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9/12/12Bruce Berkowitz's MBIA Investment Thesis: Case Study (market folly)

Yesterday, we posted up Bruce Berkowitz and Fairholme Capital's investment thesis on Sears.  Today, we're presenting another case study from the money manager: their thesis on shares of MBIA (MBI). In his fourth case study, Berkowitz looks at numerous catalysts for the insurance company: Catalyst #1: National Public Finance Guarantee Corporation: A stand alone subsidiary of MBIA.  Judicial confirmation of MBIA's transformation could lead to an increase in credit ratings > lower expenses >...

9/11/12Bruce Berkowitz Explains Why MBIA and Sears Are Attractive (

Bruce Berkowitz's Fairholme Management (FAIRX)  has been giving out its thesis on how investments are planned and executed on a number of its holdings. All of these case studies are based around the tenant "market price does not equate to the intrinsic value of a stock/investment" and that one should forget what the crowd is [...]

3/29/12Are Biopesticides the Future of Insect Control? (Green Chip Stocks)

Farmers seek safer insect and weed control with biopesticides.

3/19/12MBIA (MBI) Pays No Bonuses In 2011 (Value Investing)

MBIA Inc (NYSE:MBI) did not award bonuses to its top executives in 2011. The lack of bonuses was put down to regulatory pressure from New York regulators. Top executives including the company's chief executive, Jay Brown  who was accused of insider trading in recent weeks, did not receive any cash bonse for the fiscal year 2011. The primary regulator involved [...]

3/11/12MBIA CEO Accused Of Insider Trading (Value Investing)

MBIA’s (NYSE:MBI) chief executive Joseph W. Brown Junior has been accused of insider trading. The allegation comes in the midst of a trial concerning fraud when MBIA was split into two separate organisation. The specific allegation relates to purchases of the company’s stock Mr. Brown made in the months leading up to the restructuring. MBIA [...]

1/6/12MBIA v BAC/Countrywide Ruling (

There has been a ton written and a lot of numbers thrown around regarding this ruling. We need to break it down into two separate issues. Does this make it easier for $MBIA to collect from $BAC for “losses it suffered” as a result oc Countrywide misrepresentations? Yes. I’m not sure that anyone really though $MBIA wasn’t going to collect something [...]

1/3/12Win for MBIA in Ruling Against Countrywide (Updated: Maybe Not Really) (naked capitalism)

Bloomberg reports that Countrywide took a major setback in a suit against it by bond insurer MBIA. MBIA has alleged (quelle surprise!) that Country misrepresented the quality of loans it had MBIA guarantee. From Bloomberg:

1/3/12Catalyst Arrives: MBIA Wins Summary Judgment Against Countrywide; Bad News For Bank of America (Phil’s Stock World)

Courtesy of ZeroHedge. View original post here.Submitted by Tyler Durden.The catalyst so many have been waiting for, and the nearly 30 million shorts dreading, has arrived. From Judge Eileen Bransten: "ORDERED that MBIA Insurance Corporation’s motion for partial summary judgment is granted to the extent that MBIA Insurance Corporation (“MBIA”) must establish for its claim [...]

12/15/11(MS) Morgan Stanley Settles MBIA Dispute (Stock Blog Hub)

In an attempt to strengthen its balance sheet and remove the vestiges of the financial crisis, Morgan Stanley (MS) announced a comprehensive plan to settle its legal fight with MBIA Inc. (MBI). The 2-year-old legal dispute involved conflict over guarantees on commercial mortgage-backed securities (CMBS). Terms As a part of the settlement agreement, Morgan Stanley will close [...]

12/9/11Seth Klarman is Likely Not Short BAC (Value Investing)

Our friends at, put out an interesting report suggesting that Seth Klarman is short BAC. Below is a brief excerpt: As a reminder, Baupost is one of the world's biggest hedge funds at $23 billion, and unlike other fly-by-night one hit wonders, is not down 47% YTD. In fact, the mere name of Seth Klarman being long [...]

11/29/11How Bill Ackman Fooled MBIA and The World (Value Investing)

“We have friends in high places” Jay brown MBIA’s chairman and CEO “Markets are efficient. That’s the very basic assumption underlying everything we do here. And you attempt to challenge that? “ “You are less experienced, less knowledgeable and don’t understand what you are doing” From: Confidence Game: How Hedge Fund Manager Bill Ackman Called Wall Street's Bluff [...]

