MBIA, Inc. (MBI)

PuddinHead42 (98.02) Submitted: 4/24/08 10:40 AM : Start Price: $8.55 MBI Score: 39.60

(4/24/08) MBI is beaten bad and it plunged yesterday on bad write-down data from Ambak. Yes, Bill Ackman of Pershing Square capital has been running a bear raid on this company and bad mouthing it for a long time. Some of the criticism is valid but the manager of the Third avenue value fund takes great exception with many of them. The highly respected fund manager and value oriented investor makes some very valid points. 1) this have plenty of reserves to pay any write-downs. 2) The vast majority of their investments in subprime have senority, so a lot of junior subprime will have to eat losses before it hits them. 3) the mark-to-market accounting Ackman references is bogus for the investments this company holds. These investments are not trading vehicles (fro MBI) that should be marked to market, they are long term holdings that should be valued on their ability to throw off cash and then pay off at maturity. MBI is at most risk from losing its AAA rating, but with Spitzer gone, some pressure is off them. The TAV manager has infused a lot of cash and bought more stock, holding a significant portion because he is confident in the long term value and even the short term book value. I say join him.

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