires anyone who tenders to them to covenant that they won't sell the note in a way that the vote could be changed. I might be remembering that wrong. So if you short a bond, how can you be sure that the bond you located and borrowed is a bond that hasn't voted yet? In other words, how can the buyer at the other side of the short sale be certain that he can tender it? And if he can't tender it, it's damaged goods. I don't know for sure. Here's what I would guess from having done bond votes before. One, the onus is on the original holder, the one who votes and then sells it. They are the one who has covenanted to BAC that they will abide by the terms of the tender (it's all spelled out in the docs). Two, when the votes are being counted the way I always saw it was that each bond had some kind of identification to it - a number. I don't know how that would work with global positions (i.e. DTC). But someone has to be tracking it somehow, or attempting to anyway. When all bonds are physical it's easy. You hold bond R-2, for example, and you vote affirmatively. They then see the same R-2 come around again and they know there's a problem. I don't recall how it was done with global positions. In terms of the bond you locate and try to tender, I am not sure. That's a problem with global positions. With physicals, the seller would need to tell you that. I am not sure here (I'm assuming these bonds are through DTC, if not it's easy as explained above). Link to comment Share on other sites More sharing options...
mpauls Posted November 21, 2012 Share Posted November 21, 2012 BTW, here's a Compilation of Unsealed Documents MBIA v Countrywide Motion For Summary Judgement:Breach of Insurance Agreements http://investinginknowledge.com/info/2012/11/compilation-of-unsealed-documents-1119-1120-mbia-v-countrywide-home-loans-motion-for-summary-judgement-on-breach-of-insurance-agreements/ Link to comment Share on other sites More sharing options...
ShahKhezri Posted November 21, 2012 Share Posted November 21, 2012 Did the Moody's downgrade just make it easier for MBIA to commute? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted November 21, 2012 Share Posted November 21, 2012 Suppose you vote early and then sell the note before the voting deadline. Can the new holder of the note reverse the previously submitted vote? In other words, can a note be voted multiple times with only the last submitted vote counted? My recollection is that BAC requires anyone who tenders to them to covenant that they won't sell the note in a way that the vote could be changed. I might be remembering that wrong. So if you short a bond, how can you be sure that the bond you located and borrowed is a bond that hasn't voted yet? In other words, how can the buyer at the other side of the short sale be certain that he can tender it? And if he can't tender it, it's damaged goods. I don't know for sure. Here's what I would guess from having done bond votes before. One, the onus is on the original holder, the one who votes and then sells it. They are the one who has covenanted to BAC that they will abide by the terms of the tender (it's all spelled out in the docs). Two, when the votes are being counted the way I always saw it was that each bond had some kind of identification to it - a number. I don't know how that would work with global positions (i.e. DTC). But someone has to be tracking it somehow, or attempting to anyway. When all bonds are physical it's easy. You hold bond R-2, for example, and you vote affirmatively. They then see the same R-2 come around again and they know there's a problem. I don't recall how it was done with global positions. In terms of the bond you locate and try to tender, I am not sure. That's a problem with global positions. With physicals, the seller would need to tell you that. I am not sure here (I'm assuming these bonds are through DTC, if not it's easy as explained above). And if you haven't yet voted your bond, then you must be planning on tendering it. But you can't tender what you've loaned out to a short seller who might not sell it back to you in an un-voted form. Why would anyone lend out a bond that they haven't yet voted on? Link to comment Share on other sites More sharing options...
Kraven Posted November 21, 2012 Share Posted November 21, 2012 And if you haven't yet voted your bond, then you must be planning on tendering it. But you can't tender what you've loaned out to a short seller who might not sell it back to you in an un-voted form. Why would anyone lend out a bond that they haven't yet voted on? I don't know the answer. Link to comment Share on other sites More sharing options...
mpauls Posted November 21, 2012 Share Posted November 21, 2012 Did the Moody's downgrade just make it easier for MBIA to commute? Why would this make it easier? And by easier, I assume you mean cheaper? Link to comment Share on other sites More sharing options...
ShahKhezri Posted November 21, 2012 Share Posted November 21, 2012 Did the Moody's downgrade just make it easier for MBIA to commute? Why would this make it easier? And by easier, I assume you mean cheaper? Yes, I meant cheaper. Link to comment Share on other sites More sharing options...
Kraven Posted November 22, 2012 Share Posted November 22, 2012 The consent solicitation expired at 5 pm (NYC time) yesterday (Nov 21). No word out of either camp yet. Link to comment Share on other sites More sharing options...
mpauls Posted November 22, 2012 Share Posted November 22, 2012 Brown said the results should be released Monday. Link to comment Share on other sites More sharing options...
mpauls Posted November 25, 2012 Share Posted November 25, 2012 (UPDATED NOV 25, 2012) Part 5: ~334.5 MB, 11,979 PAGES http://investinginknowledge.com/video/MBIALitigationNov21-23.pdf The rest can be found here: http://investinginknowledge.com/info/2012/11/compilation-of-unsealed-documents-1119-1120-mbia-v-countrywide-home-loans-motion-for-summary-judgement-on-breach-of-insurance-agreements/ Link to comment Share on other sites More sharing options...
Kraven Posted November 26, 2012 Share Posted November 26, 2012 MBIA got the consent done. Looks like they had to buy back around $170 mil of the 2004 bonds in order to do it. The $170 mil was the par amount, so likely it cost less. Appears that some holders got MBIA to buy back after consenting. Probably MBIA was able to work out deals with some of these holders to pay less than BAC was offering knowing that their equity stakes (assuming they had them) would more than make up for any difference in price. Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 26, 2012 Share Posted November 26, 2012 Congrats to those that loaded up! Dazel. Link to comment Share on other sites More sharing options...
ShahKhezri Posted November 26, 2012 Share Posted November 26, 2012 Got lucky and doubled on Jan 7.50 calls Wed (still down 6% based on my avg) and added heavily to FAAFX throughout the week. I think the BAC consent, at least my readings and my interpretation of it was BS. The equity holders were not going to risk $20 BV in Municipal. BAC wasn't playing chess, Jay Brown isn't stupid and heading into Dec. 4-5 courtroom festivities things get interesting. Link to comment Share on other sites More sharing options...
glider3834 Posted November 27, 2012 Share Posted November 27, 2012 I averaged down when it went to $7 but my avg cost for my accounts I manage is around the mid $8 mark - I think its a good outcome for MBIA but it does mean a use of precious cash resources - I believe they will succeed in their Dec Court case & this will raise their hand in the settlement negotiating stakes with BAC post trial. Their hand would have been weakened if BAC had succeeded in this recent offering. Link to comment Share on other sites More sharing options...
merkhet Posted November 27, 2012 Share Posted November 27, 2012 I wonder if this gets to trial at all now... Link to comment Share on other sites More sharing options...
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