MBI - MBIA Inc.

[MYDemaray]

"If Article 77 fails, the ultimate fate of the settlement will rest with the Investor Group -- the group which is arguing FOR the settlement.  My guess is, they will be willing to settle  for FAR LESS than $100bn, as they've already demonstrated with their $8.5bn figure."

 

I am not sure about all the details or the process of it, but these people who agreed to the $8.5 billion settlement, do they have any chance to change their mind? I mean, why go for pennies on the dollar when you could now ask $0.20, $0.30 or more now that BAC is doing well with a strong balance sheet and that you have other cases in court to back a bigger claim? Are they trapped for now in the Article 77 proceeding because it was entered into a long time ago and are now praying for a negative verdict to be free to ask for more?

 

After all, they agreed to this amount in pretty much a different era if you are to compare with today when they thought they were lucky to even get that amount. Monolines have won pretty much all their cases with many regarding fraud and many have settled. Lots of precedents that did not exist before.

 

Cardboard

 

From what I understand...monoline a are covered by insurance law, whereas investors in the Article 77 case are subject to securities law, and specifically the pooling and servicing agreements of the private label securities.  As such, there is not a one-for-one influence of the monoline outcomes on the security holders.

 

As I read the settlement agreement, all parties to the settlement have agreed to use best efforts to ensure the settlement is approved.

 

FWIW, here is the settlement agreement: http://www.gibbsbruns.com/files/Uploads/Documents/Settlement%20Agreement.PDF

 

And Investor Group argument in favor of approval:

http://www.cwrmbssettlement.com/docs/No.%20124%20Institutional%20Investors_%20Statemetnt%20in%20Support%20of%20Settlement%20and%20Consolidated%20Response%20to%20Se.PDF

 

And the docket: http://www.cwrmbssettlement.com/docsny.php

[valuecfa]

https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=jDMRduzobSHUgRGpqfVT0g==&system=prod

[Guest bottomsup]

And BTIGs comments:

 

http://www.btigresearch.com/2013/04/08/mbia-responds-to-bofas-letter-to-judge-bransten-rescissory-damages-was-never-key-to-loss-recovery/

 

 

https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=jDMRduzobSHUgRGpqfVT0g==&system=prod

[Kiltacular]

bottomsup (and valuecfa),

 

I much appreciate your discussion on MBIA.  Since I cannot get access to BTIG (a problem some others here have encountered), if/when you post a link to their thoughts, can you reprint relevant excerpts here (if permitted, of course).

 

TIA

[muscleman]

bottomsup (and valuecfa),

 

I much appreciate your discussion on MBIA.  Since I cannot get access to BTIG (a problem some others here have encountered), if/when you post a link to their thoughts, can you reprint relevant excerpts here (if permitted, of course).

 

TIA

 

You don't have a corporate email address? Can you try some bizzare emails like www.163.com? Maybe they will allow you to get in.

[Kiltacular]

I was able to register.  Then, without explanation, was restricted.  I tried a few things (read: I tried a bunch of things).  I'm not sure what the issue was. 

 

I think someone else mentioned a similar issue -- bmichaud, maybe?

 

Since they are not -- apparently -- incredibly restrictive, I was hoping to convince someone to post relevant sections of their MBIA missives (again, assuming doing so doesn't violate their restrictions).  If you want to be really helpful, you can put certain sections in bold as PlanMaestro did (does?...I've been missing his frequent posts...though I saw something tonight from him regarding JCP). 

[bmichaud]

They blocked my work email because I believe they were pissed I never bought Clearwire through them. They said I'd need to pay $10k a year to access research again....so....I signed up under a family member's work email.

[valuecfa]

There was nothing new in the research piece...just a recap of the letter MBIA's attorneys wrote.

[Kiltacular]

thanks valuecfa

[valuecfa]

Looks like Fairholme sold a few shares.

 

...and BAC writes another letter to the judge in hopes that it will delay the successor liability ruling

 

BTIG's comments:

 

One week after Bank of America (BAC)/Countrywide attorney Barry Ostrager of Simpson Thacher & Bartlett wrote a letter to New York State Supreme Court Justice Eileen Bransten asking that she allow supplemental briefing and argument on buy-rated MBIA’s summary judgment motion related to fraud and breach-of-contract claims in MBIA v. Countrywide, Ostrager today submitted yet another letter to the judge, this one in response to an Apr. 8 letter from the bond insurer’s counsel responding to his Apr. 3 letter.

 

continued: http://www.btigresearch.com/2013/04/10/mbia-another-letter-from-bofas-counsel-to-judge-bransten-ironically-obviating-need-for-additional-briefing/

[JRH]

Looks like Fairholme sold a few shares.

 

More interestingly, they were all sold out of Fairholme Allocation - approximately 2/3 of its stake!  That would take it down to a ~9% allocation, not taking into account changes in AUM or holding price changes since the November 30 report.

 

Let the speculation begin. ;)

[valuecfa]

Looks like Fairholme sold a few shares.

 

More interestingly, they were all sold out of Fairholme Allocation - approximately 2/3 of its stake!  That would take it down to a ~9% allocation, not taking into account changes in AUM or holding price changes since the November 30 report.

 

Let the speculation begin. ;)

 

Thanks for pointing that out. I hadn't noticed the additional disclosure in the 13G til now.

