The monoline appreciation society clearly extends beyond those directly in the business of providing bond insurance wrappers.
Warren Buffett’s interest may have been of the exploitative variety, but now the likes of MBIA, Ambac and ACA Capital are attracting the attention of other value investors.
Fidelity has declared a holding of almost 10 per cent in Ambac and 5.6 per cent in MBIA, to go alongside the 5.4 per cent it holder in mortgage financier Countrywide Financial.
Meanwhile, Third Avenue Management, a dedicated contrarian, has said it now owns 13 per cent of ACA.
Even Moody’s seems to be taking a slightly softer line on some of the monolines. Having slashed the rating on FGIC late on Thursday (collateral damage can be viewed here), the rating agency added:
Although further analysis remains to be completed before those reviews can be brought to conclusion, Moody’s believes that, in contrast to XL Capital Assurance and FGIC, MBIA and Ambac are better positioned from a capitalization and business franchise perspective.
What’s more, it seems that MBIA is not alone in calling for measures to curb those who have been shorting its stock, like the vocal Bill Ackman. Take the Alea blogger, jck:
The biggest flaw in Mr Ackman’s model is that he doesn’t appear to know the difference between an “insured credit default swap” and a plain vanilla credit default swap. That’s enough to dismiss his alleged analysis as self-serving propaganda. In most civilized countries, individuals actively campaigning to destroy important financial institutions would be behind bars where they belong. Mr Ackman has been short MBIA for many years and his analysis has been wrong for many years, the travails of MBIA are the results of regulators-imposed and misguided changes in accounting rules namely SFAS133.
Wrong for many years? Maybe, but he’s been very right recently. A fresh regulatory filing on Thursday disclosed that, as of end-December, Mr Ackman’s firm, Pershing Square Capital Management, had 1m options to sell Ambac at various prices and puts covering almost 700,000 shares in MBIA.