9/27/11The Steve Liesman Market (Fund my Mutual Fund)

Much like it was the Charlie Gasparino market a few years back (remember the nearly daily rumors about solutions or bailouts for MBIA and Ambac? they now seem quaint), it is now the Steve Liesman market - he says bailout, the market cheers... he says not so fast, the market cries. It's all become a bit ridiculous, but this is what happens when the entire market is based on politicians and central bankers. Nice 20 point drop there in the last hour or so on the S&P 500 - would have been 25 if...

7/21/11Bill Ackman’s Perseverance and Due Diligence (Value Investing)

One of my favorite investors is Bill Ackman. Many pundits claims that the big investors have more resources, get access to better data and therefore have an unfair advantage over the little guy. First off I think this is not true because as Warren Buffett stated that if he had $1 million he could return [...]

7/14/11MBIA Settlement Approaches, Stock Soars, Triggers Circuit Breaker (Phil’s Stock World)

Courtesy of Tyler DurdenBack in February, when looking at the CDS of MBIA, we observed the dramatic tightening in the corporate opco risk which had seen levels tighten from 55 pts upfront to 37, we speculated that "MBIA recently succeeded in making life for mortgage originators a living hell, after it successfully challenged, and was [...]

6/18/11Small Plane On Its Way To Montauk, NY Crashes Outside Greenwich, CT, Kills 3* (Wall Street Sector Selector)

A small plane crashed outside Greenwich earlier this evening. Reports say the plane was on its way to Montauk. The plane crashed near an MBIA building, and an investigation into the crash is being conducted in that building. One report says the crash...

5/25/11Bullish on MBIA? See Who Else Is (Wall Street Sector Selector)

Sabretooth Capital’s Erez Kalir presented a bullish case for MBIA (MBI) and the stock jumped 2% within minutes. Since then it gave back most of the increase though. Kalir said they have done a rigorous analysis of MBI’s risks and thinks th...

2/24/11MBIA Inc. (NYSE: MBI): Q4 Earnings Preview 2010 (Stock Wizard)

MBIA Inc. (NYSE: MBI) is scheduled to release its fourth-quarter financial results after the closing bell on Tuesday, March 1, 2011. Analysts, on average, expect the company to post a loss of 27 cents per share on revenue of $144.93 million. MBIA Inc., together with its subsidiaries, provides financial guarantee insurance and related reinsurance, advisory, and portfolio services, as well as investment management services to public finance and structured finance markets. In the...

1/12/11Top Bulls at NYSE: (PCX, MBI, CDE, CPF, EEE) (Penny Stock DD)

Patriot Coal Corporation (NYSE:PCX) went up by 9.80% and closed at $25.88 whereas overall traded volume stood at 13.64 million shares for the day as compare to its average volume stood at 5.49 million shares. The share price is at its overbought level with relative strength index of 85.87 times till its last trading session. MBIA [...]

1/11/11Trading results 1/11/11 (Robert Weinstein Trading Blog)

Busy day with lots of action. Maybe a little more than I cared for at times as I once again went through a trading halt. The biggest trade of the day was with MBI. I went pretty big with this small sized stock as it went past the signal price and was well above [...]

12/30/10Here’s Why Shares of MBIA Inc. are Up 13% (Wall St. Cheat Sheet)

Business like when the lawsuits are scratched. Wall Street is cheering on the stock...

12/25/10“Summer” Rerun: MBIA Lies in Attack on New York Times (naked capitalism)

This post first appeared on June 19, 2008 Let's start with some admissions: Gretchen Morgenson, one of two authors (the other is Vikas Bajaj) of a takedown piece on MBIA yesterday, has some detractors in the blogsphere because, frankly, her understanding of credit instruments leaves something to be desired. Her critics overlook her solid work on executive comp and corporate malfeasance. When she has access to court documents and SEC filings. she is specific and accurate. Based on...

12/9/10On MBIA’s Suit Against Morgan Stanley on a Second Lien Deal Gone Bad (naked capitalism)

n theory, I'm a wee bit late to the item at hand, a suit by failed mortgage bond insurer MBIA against Morgan Stanley on a second mortgage deal. But in practice, I've not seen any commentary on it and the suit has some interesting wrinkles. Before we get to the details, however, a general issue: looking at this case is like deciding which of Cinderella's bad sisters is less ugly. While mortgage bond originators and sponsors did not cover themselves in glory in the later years of the...

