muscleman Posted May 6, 2013 Share Posted May 6, 2013 http://finance.yahoo.com/news/bank-america-announces-comprehensive-settlement-192800778.html Cardboard So the CDS did get terminated. This is not a bad settlement. Link to comment Share on other sites More sharing options...
muscleman Posted May 6, 2013 Share Posted May 6, 2013 MBIA Corp.'s policies insuring the residential mortgage-backed securities (RMBS) transactions originated by Countrywide will continue to be in full force and effect, and MBIA Corp. will continue to make timely payment of principal and interest when due under these policies. Bank of America will have no further put-back liability to MBIA with respect to the insured Countrywide transactions. This is the tricky part. Whenever AGO gets a settlement, it will always be a 85% loss sharing for future losses on the insured RMBS, so AGO only needs to pay 15% of future losses. But for MBIA, there is no further loss sharing, and MBIA still needs to pay 100% of the future losses? Link to comment Share on other sites More sharing options...
Parsad Posted May 6, 2013 Share Posted May 6, 2013 Congrats everyone! This one was in the 9-foot hurdle department for us, and we did not touch it, even though we were often tempted. And yes, I think someone could write a book about The Money Masters on Corner of Berkshire & Fairfax! Cheers! Link to comment Share on other sites More sharing options...
valuecfa Posted May 6, 2013 Author Share Posted May 6, 2013 Congrats all. ;D I only sold most of my call options today. Still holding all my common as i don't think the market understands yet how the chips will fall once the financial statements get cleaned up. I actually added a little more of the common today at 13.3. I think clarity over the coming weeks/months will help the share price further. I'd rather not get into any of the financials on why, just in case I get to take another bite out of this apple. I'll just say i think it is still meaningfully undervalued still, but if you own calls you should probably start taking profits soon given time decay. Cheers. Link to comment Share on other sites More sharing options...
Cardboard Posted May 7, 2013 Share Posted May 7, 2013 I opted to sell my calls too. However, I am afraid that I may experience the "Sanjeev pain" as he had with Overstock.com just a few days ago and see how that thing now keeps going up! MBIA had a lot of shorts also so who knows what will happen over the next few days with the share price. It was really difficult to tell this afternoon what was really going on or until press releases came out after 15:30. These leaks on all sorts of deals out there is a big problem IMO. Not knowing all the details, especially around commutations or it could have been just a rumour with all kinds of wrong info and the fact that Societe Generale is still appealing on the Article 78, and I had enough cause for concerns to take profits as they were expiring next Friday. Still hold the stock and I think that yes, the future looks quite a bit brighter now. Once I understand better the commutations, I think that it will appear clear that MBI worked out a very good deal under the circumstances. Lawsky seems pretty happy with the deal. http://video.cnbc.com/gallery/?play=1&video=3000166555 Cardboard Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 7, 2013 Share Posted May 7, 2013 67.4m share volume! Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 7, 2013 Share Posted May 7, 2013 Word problem: This morning I bought 80,000 MBI shares at $10.19 average cost in my wife's RothIRA account. First purchase today was today at 10:12:57 EDT Last purchase today was today at 10:46:34 EDT At the time of last purchase, it was 53% of her account. Shares were at $14 less than 1.25 hours later. How much does she owe me? Link to comment Share on other sites More sharing options...
Parsad Posted May 7, 2013 Share Posted May 7, 2013 Word problem: This morning I bought 80,000 MBI shares at $10.19 average cost in my wife's RothIRA account. First purchase today was today at 10:12:57 EDT Last purchase today was today at 10:46:34 EDT At the time of last purchase, it was 53% of her account. Shares were at $14 less than 1.25 hours later. How much does she owe me? Somebody's going to get lucky tonight! And you didn't even have to take out the garbage or do anything around the house. ;D. Cheers! Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 7, 2013 Share Posted May 7, 2013 Nice timing Eric! I had it at about a 85% position including calls I am glad you didn't hold back -- you got paid. Thank you for sharing information on it with the board. The last thing you posted helped me buy this morning -- you dug up some BTIG research arguing that they only needed additional $1.4b or so to be made whole (for National to get going) in the settlement (with BAC and all others cumulative). I reasoned that if BAC had already offered (as rumored) $1b, then they only needed another $400m or so. They'd get that in part from the rest of the parties, but even if they didn't the stock would still be worth $13 (based on your $22 estimate) if they had to raise the rest of the money via dilution at $5. So it seemed pretty safe. The worst case was still not that bad, assuming they really did have that $1b offer on the table as rumored. Link to comment Share on other sites More sharing options...
