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Early in the contest I bought shqares of MBIA (MBI) at prices as low as 49.xx and sold all of them at a profit, getting prices as high as 64.50. MBI is a financial guaranty insurance company and has been very volatile due to the fear in the market. The company just reported a loss based on mark to market of sub-prime related exposures. They expect that the impariment will be temporary.
My metric here is the company provided nonGAAP Adjusted Book Value, which includes the present value of future installments and other future income. I think it is relevant because insuring bonds is a long term proposition and once they do the insurance they can be reasonably confident of earning future premiums. What was of interest to me was the Adjusted Book Vlaue increased during the quarter, along the lines of what I had been projecting. Curious, the company reports a loss for the quarter yet this metric increases. At today's rpices this is at .56 of its adjusted book value.
What I saw was improved pricing power and demand for their products. Similar to a reinsurance company, a finacial guaranty company seems to make money after a catstrophe as pricing power increases.
The stock was down badly on the day, so I placed a limit order to buy 1,000 shares at 50, it filled promptly at 49.xx. It continued down so I used my remianing funds to buy another 1,000 shares at 46. This is the same thing I did earlier in the contest: hopefully, I will achieve the same results.
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