10/14/10MBI (Samurai Trader)

Why the foreclosure fraud mess is good for these guys, I don';t know, but apparently it is, because this thing broke out on huge volume today. The technicals, however, were ripe for a breakout, so I shouldn't be all that surprised. The only thing here that concerns me is the deeply red CMF, which may indicate big money selling into strength. As I said in the industry post, I don't care how good the chart is, anything real estate related is radioactive as far as I am concerned.

10/14/10MBIA Jumps More Than 7% (MBI) (Benzinga)

Shares of MBIA Inc. (NYSE: MBI) continue their impressive run, gaining more than 7.5% today on strong volume. MBIA has been at the center of the recent "foreclosure-gate" scandal, and is proving to be a beneficiary, as foreclosures have been stopped by the majority of the major banks as they reevaluate their foreclosure procedures. MBIA provides financial guarantee insurance and related reinsurance, advisory, and portfolio services, as well as investment management services. Shares are...

7/13/10Bruce Berkowitz's Fairholme Capital Starts MBIA Position, Raises AIG Stake (market folly)

Bruce Berkowitz's investment firm Fairholme Capital Management recently filed two 13G's with the SEC regarding two of its positions. Firstly, Fairholme has filed a 13G regarding shares of MBIA (MBI). Due to portfolio activity on June 30th, 2010, Fairholme now shows an 11.1% ownership stake in the bond insurer with 22,736,200 shares. The vast majority of these shares are owned by Berkowitz's mutual fund vehicle, the Fairholme Fund (FAIRX). This is a brand new position for his firm as it...

6/2/10The Most Thorough Analyst is Now Buying This Stock (Gold Stocks Today)

By Dr. Steve Sjuggerud Wednesday, June 2, 2010 Hedge-fund manager Bill Ackman once received a six-figure photocopying bill from a law firm… for 140,000 pages of photocopying. The attorney general wanted Ackman's investment research on MBIA. So he subpoenaed it… and got all 140,000 pages. Whether Ackman makes money (like he did on MBIA) or loses money (like he did on Target), you can be certain that he was thorough in his homework. Today, Ackman has a new big idea, and...

5/19/10Bill Ackman Talks Financial Regulation & Ratings Agencies (market folly)

We wanted to quickly highlight that BloombergTV recently had Bill Ackman of hedge fund Pershing Square on to talk about financial regulation and the ratings agencies. The conversation stems from Ackman's battle with MBIA where he shorted the stock and over the course of six years eventually won. This story is detailed in Christine Richard's new book Confidence Game that we recently reviewed. In order to help change the system, Ackman is in favor of Sheila Blair's proposal which he talks...

5/9/10Confidence Game: How A Hedge Fund Manager Called Wall Street's Bluff by Christine Richard (Book R... (market folly)

We've covered hedge fund manager Bill Ackman extensively here on Market Folly so it's always intriguing when a book is released on an investor we've seemingly tracked forever. As such, we were eager to dive into Bloomberg News reporter Christine Richard's new book, Confidence Game: How A Hedge Fund Manager Called Wall Street's Bluff. For those of you unfamiliar with the backstory, it centers on Ackman's short position in bond insurer MBIA and the ensuing battle he waged against the company,...

5/8/10MBIA Inc. (NYSE: MBI): Q1 Earnings Preview (Stock Wizard)

MBIA Inc. (NYSE: MBI) is scheduled to release its first-quarter 2010 financial results after the market close on Monday, May 10, 2010. Analysts, on average, expect the company to report a loss of $1.02 a share on revenue of $252.47 million. In the year ago period, the company posted a loss of $1.51 per share on revenue of $371.57 million. MBIA Inc. provides financial guarantee insurance and credit protection products, as well as investment management services to public finance and structured...

3/3/10(MBI) MBIA Incorporated Reports Smaller Loss (Stock Blog Hub)

MBIA Inc.’s (MBI) fourth quarter operating loss of $1.16 per share was a penny more than the Zacks Consensus Estimate of a loss of $1.15. The company had reported a loss of $5.21 per share in the prior-year quarter. Results were dragged down by losses on MBIA's coverage of mortgage-related securities and complex investments, which weighed [...]