valuecfa Posted May 7, 2013 Author Share Posted May 7, 2013 Nice timing Eric! I had it at about a 85% position including calls I am glad you didn't hold back -- you got paid. Thank you for sharing information on it with the board. The last thing you posted helped me buy this morning -- you dug up some BTIG research arguing that they only needed additional $1.4b or so to be made whole (for National to get going) in the settlement (with BAC and all others cumulative). I reasoned that if BAC had already offered (as rumored) $1b, then they only needed another $400m or so. They'd get that in part from the rest of the parties, but even if they didn't the stock would still be worth $13 (based on your $22 estimate) if they had to raise the rest of the money via dilution at $5. So it seemed pretty safe. The worst case was still not that bad, assuming they really did have that $1b offer on the table as rumored. Oh yeah, buddy. I made more today then i think i will ever make in a single day again (more than 5 years worth of my annual salary). I think this was what the market was missing, and still is to a certain degree. MBIA didn't need a "full" recovery, especially when you think of it in terms of isolating National's book value, separate from Ins corp. And to think that MBIA ins corp has the potential to have some value with remaining litigation is also nice. Link to comment Share on other sites More sharing options...
shalab Posted May 7, 2013 Share Posted May 7, 2013 Congrats to everyone for their persistence and patience. This was a huge winner for me and made my day! Link to comment Share on other sites More sharing options...
Kiltacular Posted May 7, 2013 Share Posted May 7, 2013 You know, it's interesting to me that Berkowitz had recently sold a few shares. Since it is completely unlike him to get the timing of something like this wrong, I'm wondering the following: The rumor is that, basically, MBIA's board pushed Jay Brown to the side and got this deal done. I wonder if part of that was a push from Berkowitz (and other large holder -- Warburg?). Perhaps Berkowitz had to start selling to really get the board's attention. It was beginning to seem like Jay Brown was stuck on winning this thing and redeeming himself completely. Then again, maybe Brown fought the good fight. But, after following this long enough, it seemed like even with the threat of having "$hitco" seized, he was still resistant. Anyway, I hope Brown is set to put this stuff behind him and MBIA and work on getting MBIA's credit ratings up -- wooing the street and ratings agencies, etc. I don't see why we shouldn't get back to National's book value -- that's a ways away from today's prices. Link to comment Share on other sites More sharing options...
valuecfa Posted May 7, 2013 Author Share Posted May 7, 2013 You know, it's interesting to me that Berkowitz had recently sold a few shares. Since it is completely unlike him to get the timing of something like this wrong, I'm wondering the following: The rumor is that, basically, MBIA's board pushed Jay Brown to the side and got this deal done. I wonder if part of that was a push from Berkowitz (and other large holder -- Warburg?). Perhaps Berkowitz had to start selling to really get the board's attention. It was beginning to seem like Jay Brown was stuck on winning this thing and redeeming himself completely. Then again, maybe Brown fought the good fight. But, after following this long enough, it seemed like even with the threat of having "$hitco" seized, he was still resistant. Anyway, I hope Brown is set to put this stuff behind him and MBIA and work on getting MBIA's credit ratings up -- wooing the street and ratings agencies, etc. I don't see why we shouldn't get back to National's book value -- that's a ways away from today's prices. He sure didn't sell the bonds. Link to comment Share on other sites More sharing options...
Kiltacular Posted May 7, 2013 Share Posted May 7, 2013 He sure didn't sell the bonds. ;) Link to comment Share on other sites More sharing options...
valuecfa Posted May 7, 2013 Author Share Posted May 7, 2013 So while it may have been time for MBIA and BAC to move on from their dispute, we don’t think it’s time for investors in MBIA shares to move on from their positions. Not when we believe the shares still have considerable upside – perhaps more than had been conceived of by many investors prior to the revelation of the details of the settlement. ... While we had assigned zero value to MBIA Insurance Corp. when we initiated coverage of the company in Nov-11, we believe the combination of the commutation of BAC’s $6.1bn synthetic position – described by management as the worst position in the structured-product insurance book – and the $500mm line of credit from the bank at that unit have caused us to believe that a reassessment of that assumption is called for. MBIA reported that the unit had $11.86 in adjusted book value and $15.6bn in gross par outstanding of structured CMBS pools as of 31-Dec-12. With the worst position in the book commuted and the line of credit providing the flexibility for the rest of the book to be worked out in an orderly manner, we think it’s possible for the company to ultimately realize value from the unit. Read more: http://www.btigresearch.com/2013/05/07/mbia-at-last-comprehensive-settlement-with-bofa-gets-done-and-we-think-mbi-shares-have-another-leg-up/#ixzz2Sbf7o54k Link to comment Share on other sites More sharing options...
