Posted on June 7th, 2008 in Daily Mortgage/Housing News - The Real Story
It is quickly becoming apparent to the entire world and not just those of us with common sense, that the entire bond insurance sector is under-capitalized for the risk they underwrote. These firms are sitting leveraged in some cases up to 100x and still fighting, kicking and screaming that there ‘is nothing to see here’.
We knew about the bond insurers health months ago thanks to the likes of Bill Ackman at Pershing Square but in grand Wall St fashion, companies must be literally on the verge of collapse before the ratings agencies or analysts will warn you. Until that time, any warnings given about the health of companies, especially in the financial sector, immediately classifies you as a ‘short selling basher’.
Well, just a few days after S&P FINALLY downgraded Ambac and MBIA and thousands of investors, both individual and institution, have lost nearly all their investment, S&P did what is right by downgraded most of the remaining bond insurers, XL, CIFG and FIGC. For some reason AGO, Assured Guaranty, was left out despite a boat load of risk my buddy Reggie Middleton finely details in the following research report. I am not short AGO at the present but am considering getting into position quickly.
One of the primary reasons AGO has hung in there with regard to its stock price despite two quarters of substantial and escalating losses, is because Wilbur Ross committed to invest up to $1 billion in the firm. He has already funded $250 million of the commitment if I am not mistaken. This does not impress me, however. My buddy Reggie Middleton’s research on AGO does… http://boombustblog.com/index.php?searchword=ASSURED+GUARANTY&option=com_search&Itemid=56