* MBIA, Ambac May Each Have $11.6 Billion in Losses, Ackman Says
Wednesday, January 30th, 2008By Christine Richard and Mark Pittman
Jan. 30 (Bloomberg) — MBIA Inc. and Ambac Financial Group
Inc., the two largest bond insurers, may each lose $11.6 billion
on guarantees of residential mortgage securities and some
collateralized debt obligations, according to hedge fund manager
William Ackman.
Ackman calculated the losses using a model supplied by an
unnamed investment bank and sent the findings in a letter to the
Securities and Exchange Commission and New York Insurance
Superintendent Eric Dinallo. Ackman is a managing partner of
Pershing Square Capital Management LP, which is trying to profit
from declines in the stocks and bonds of MBIA and Ambac.
Ackman, 41, stepped up his attack by posting on the Internet
a list of asset-backed CDOs and other securities guaranteed by
Armonk, New York-based MBIA and New York-based Ambac that allows
others to craft their own loss predictions. Ackman didn’t say how
he got details on the securities, many of which haven’t been
disclosed by the companies.
“Up until this point in time, the market and the regulators
have had to rely on the bond insurers and the rating agencies to
calculate their own losses in what we deem a self-graded exam,”
Ackman said in a statement preceding release of the letter. “Now
the market will have the opportunity to do its own analysis.”
MBIA fell $2.56, or 16 percent, to $13.42 at 3:21 p.m. in
New York Stock Exchange composite trading. Ambac dropped $1.77,
or 14 percent, to $11.16. Both companies have lost more than
80 percent of their market value in the past year.
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