Assured Guaranty Ltd. (NYSE:AGO)

http://www.stockpickr.com/4-stocks-looking-break-out.html?puc=yahoo&cm_ven=YAHOO

Value play

AGO looks like to be in the sweet spot. Complete some D&D, I'd say we're heading to 30+

12/17

one of the smartest insurer around

Good ROI, increasing cash flow in a tough public debt and real estate economy, and a decent balance sheet. And I am of the opinion that the government will get their act together, on the debt issue, later next year.

For me, this was a more macro economic pick. AGO's financial numbers currently do not look horrible (emphasis on "currently"). I am very concerned, however, about their 71% exposure to U.S. Public Finance insurance (municipal bond guarantees). It does not take very long to realize, if there is a crisis with public debt, which I happen to believe is coming, this company is in a ton of trouble. Take a very small default % rate and apply it to the par value of the bonds they insure. It does not take a high percentage to put this company in serious risk of bankruptcy. I happen to believe that there are several localities in the US where there is a high risk of public debt default.

This pick is highly risky and I am readily admitting that I might be wrong. If no public debt defaults occur, I will get roasted as this issue is undervalued versus current book value by a substantial amount. If I am right, they are toast. I personally do not plan to play this in real life, so leave this one to my Caps portfolio for my personal amusement. Best of luck if you choose a side in RL.

value stock

This is a financial insurance company. Oooo scary! It's primary source (85%) of income is similar to PMI but with financial instruments such as Bonds, where they insure against a failure to pay principal and interest when due and similar credit events. Their exposure to actual PMI is 1% of their business. The other 14% is reinsurance, where they insure someone who is insuring someone else. That sounds really safe.

While reading about this company I began to wonder how it came to be on my radar and then I realized it was because it had increased it's income by "616.3%" since last year, or in easier to understand terms it went from earning -$35 million to $180.9 million. Honestly I question it's solvency. Plus it's not in the low competition side of insurance, it's in the very competitive side of insurance where market forces force companies to pay out slightly more than intake premiums. And if you've read my other insurance company write ups, I hate that.

BYE BYE ABK = go go go AGO. Price entry seems correct and will probably see $25 sooner than you think.

Assured Guaranty Ltd. (AGO) is a holding company that provides, through its operating subsidiaries, credit enhancement products to the public finance, structured finance and mortgage markets.

Currently, at $18.40, AGO is still 34% off its 52W high, even though it had an almost 50% run since July 1st.
I didn't get into AGO at the bottom, but I think that my $16 price is still pretty good.
I like this stock a lot.
It fit's my eleven twenty-one criteria, and I love the way its chart looks.
I wouldn't be surprised to see AGO at $25 before the end of 2010.
I plan on holding AGO for a long time.

Assured Guaranty Ltd. (AGO)
A holding company that provides, through its operating subsidiaries, credit enhancement products to the public finance, structured finance and mortgage markets.

AGO is down 43% from its 52W high, but still approx. 250% up from its March 2009 low.
I like AGO a lot. My kind of value stock.

fine pick (with MBI and MF)

These munis won't default - the market won't touch them for a long time. AGO well below book.

Turns out, one ill-fated company is on the hook for the lion’s share of Muni Bonds. They insured $2.56 billion-worth in the last half of 2009 alone… 64x more than Berkshire Hathaway Assurance Corp. Last year, their operating income was $316.7 million. That means if just 12% of their loans go bad, they’ll be wiped out. Whoops! They’re rated AAA by Moody’s and Fitch. But that’s a complete farce. The same agencies stamped their “AAA” approval on AIG, Lehman Brothers and dozens of other firms that plummeted to earth in 2008. Don’t be fooled… As the public finally wakes up to the ugly truth, this insurer will come under intense selling pressure. It’s going to be the next AIG-like crash.

They were nearly wiped out by defaulting sub-prime mortgages. Since then, their share price has risen 505%. But soon, they’ll be slammed by an even bigger wave of defaulting Muni Bonds. The perfect time to bet against them is NOW.
Like Warren Buffet says…
“[When] a few communities stiff their creditors and get away with it, the chance that others will follow in their footsteps will grow. What mayor or city council is going to choose pain to local citizens in the form of major tax increases over pain to a far away bond insurer?”
http://www.sovereignsociety.com/pages/svs/48Enrons0510.php?pub=SVS&code=ESVSL535&o=101478&s=103200&u=47393188&l=115283&r=Milo

Classic value play: company not very well understood, fears related to municipal insurance overdone, strongest player in its businesses, earnings power undervalued, cheap on P/BV and PER. Potential 2 bagger - and would still be less than book value.

Noone is left to insure bonds except these guys and brk. Any questions?

Wilbur Ross, King of the Bottom Feeders. Prime for buyout by Goldman or Berkshire. The only game in town.

It has great management.