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Sold 800 Shares MBI at prices from 61.97 to 62.46
MBI (MBIA, a financial guaranty insurance company) has had a large short interest open against it, 10 days when last I looked. I got the idea of checking short interest from a post by John Czerw, which covered the topic as it related to his SLO picks. After looking at the short interest and recalling that MBI was up very strongly on 8/17, when the Fed cut the discount rate, I was watching for a similar increase if the Fed cut today. MBI was up as much as 9% on above average volume, short-covering, and I felt it was a good time to reduce my position.
I started trimming, using limit orders, and sold 800 out of 1,800. If the stock behaves the same as it did before, it will start giving back its gains over the next few weeks. While I believe MBI will escape material damage to its balance sheet as the result of the sub-prime situation, I suspect that they will have some losses to report before the end of the year, which may very well create another buying opportunity.
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