2/26/10MBIA Inc. (NYSE: MBI): Q4 Earnings Preview 2009 (Stock Wizard)

MBIA Inc. (NYSE: MBI) is scheduled to release its fiscal fourth-quarter 2009 financial results after the market close on Monday, March 1, 2010. Analysts, on average, expect the company to report a loss of $1.11 a share on revenue of $236.96 million. In the year ago period, the company posted a loss of $5.30 per share on a negative revenue of $1.59 billion. MBIA Inc. provides financial guarantee insurance and credit protection products, as well as investment management services to public...

2/25/10Monoline datapoint of the day (HedgeAnalyst)

Monoline datapoint of the dayFeb 23, 2010 19:00 ESTBloomberg reports:Ambac, MBIA Inc. and Assured Guaranty, the three largest bond insurers, have set aside 0.04 percent of the total public finance debt they insure, or $520 million, to pay claims on municipal securities, according to regulatory filings by the companies.No, that’s not a misprint: the claims-paying [...]

1/13/10(MBI) MBIA Downgraded to Underperform (Stock Blog Hub)

We are downgrading our recommendation on the shares of MBIA Inc. (MBI) to Underperform as macroeconomic conditions continue to contribute to losses on the group’s structured finance products. MBIA insures mortgage-backed securities backed by subprime mortgages. MBIA also has an indirect exposure to subprime mortgages that are included in collateralized debt obligations (CDOs), in which the [...]

1/13/10(MBI) MBIA Incorporated – Bear of the Day (Stock Blog Hub)

We are downgrading our recommendation on the shares of MBIA Inc. (MBI) to Underperform as macroeconomic conditions continue to contribute to losses on the company's structured finance products. MBIA's third quarter results missed the Zacks Consensus Estimate abysmally. Results were dragged down by higher losses on MBI's coverage of mortgage-related securities and complex investments, which weighed [...]

11/11/09(MBI) MBIA Incorporated Misses Earnings Estimates (Stock Blog Hub)

MBIA Incorporated’s (MBI) third quarter operating loss of $3.50 per share substantially missed the Zacks Consensus Estimate of a loss of 99 cents per share. Last year, the company had reported a loss of $3.42 per share. Results were negatively affected by a continued deterioration in the performance of the company’s insured second-lien residential mortgage [...]

11/10/09Belated: Covered call with MBI (Geographic Independence)

And yet another catch up on trades completed but not yet blogged about. A position using MBIA Inc (MBI) as the underlying is the last of my covered calls done within the GI portfolio for November expiration. Sadly, it's been too long since I initiated the position for me to remember exactly why I went ahead with this trade. Which is really another way to say I may be doing too much experimentation and not enough of sticking to a plan.

10/3/09(MBI) MBIA Incorporated Slashed Sub-Investment Grade (Stock Blog Hub)

Note: We are re-issuing this post after correcting a mistake in the original post that ran yesterday. As a result of another sign of dwindling confidence about MBIA Incorporated’s (MBI) business prospects, Standard & Poor's (S&P) has downgraded its ratings on the parent company as well as its structured finance insurance arm, MBIA Insurance Corporation.Rating of [...]

9/30/09MBIA’s CDO Misadventures Continue (Commercial Real Estate Edition) (naked capitalism)

Monoline insurers were last year's story, but I have a prurient interest in some of the smoldering hulks of the credit crisis. Readers may recall that in January-Feb of last year, seemingly imminent demise of monolines looked to be ready to set off financial armageddon, since monoline (and AIG) credit enhancement was critical to a lot [...]

9/30/09(MBI) MBIA’s Credit Ratings Slashed to Sub-Investment Grade (Stock Blog Hub)

As a result of another sign of dwindling confidence about MBIA Incorporated’s (MBI) business prospects, Standard & Poor's (S&P) has downgraded its ratings on the parent company as well and its structured finance insurance arm, MBIA Insurance Corporation. Rating of the parent company has been slashed by one notch to “BB+" from “BBB" and its subsidiary [...]

9/28/09MBIA Inc (MBI) Cut To “Junk” by Standard and Poors (Stock Market Analysis, Trading, And Financial Commentary - Rebel Traders)

MBIA is now officially in 'junk' status. MBIA Inc - S&P cuts counter-party credit, financial strength and financial enhancement ratings on MBIA Insurance by 2 notches to BB+ (now junk) from BBB;  Outlook is Negative - Also, S&P cut the counterparty credit rating for MBIA Inc by 1 notch to BB- from BB - S&P affirmed its [...]

