I have some comments:
1. SCA is not a shell company, sca used to be a big insurance company. Because it insures bad loans (CDO), it can't pay the claim, so it was broke, if it bankrupted, Mer would get very little back, that is why Mer agreed to only get 22c on the dollar. Also, Mer is the guy who started the mess, so the bond insurer is the victim here. What I invested is bond insurers.
2. ABK and MBI have similar situations, investors were scared to death about the situation, that is why we called it crisis. In a crisis, people were panicking, and panicking leads to opportunities. I put almost all my money into MBI first, not ABK, the difference between ABK and MBI for me is: MBI's CEO bought and hold 2.6 millions shares of MBI. I do not think the ceo is playing slot machine with that amount of money. I bought a lot of ABK after abk reported its cancellation of one CDO contract with CITI. Here citi bank gets about 60c on the dollar. Again, ABK is a victim, but this deal shows how panic the market was about ABK. ABK recorded one billion dollar loss on this CDO contract already. It turned out ABK was only paying out $850 million, so ABK recorded a $150 million paper gain. This event shows a couple of things: a. market was panicking, b. ABK was honest and conservative with their accounting. That raise a question, if ABK is over conservative, then maybe it is worth more than what its book value shows, second, market was evaluating ABK a lot less than its already conservative calculated book value. It is like you get double insurance. That is why I am aggressively increasing my investment on ABK.
Investment is all about future, so nothing is certain. You can't wait until everything is clear. You have to use your common sense to get an idea of the big picture. If you have the big picture and put your investment story against this big picture, then you should be safe if you get the big picture right.
At the stock market bottom last month, you can hear people were screaming about bankruptcies of banks everywhere, people were anxious about their deposits even if we have FDIC, people were not interested on financial stocks at all, Cramer was yelling sell, sell, sell ... I think I got the big picture right, which is panic. And then that ceo's 2.6 million shares made MBI as my biggest bet of my life ever.
thanks for reading, we may have different views on things transpired, a lot of things I do are very risky for some people. If I am old, I may not do the same thing the same way. So your strategy should fit your own situation and grab your own opportunity.
1. SCA is not a shell company, sca used to be a big insurance company. Because it insures bad loans (CDO), it can't pay the claim, so it was broke, if it bankrupted, Mer would get very little back, that is why Mer agreed to only get 22c on the dollar. Also, Mer is the guy who started the mess, so the bond insurer is the victim here. What I invested is bond insurers.
2. ABK and MBI have similar situations, investors were scared to death about the situation, that is why we called it crisis. In a crisis, people were panicking, and panicking leads to opportunities. I put almost all my money into MBI first, not ABK, the difference between ABK and MBI for me is: MBI's CEO bought and hold 2.6 millions shares of MBI. I do not think the ceo is playing slot machine with that amount of money. I bought a lot of ABK after abk reported its cancellation of one CDO contract with CITI. Here citi bank gets about 60c on the dollar. Again, ABK is a victim, but this deal shows how panic the market was about ABK. ABK recorded one billion dollar loss on this CDO contract already. It turned out ABK was only paying out $850 million, so ABK recorded a $150 million paper gain. This event shows a couple of things: a. market was panicking, b. ABK was honest and conservative with their accounting. That raise a question, if ABK is over conservative, then maybe it is worth more than what its book value shows, second, market was evaluating ABK a lot less than its already conservative calculated book value. It is like you get double insurance. That is why I am aggressively increasing my investment on ABK.
Investment is all about future, so nothing is certain. You can't wait until everything is clear. You have to use your common sense to get an idea of the big picture. If you have the big picture and put your investment story against this big picture, then you should be safe if you get the big picture right.
At the stock market bottom last month, you can hear people were screaming about bankruptcies of banks everywhere, people were anxious about their deposits even if we have FDIC, people were not interested on financial stocks at all, Cramer was yelling sell, sell, sell ... I think I got the big picture right, which is panic. And then that ceo's 2.6 million shares made MBI as my biggest bet of my life ever.
thanks for reading, we may have different views on things transpired, a lot of things I do are very risky for some people. If I am old, I may not do the same thing the same way. So your strategy should fit your own situation and grab your own opportunity.
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