JRH Posted May 7, 2013 Share Posted May 7, 2013 He sure didn't sell the bonds. Does anybody know what the MBIA Corp. surplus notes were trading after before/after the settlement announcement? That would have been the most direct bet if a person were convinced one or the other would swerve in the game of chicken. Link to comment Share on other sites More sharing options...
valuecfa Posted May 7, 2013 Author Share Posted May 7, 2013 He sure didn't sell the bonds. Does anybody know what the MBIA Corp. surplus notes were trading after before/after the settlement announcement? That would have been the most direct bet if a person were convinced one or the other would swerve in the game of chicken. BAC will provide MBIA Insurance Corp. with a $500mm line of credit that Lawsky said was a game-changer for the unit. “That takes them out of the realm of insolvency,” he said in the same television interview. “I don’t think anyone’s talking about insolvency today.” said Lawsky, MBIA Ins corp's regulator. Coming from the superintendent of the NYSDFS, who is provided with significantly more information by MBIA on the condition of its structured product insurance unit than is disclosed to investors, that statement should speak volumes. Instead of contemplating the consequences of a potential rehabilitation of MBIA Insurance Corp., investors are now asking a question that may have seemed absurd a few months ago: is there equity value at the unit? Link to comment Share on other sites More sharing options...
valuecfa Posted May 7, 2013 Author Share Posted May 7, 2013 Hmm. I just realized mbia reports tomorrow. I wonder if they will apply the settlement to Q1, or Q2 like one would expect. Link to comment Share on other sites More sharing options...
JRH Posted May 7, 2013 Share Posted May 7, 2013 Hmm. I just realized mbia reports tomorrow. I wonder if they will apply the settlement to Q1, or Q2 like one would expect. They mentioned in their settlement announcement that the conference call would get moved back, but no word on change in the timing of the Q1 earnings release. Seems to suggest to me the settlement will hit Q2 like it should for any sane company. ;D Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 7, 2013 Share Posted May 7, 2013 Hmm. I just realized mbia reports tomorrow. I wonder if they will apply the settlement to Q1, or Q2 like one would expect. They mentioned in their settlement announcement that the conference call would get moved back, but no word on change in the timing of the Q1 earnings release. Seems to suggest to me the settlement will hit Q2 like it should for any sane company. ;D I vote for Q1. The deal was struck in Q1, and that's when I think it should hit the financials. Link to comment Share on other sites More sharing options...
johnpane Posted May 7, 2013 Share Posted May 7, 2013 I vote for Q1. The deal was struck in Q1, and that's when I think it should hit the financials. Q1 ended 3/31/13. The deal was struck in early May 2013. Link to comment Share on other sites More sharing options...
valuecfa Posted May 7, 2013 Author Share Posted May 7, 2013 I vote for Q1. The deal was struck in Q1, and that's when I think it should hit the financials. Q1 ended 3/31/13. The deal was struck in early May 2013. Deal was announced in May. Bank of America will record $1.6 billion in additional pretax charges in the first quarter of 2013, of which $1.3 billion is related to the settlement and the remainder is related to other monolines. The after-tax effect of the additional charges will reduce the company's first-quarter 2013 net income to $1.5 billion, or $0.10 per diluted common share, from the $2.6 billion, or $0.20 per diluted common share reported on April 17, 2013. As the settlement occurred prior to filing the company's Quarterly Report on Form 10-Q for the period ended March 31, 2013, generally accepted accounting principles require Bank of America to apply the additional charges to the financial results for the quarter ended March 31, 2013. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 7, 2013 Share Posted May 7, 2013 This is the part I misunderstood. I thought the language pointed to a Q1 settlement, but apparently they are forced to report it in Q1 because they hadn't yet filed their Form 10-Q when the settlement was reached. As the settlement occurred prior to filing the company's Quarterly Report on Form 10-Q for the period ended March 31, 2013, generally accepted accounting principles require Bank of America to apply the additional charges to the financial results for the quarter ended March 31, 2013. Link to comment Share on other sites More sharing options...
nkp007 Posted May 7, 2013 Share Posted May 7, 2013 This is the part I misunderstood. I thought the language pointed to a Q1 settlement, but apparently they are forced to report it in Q1 because they hadn't yet filed their Form 10-Q when the settlement was reached. As the settlement occurred prior to filing the company's Quarterly Report on Form 10-Q for the period ended March 31, 2013, generally accepted accounting principles require Bank of America to apply the additional charges to the financial results for the quarter ended March 31, 2013. Bizarre. GAAP strikes again. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 7, 2013 Share Posted May 7, 2013 This is the part I misunderstood. I thought the language pointed to a Q1 settlement, but apparently they are forced to report it in Q1 because they hadn't yet filed their Form 10-Q when the settlement was reached. As the settlement occurred prior to filing the company's Quarterly Report on Form 10-Q for the period ended March 31, 2013, generally accepted accounting principles require Bank of America to apply the additional charges to the financial results for the quarter ended March 31, 2013. Bizarre. GAAP strikes again. Anyhow, this means MBI will take the charge in Q1 too. I'm often right for the wrong reason, but I'll take it. Link to comment Share on other sites More sharing options...
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