muscleman Posted July 7, 2014 Share Posted July 7, 2014 Nonetheless, I think that all three of them (MBI, AGO, and AMBC) might be attractive longs, if investors get further spooked this week on deteriorating Puerto Rico news. Could you tell me what makes MBI unable to initiate the buybacks like AGO does? Is it because MBI's excess capital is not as strong? S&P says AGO has 1.5 bn excess capital. I think MBI can use national sub to do the buyback if the holding corp's capital level is weak, but probably national's excess capital isn't that strong From the S&P report below, National has about 350m to 400m exceed capital and AGO has 450 excess capital at that time. Right now AGO's excess capital has jumped up a lot so I assume National's will likely follow. So what makes the difference between buyback and no buybacks between these two companies? http://www.mbia.com/investor/ratings/01_29_2014_BondInsurersCapitalAdequacyPuertoRico.pdf Link to comment Share on other sites More sharing options...
Eye4Valu Posted July 9, 2014 Share Posted July 9, 2014 Be greedy when others are fearful. ;) Link to comment Share on other sites More sharing options...
PatientCheetah Posted July 9, 2014 Share Posted July 9, 2014 doesnt it make more sense to own calls? seems like a binary situation to me Link to comment Share on other sites More sharing options...
muscleman Posted July 9, 2014 Share Posted July 9, 2014 doesnt it make more sense to own calls? seems like a binary situation to me Why is it a binary situation? Are you saying that PR bonds may wipe out MBI? Link to comment Share on other sites More sharing options...
muscleman Posted July 9, 2014 Share Posted July 9, 2014 Be greedy when others are fearful. ;) I am not interested in this price level. I am more greedy. :) Link to comment Share on other sites More sharing options...
yader Posted July 10, 2014 Share Posted July 10, 2014 Anyone buying leaps down here? Link to comment Share on other sites More sharing options...
Andy Dufresne Posted July 10, 2014 Share Posted July 10, 2014 Anyone buying leaps down here? IMHO they are expensive - the middle of the bid-ask spread for the Jan 2016 strike 8 USD is currently 2.9 USD, so break-even is 10.9 USD in 18 months, which is 17.71% from the current price of USD 9.26 or almost 11.5% p.a. .... and the open interest is 44 contracts - the strike 15 USD has some open interest, but that IMHO is speculation, not investment. Link to comment Share on other sites More sharing options...
muscleman Posted July 12, 2014 Share Posted July 12, 2014 Anyone buying leaps down here? The options are too expensive. It may be better to sell puts or buy stock and sell covered calls. Has anyone been researching the PR economy and its various bonds. I think that could really affect MBI and AGO here. Note that S&P report says MBI had excess capital of 350 m last year, and AGO of 450 m. This year AGO's excess capital is 1.5bn, so that may be sufficient to buffer, but there isn't an update on MBI's excess capital yet. I have been researching the PR bonds. What's interesting: 1. The secured revenue bonds aren't as secure as I thought. If GO bonds cannot pay, GO bonds can take the secured revenue from PREPA and the other entities to pay the GO bonds first. 2. Mark Palmer said in BTIG that AGO's analyst believed that PRHTA will likely not have any haircut and PREPA will have at most a 20% haircut. When I look at PRHTA's income statement, although the interest coverage ratio is about 1.4x, the net loss each year for PRHTA is huge. It requires the Federal Transportation Agency to give it a lot of money each year to stay afloat. Will that continue forever? How much capex do you expect in the future for these roads? If anyone is also researching these bonds, please let me know what you think the haircut could be. Link to comment Share on other sites More sharing options...
muscleman Posted July 24, 2014 Share Posted July 24, 2014 Is anyone interested in PRHTA bonds other than me? http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/prhta-bonds/ I think at present buying PRHTA bonds is always better than buying MBI stocks at $10. If you look at MBI's exposure of to PRHTA, PRASA and PREPA bonds, suppose each of them get a 50% haircut, that would reduce MBI's adjusted book value to 12-14 per share, which means no upside. But buying PRHTA bonds directly at 40 still gives you a little upside in this scenario. Not to say that PRHTA bonds should be in a much better shape than PREPA bonds and may not need any haircut at all. Link to comment Share on other sites More sharing options...
no_free_lunch Posted November 13, 2014 Share Posted November 13, 2014 On the latest 10-Q, page 66, there is some verbage on puerto rico's finances and MBI's exposure. Does anyone know if their full book is exposed to Puerto Rico or is there a limit since the Puerto Rico debt is insured by National? As of September 30, 2014, National had $4.5 billion of gross insured exposure related to the Commonwealth of Puerto Rico and certain of its instrumentalities (“Puerto Rico”). Puerto Rico is experiencing fiscal stress. However, it has taken proactive steps to address its significant economic challenges, including passing the first balanced general fund budget in 22 years for the fiscal year ending June 30, 2015, passing of comprehensive reform of its employee retirement system, and recently enacting the Fiscal Sustainability Act, which allows the government to exercise emergency powers to deal with its fiscal crisis. Under this Act, the government could institute a number of steps to lower spending on government operations and labor by renegotiating its public employees’ contracts. Separately, in June of 2014, the Governor of Puerto Rico signed into law the Puerto Rico Public Corporations Debt Enforcement and Recovery Act (“the Recovery Act”) which is being challenged in federal lawsuits by multiple parties. In August of 2014, National, along with other insurers and certain bondholders provided a forbearance and amendment through March 31, 2015, which assists the Puerto Rico Electric and Power Authority (“PREPA”) with liquidity and time to restructure its business. Given the fiscal and economic challenges that Puerto Rico is facing, we continue to monitor our exposures there closely. Refer to the “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our Puerto Rico expos https://www.sec.gov/Archives/edgar/data/814585/000119312514398675/d808526d10q.htm Link to comment Share on other sites More sharing options...
