MBIA, Inc. (MBI)

If you think this industry is hurting now, wait until muni bond issuers and buyers realize their "insurance" is worthless and most deals get done without it. It's already starting, but we've only seen the tip of the iceberg.

Reckon Moody, Fitch, are destroying MBI and ABK. And they are doing this, only because they failed to do what they were suppose to do in the first place.

Its always easy to step on the person who has fallen. If they would have done their jobs in the first place, we might not be in this mess.

Now, they are just trying to save themselves, by stomping on the injured.

Strongly believe MBI can recover. They didn't become the company they are (before the fall) by being flukes.

MBIA Inc has issued a bearish signal and presents a selling opportunity based on the stochastic indicator, which compares the current price of MBI to its recent trading range. MBI has recently experienced a sharp rise in price and is vulnerable to a price drop (because few buyers are left to drive the price up any farther).

Following Bill Ackman's lead.

Going to 0 along with ABK. These guys have stayed out of the spotlight for a while, but I would expect muni insurers to come into scrutiny again soon

MBIA Inc provides financial guarantee insurance, investment management and municipal and other public finance and structured finance to the global market. They were hit hard because of the subprime crisis losing more than 90% fof their value. Down from the 52 week high of $68.98 to a mere $3.62. MBI has recovered a tad and now at about $5 a share. This stock should benefit from the new Fannie Mae, Freddie Mac and subprime loan legislation. I believe this stock will return to at least half of its 52 wk high in the next three years. 1,000 shares at $5,000 has the potential to return 300% to 1000% in three years. MBI fits my contrarian view and the worst is I lose the $5k. A risk Im willing to take with this stock based on the recent changes and legislation. In the meantime it pays a dividend.

The major banks can't afford for this company to suffer a downgrade. They will receive the capital support they need and the price will rebound nicely. However, don't count on the dividend.

Oversold in my mind.

Look at the volume! If the officers are not arrested for their part in the housing bubble, this company will recover and richly reward those who hung in there.

bankruptcy is around the corner

The financials have just about hit bottom and are ready for a comeback. I could be calling this a little early, but.....

This has been one of my most stable stocks. Always up when I need it and their business is always in demand. We always need insurance especially in times of uncertainty like these when it comes to our roads, cities, etc.

Love it, love it, love it! MBIA is a mortgage insurer and given the current state of the mortgage environment its having to pay higher fees to secure its mortgages. Well that's fine and dandy that a rating downgrade has been looming from Moody's for four months now, but MBI has raised over 2.3 billion dollars in capital and now stands firm to maintain its AAA rating from S&P. Personally I feel MBI could survive the downgrade to AA easily at these levels and the overreaction to the downside on a possible downgrade by Moody's is ludicrous. Well below book, 2 times earnings, and all they have to do is slash that dividend to preserve capital. WAY overdone sell-off.

Nero

Sagetrade

the housing bubble is about to be over, as many people trying to take advantage of the situation to secure their first home, the credit market will pick up again. but none the less this is purely a speculationall pick

Excerp from Barron's JONATHAN R. LAING

Still, we find the current price levels of its debt, credit-default swaps and, yes, even its stock to be absurdly low. For one thing, MBIA isn't nearly as troubled as Ambac because it has far less exposure to the really-troubled subprime paper. Also MBIA has already completed raising, or locked in commitments for the additional capital demanded last month by Fitch and the other rating agencies. Ambac wasn't so lucky.

Likewise, MBIA's triple-A rating seems to have passed muster with both Fitch and S&P even after the latter ran a new stress-test on its 2006-vintage subprime exposure using the 19% cumulative default rate. MBIA said it's now working closely with Moody's to resolve the agency's concerns. Moody's worries seem to arise more from the uncertainty that exists in the housing market than MBIA's capital levels, according to one third party. Without Ambac competing for new business, MBIA and the other bond-insurer survivors should be able to grow faster and strike more attractive insurance deals.
[chartmbia]

Moreover, both the debt and equity markets seem to be ignoring the nature of bond insurance. These insurers only guarantee the timely payment of interest and principal over the life of the underlying debt obligations. This means that any future MBIA claims loss, even using the wildly inflated number of $10 billion from a long-time MBIA antagonist, hedge-fund manager Bill Ackman, will be dribbled out over the 20-year -- or in some cases 50-year -- life span of the obligations. Thus, the present value of any claims costs dwindles dramatically in relative significance.

Another favorable sign is that a number of smart value investors have piled into the stock in recent months, albeit at prices three to four times as high as the current trading level. They include Marty Whitman's Third Avenue Fund, Davis Selected Advisers and, most important, private-equity firm Warburg Pincus. The last signed a deal in December under which it will inject $500 million into MBIA later this month by buying 16.1 million shares of its stock at the now blitzed price of 31. Warburg will also backstop a $500 million rights offering that's part of MBIA's $2 billion capital-augmentation program.

Barron's confirmed that Warburg Pincus remains committed to the deal despite the fact that when it closes, it will have lost all but about $130 million of its $500 million investment based on the current stock price.

The Bottom Line:
MBIA's shares were savaged anew last week, and now its stock looks cheap. It trades for about 8, well below a conservative liquidation value above $30 a share.

A Warburg official says it expects to lower its cost basis by participating in the rights offering and taking into the account the value of long-term stock warrants it will be awarded. The firm, he noted, helped recapitalize troubled Mellon Bank in the early 1990s, which produced similar strains prior to a huge return. "We'd love to buy the whole company if we could because of its humongous book of business and profitability even given the less-than-satisfactory business they wrote of late," he said.

Before Warburg cut its deal with MBIA it brought in outside consultants to stress-test the company's portfolio, subjecting it to Armageddon-like housing and other economic assumptions. It found that annual loss expenses -- actual checks written -- came to no more than about $250 million a year under the harshest of conditions.

Balance that against MBIA's assumption, even in run-off, that the company could continue to generate annual revenues of $1.3 billion to $1.4 billion, just from growing net investment income from reserves and other assets; installment premiums from existing customers; investment-management revenues from various funds it runs for municipalities and other customers, and already-collected insurance premiums that get booked into revenues as coverage periods expire.

As a result, some observers claim that, conservatively, the present value of MBIA's liquidation value in run-off is likely to be $30 to $40 a share. If true, it would appear that MBIA has long way to go on the upside, dead or alive.

The muni-market has an inherently strong credit. The muni's minimal default risks reduce the chance for pay-out and somewhat relieve the housing crisis pain. The poor housining market decisions have made this stock ripe. Price has bottomed out and will remain low over the next few months. However, there is good potential over the long-term and also the chance for some day-trading gains in the short-term.

this is certainly NOT a 1-star stock. too many folks have been listening to bill ackman. ambac & mbia are NOT insolvent, folks.

Ratings agencies now trying to make up for past complacency and err on the opposite side. Institutions don't want to hold a "bad-story" stock and dump for "political" more than financial reasons. Current storm will clearly change business model going forward and may well reduce profitibility -- but look at market position, assets, and current price. It is compelling buy at these levels -- a good underlying business. And Warren Buffet has never shown that he can run an entrepreneur. New venture is going to chip away at margins of competitors, for sure. But the current price provides an awful, awful lot of leeway going forward.

Significant exposure to subprime mortgages.MBIA has $24.7 billion of "high-risk" credit exposure, which includes direct subprime exposure and more indirect exposure through CDOs, Ackman's presentation said. The company's exposure to so-called mezzanine CDOs, with underlying collateral rated BBB or lower, was $5 billion at the end of 2006, which is 73.5% of its statutory capital, he added. (Info from Pershing Square Capital Mgmt Hedge Fund)