5/30/09MBIA Split Attacked-2 (Skeptical CPA)

"Three weeks ago, Wells Fargo served a notice that it had failed to receive $5.5m of insurance payments. ... The use of their triple A rated guarantees was the backbone of huge parts of the credit industry such as securitisation and structured finance, their demise is one reason these parts of the financial markets remain dysfunctional. ... In spite of the pressures wrought by the credit crisis on the biggest bond insurers. or monolines, none of them had been forced to cease paying claims....

5/21/09T2’s Tilson Says $1 Trillion Bank Losses Still to Come (Contrarian Profits)

Another bad omen for stocks comes from storied hedge fund T2. According to Reuters, T2 partners Whitney Tilson and Glenn Tongue Tilson “have halted their move into the US mortgage bond market.” Tilson says there will be “a headwind of continued losses for the better part of five years." That’s because banks are facing more losses [...]

4/30/09MBIA Split Attacked (Skeptical CPA)

"Veteran investor Martin Whitman's Third Avenue Management LLC sued units of MBIA Inc., saying the bond insurer's decision to separate its busineses 'greatly harmed' Third Avenue as a bondholder. ... In a statement Monday night, MBIA Chief Executive Joseph 'Jay' Brown said: 'We appreciate Third Avenue's past support of MBIA and regret that they felt today's action was necessary.' He added that the insurer's split 'should not have been a surprise,' and believes the allegations in the complaint...

4/5/09MBIA = AIG, Maybe Not (Skeptical CPA)

"Representatives of about 15 financial institutions will meet Thursday with New York State Insurance Superintendent Eric Dinallo [ED] to complain about MBIA Inc.'s decision to split its bond-insurance unit into two companies, people familiar with the matter said. The group includes many banks that feel disadvantaged by MBIA's move last month to separate its municipal-bond business from its commitments to insure mortgage-backed bonds and other structured securities. The banks are...

3/11/09MBIA Debt-Guarantee Split Sparks Hedge Fund Lawsuit (Hedge Fund Blogs From HedgeCo.Net)

Bloomberg - MBIA’s split of its bond- insurance business was challenged by hedge funds alleging the move hurts owners of about $240 billion of debt while benefiting stock investors, executives and some policyholders. The reorganization, in which MBIA stripped $5.4 billion of assets and its U.S. municipal business from a unit that now mainly insures [...]

1/26/09Bill Ackman's Pershing Square Files 13D on Borders, Covers MBIA Short (market folly)

Pershing Square Capital Management, the hedge fund ran by Bill Ackman, has filed an amended 13D with the SEC and has disclosed a 33.62% ownership stake in Borders (BGP). According to the filing, "As of January 16, 2009, as reflected in this Amendment No. 9, the Reporting Persons are reporting beneficial ownership on an aggregate basis of 25,297,880 shares of Common Stock (approximately 33.62% of the outstanding shares). This includes warrants covering 14,700,000 shares of Common Stock,...

11/19/08Bill Ackman on Charlie Rose (GreenLightAdvisor Views)

Bill Ackman, founder and CEO, Pershing Square Capital Management, and now infamous and highly successful activist hedge fund manager of nearly $6-billion in assets, appeared on Charlie Rose, November 11, 2008. In 2002, Ackman started a public campaign questioning America's bond insurers, in particular MBIA. that work uncovered among other things the possibility of a looming systemic problem [...]

9/18/08Moody's Revised RMBS Loss Forecasts Threaten MBIA, Ambac Ratings (naked capitalism)

Just when the worries about AIG have receded from the fore, the longer-standing insurance bugaboos, MBIA and Ambac, may return to center stage. From the Financial Times: Moody’s Investors Service has increased its projections for losses on residential mortgage-backed securities, a move that could result in “multi-notch” credit rating downgrades for bond insurers such as Ambac and MBIA which have exposure to these securities. In its latest update on losses expected on mortgages made...

7/24/08MBIA and Ambac sued by LA (Credit Writedowns)

The lawsuits are piling up. America is a very litigious country and when things go wrong people sue. That's one reason one should realistically expect the courts to be clogged with all manner of suits on bond insurance, auction rate securities, CDOs, predatory lending, and on and on. The latest in this [...]

7/2/08Guaranteed Investment Contracts: Another Headache for Bond Insurers? (naked capitalism)

When the question of guaranteed investment contracts and their implications for monolines first came up on this blog, a reader jumped all over us when we ventured that the fallout from GICs might affect claims paying ability. We were told that making a fuss over GICs was tantamount to focusing on a withdrawal by a [...]

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