muscleman Posted November 13, 2014 Share Posted November 13, 2014 On the latest 10-Q, page 66, there is some verbage on puerto rico's finances and MBI's exposure. Does anyone know if their full book is exposed to Puerto Rico or is there a limit since the Puerto Rico debt is insured by National? As of September 30, 2014, National had $4.5 billion of gross insured exposure related to the Commonwealth of Puerto Rico and certain of its instrumentalities (“Puerto Rico”). Puerto Rico is experiencing fiscal stress. However, it has taken proactive steps to address its significant economic challenges, including passing the first balanced general fund budget in 22 years for the fiscal year ending June 30, 2015, passing of comprehensive reform of its employee retirement system, and recently enacting the Fiscal Sustainability Act, which allows the government to exercise emergency powers to deal with its fiscal crisis. Under this Act, the government could institute a number of steps to lower spending on government operations and labor by renegotiating its public employees’ contracts. Separately, in June of 2014, the Governor of Puerto Rico signed into law the Puerto Rico Public Corporations Debt Enforcement and Recovery Act (“the Recovery Act”) which is being challenged in federal lawsuits by multiple parties. In August of 2014, National, along with other insurers and certain bondholders provided a forbearance and amendment through March 31, 2015, which assists the Puerto Rico Electric and Power Authority (“PREPA”) with liquidity and time to restructure its business. Given the fiscal and economic challenges that Puerto Rico is facing, we continue to monitor our exposures there closely. Refer to the “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our Puerto Rico expos https://www.sec.gov/Archives/edgar/data/814585/000119312514398675/d808526d10q.htm I was in MBIA at 11 and I was lucky to sell it at 14 last year. My understanding is that if long term interest rate stays low, MBIA is simply a zero coupon bond. Buying at $10 to get a $25 adjusted book value per share in 30 years implies very low return. Regarding the exposure, I think 4.5 bn is gross exposure. I don't know how much is net exposure. In the past, MBIA has done shitty things like buying reinsurance AFTER the claim shows up, so they can smooth out earnings. Not sure if they are still doing those shitty things. Link to comment Share on other sites More sharing options...
no_free_lunch Posted November 14, 2014 Share Posted November 14, 2014 Muscleman, So the adjusted book value is what the book will be at in 30 years when all the policies run out? What about the potential for new claims to be written or is that basically not even on the radar? Link to comment Share on other sites More sharing options...
muscleman Posted November 14, 2014 Share Posted November 14, 2014 Muscleman, So the adjusted book value is what the book will be at in 30 years when all the policies run out? What about the potential for new claims to be written or is that basically not even on the radar? The potential of new claims depends entirely on the interest rate and on the credit rating of MBIA. I don't think the interest rate can rise by a lot, as US debt/GDP ratio is getting too high. It will be unsustainable for the rate to be too high unless treasury wants to bankrupt the whole nation. The credit rating of MBIA will NEVER get back to AAA. S&P now requires AAA level capital to maintain AA+ rating. These rating agencies' reputations were burned during 2008, so they are very careful right now. How valuable is the AA+ rating? Not much. I recommend you to read Confidence Game. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted January 28, 2015 Share Posted January 28, 2015 MBI keeps drifting lower...very close to the 52 week bottom. Link to comment Share on other sites More sharing options...
rpadebet Posted January 28, 2015 Share Posted January 28, 2015 MBI keeps drifting lower...very close to the 52 week bottom. I think its kind of expected with rates going lower and lower, munis don't see need for insurance as much. Demand for munis seems strong given the tax rates currently and muni yields relative to treasury yields. MBIA wont re-rate until they start writing new business. Till then its a runoff business valued at sufficient discount to book. Happy to have gotten out of this last year. Link to comment Share on other sites More sharing options...
rpadebet Posted June 29, 2015 Share Posted June 29, 2015 What a mess this has been since the BAC settlement..... They have been involved with everything that has gone wrong since then.....i am surprised they stayed out of Greece Debt. Anyone considering adding or re-opening at this price? Seems like the biggest investors and the biggest bulls have thrown in the towel now. Link to comment Share on other sites More sharing options...