[BargainValueHunter]

Looks like Fairholme sold a few shares.

 

More interestingly, they were all sold out of Fairholme Allocation - approximately 2/3 of its stake!  That would take it down to a ~9% allocation, not taking into account changes in AUM or holding price changes since the November 30 report.

 

Let the speculation begin. ;)

 

More redemptions?

[stahleyp]

Looks like Fairholme sold a few shares.

 

More interestingly, they were all sold out of Fairholme Allocation - approximately 2/3 of its stake!  That would take it down to a ~9% allocation, not taking into account changes in AUM or holding price changes since the November 30 report.

 

Let the speculation begin. ;)

 

More redemptions?

 

Highly doubtful. The fund already has about 18% cash last I checked.

[JRH]

More redemptions?

 

Maybe on the margin at best.  Selling 2/3 of a position amounting to ~18% of AUM in a 4-month window doesn't strike me as a redemption-driven action.

 

Moynihan obviously didn't take Berkowitz's advice to settle.  My guess is that he thinks BofA will draw it out as long as possible, and that alone moves it down the list of best ideas (short-term catalyst vs. 2-3 years from now).

 

It'd be interesting to see whether Berkowitz sold the MBIA Corp. surplus notes out of FOCIX.

[muscleman]

More redemptions?

 

Maybe on the margin at best.  Selling 2/3 of a position amounting to ~18% of AUM in a 4-month window doesn't strike me as a redemption-driven action.

 

Moynihan obviously didn't take Berkowitz's advice to settle.  My guess is that he thinks BofA will draw it out as long as possible, and that alone moves it down the list of best ideas (short-term catalyst vs. 2-3 years from now).

 

It'd be interesting to see whether Berkowitz sold the MBIA Corp. surplus notes out of FOCIX.

 

Right. I just checked the 13G. FAIRX still has 20 million shares. Fairholme allocation fund only has 2.4 million shares now, down from over 7 million shares.

Now he has over 30% in cash now. I am curious what he is going to do with so much cash.

Does he think even holding cash is better than MBIA? ::)

[texual]

Two questions: when Fairholme closed funds for new investors does that include the other two funds outside FAIRX? and if he sells a lot of MBIA in the smaller allocation fund, does that still mean he can use that cash to invest in stocks for FAIRX? I kind of imagined they were silo's, completely separate funds with their own investors and cash that stays within the fund unless its for redemptions. I don't think he is returning this cash to them in dividends either. What are some other reasons he would sell a stake in Allocation but not get rid of FAIRX's holdings in MBIA?

[muscleman]

Two questions: when Fairholme closed funds for new investors does that include the other two funds outside FAIRX? and if he sells a lot of MBIA in the smaller allocation fund, does that still mean he can use that cash to invest in stocks for FAIRX? I kind of imagined they were silo's, completely separate funds with their own investors and cash that stays within the fund unless its for redemptions. I don't think he is returning this cash to them in dividends either. What are some other reasons he would sell a stake in Allocation but not get rid of FAIRX's holdings in MBIA?

 

For your first question, the allocation fund is closed as well. Below is the letter excerpt, and at the end of that page, it says it will be closed too.

http://www.gurufocus.com/news/206836/bruce-berkowitzs-2012-letter-for-the-fairholme-allocation-fund

 

If there is massive redemption when this is announced, then it can explain what is going on here. The timing of the fund close is roughly the time that he sold.

 

Let's take a step back, do you think there are oppurtunities better than MBIA, even if the litigation will take another 2-3 years?

Buying at 40% of National's book value with a free call option to play on the litigation is a very good one.

I lost quite some money in the past playing call and put options. Then I only stick to common stocks. But this one is different. It is a free call option.

[MYDemaray]

Any chance some of this cash is headed for his new hedge fund? http://www.sec.gov/Archives/edgar/data/1566213/000091957413000300/xslFormDX01/primary_doc.xml

[stahleyp]

Any chance some of this cash is headed for his new hedge fund? http://www.sec.gov/Archives/edgar/data/1566213/000091957413000300/xslFormDX01/primary_doc.xml

 

Good thinking MYD.

 

He personally owned 9,260,821.71 shares of FAAFX (Allocation) as of April 1st. That works out to be more than $100 million.

[merkhet]

So he has reduced it to roughly the same allocation (%) as his Bank of America position in the Allocation Fund...

[JRH]

Any chance some of this cash is headed for his new hedge fund?

 

I don't think I buy the idea that the selling is related to cash redemption (either outside holders or Berk himself), because that would precipitate broad selling of FAAFX holdings.  However, he hasn't reported a 13G on Sears, for which Fairholme Capital also has 5%+ position.

 

[valuecfa]

short and to the point:

 

https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=1bCgaSwbCT8IP9Lx1GbDOA==&system=prod

[valuecfa]

New billion-dollar MBS question: Are there limits on monoline damages?

 

http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=74403&terms=@ReutersTopicCodes+CONTAINS+%27ANV%27

[muscleman]

New billion-dollar MBS question: Are there limits on monoline damages?

 

http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=74403&terms=@ReutersTopicCodes+CONTAINS+%27ANV%27

"It's significant, Hawthorne said, that the court quoted language from insurance law provisions permitting insurers to avoid policies or block payment of claims."

 

Does this mean if the CMBS turns bad, MBIA corp can block the payment? Is this legal?