Mephistopheles Posted June 29, 2015 Share Posted June 29, 2015 As of the last q, National has $4.5 billion of gross exposure to Puerto Rico. Not sure about net exposure but I don't think this is laid off. It also only has about half a billion in liquidity. I think this is the reason why MBI is getting killed but I'm not an expert on this. Link to comment Share on other sites More sharing options...
bbarberayr Posted June 30, 2015 Share Posted June 30, 2015 Not sure if this has been discussed in this thread as I am new here, but I certainly think Assured Guaranty (AGO) is the safer and I think better way to play the revival in bond insurance. They have better underwriting, managed the crash better, have taken the hits on Detroit, Stockton, Alabama, etc. without major damage to their shareholder equity and I think do the same here. They are doing a good job of managing for shareholder value with dividends and buybacks and the latest purchase of Radian assets at a substantial discount. I've owned it for a couple of years and added to my position last fall in the low $20's and may do again in the next while. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted June 30, 2015 Share Posted June 30, 2015 http://investmentresearchdynamics.com/tag/mbia/ MBI guarantees $4.5 billion in par amount of Puerto Rico muni paper. As of it’s latest 10-Q (March 31, 2015), MBI showed a book value of $3.9 billion. Puerto Rico alone could more than wipe out MBI’s net worth. But that’s only a portion of the story. The bigger part of the story is buried off-balance sheet in the footnotes in opaque financial structures called Variable Interest Entities (VIE’s). Remember those from 2008? I remember them vividly. The VIEs are the off-balance sheet vehicles that triggered the massive chain of counterparty defaults which de facto collapsed the U.S. financial system in 2008. The VIEs are where the credit default swaps and other nebulous forms of OTC derivatives bet slither around. Companies like MBI and AMBAC underwrite credit “enhancement” guarantees on these massive cesspools of debt – and the associated derivatives that are “wrapped around” the debt structures – and stick them in VIEs. MBI’s 10-K has several pages of footnotes which vaguely describe the contents of its VIEs. The problem is that MBI and its ilk are thinly capitalized relative to the potential size of the liabilities they face if the credit markets become volatile to the downside. Link to comment Share on other sites More sharing options...
zippy1 Posted November 4, 2015 Share Posted November 4, 2015 Q3 out http://finance.yahoo.com/news/mbia-inc-reports-third-quarter-211600874.html PURCHASE, N.Y.--(BUSINESS WIRE)-- MBIA Inc. (MBI) (the Company) today reported Combined Operating Income (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) of $24 million or $0.15 per diluted share for the third quarter of 2015 compared with Combined Operating Income of $120 million or $0.63 per diluted share for the third quarter of 2014. The decline in Combined Operating Income for the three months ended September 30, 2015 compared with the same period of 2014 was driven primarily by the release of a $77 million tax reserve and the receipt of an $18 million recovery on an errors and omissions insurance policy that both occurred in the third quarter of 2014. The third quarter 2015 result is more consistent with the second quarter of 2015 Operating Income, which was $19 million or $0.11 per share. Link to comment Share on other sites More sharing options...
muscleman Posted December 28, 2015 Share Posted December 28, 2015 http://www.sec.gov/Archives/edgar/data/814585/000090951815000353/mm12-2315_8k.htm I have a hard time understanding this agreement for PREPA. It seems like uninsured bond holders will get their bonds swapped at 85 cents on the dollar and insured will also get swapped at 100 cents and both classes will receive the same securitization bond insured by the monolines? That seems a pretty good deal for the existing bond holders. It also sounds like MBI and AGO's exposure to PREPA is now limited to this surety bond? Link to comment Share on other sites More sharing options...
Cardboard Posted March 1, 2016 Share Posted March 1, 2016 This thing sells at 1/4 of adjusted book value. AGO sells also well below ABV but, not as much. Both of these guys are retiring shares like crazy especially MBI. This tells me that: 1- They have the cash to do it and no regulatory approval issue. 2- The internal need for cash such as potential payments for Puerto Rico can't be that high and/or immediate. Any idea what gets them trading closer to say 80% of ABV? Cardboard Link to comment Share on other sites More sharing options...
merkhet Posted March 2, 2016 Share Posted March 2, 2016 This thing sells at 1/4 of adjusted book value. AGO sells also well below ABV but, not as much. Both of these guys are retiring shares like crazy especially MBI. This tells me that: 1- They have the cash to do it and no regulatory approval issue. 2- The internal need for cash such as potential payments for Puerto Rico can't be that high and/or immediate. Any idea what gets them trading closer to say 80% of ABV? Cardboard No idea, but I thought I was the only person crazy enough to have given MBIA a quick once over the last few days -- I think from a 2/2016 National presentation, they indicated they had more than the statutory capital needed at the company... Link to comment Share on other sites More sharing options...
Ismael Posted January 10, 2018 Share Posted January 10, 2018 Anyone have a view on what Peurto Rico will pay on its debt? https://seekingalpha.com/article/4132125-mbia-bitcoin-common-concentrated-list-holders Link to comment Share on other sites More sharing options...
BargainValueHunter Posted December 1, 2020 Share Posted December 1, 2020 A payout of roughly double the current market cap... https://www.marketwatch.com/story/credit-suisse-may-pay-680m-in-rmbs-legal-dispute-2020-12-01 Link to comment Share on other sites More sharing options...
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