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MBIA Soars Following BTIG Initiation With $22.50 Target

Tyler Durden's picture




 

It is no secret that MBIA has long been one of our favorite longs (and by longs it is really a contrarian bet on various bad things happening - our latest piece can be found here). Today, we are happy to see that BTIG has come out with an initiating coverage report on the name following virtually all the same logic we presented two months ago, only with a price target that makes even us blush: $22.50. To wit: "We are initiating coverage of MBIA with a BUY rating and a $22.50 price target which equates to a 1.0x multiple of 2012E year-end stand-alone adjusted per share book value of National ($26.26) less the holding company net debt per share ($3.73). Our valuation is based on our view that if MBIA is able to resolve the fraudulent conveyance and Article 78 cases challenging its transformation either through a settlement or a court judgment, the value of National will flow up to the holding company and to shareholders.... Given our view that the challenges to MBIA?s transformation will be resolved through a settlement and that its shares could nearly triple in a post-announcement short squeeze, we believe MBIA offers one of the market's most compelling risk-reward propositions. Following almost four years of uncertainty during which its status as a viable entity has been in question, MBIA appears closer to resolving the various challenges it faces, unlocking the value of National Public Finance Guaranty Corporation – the company?s public finance unit – to the benefit of shareholders, and resuming its role as one of the last remaining players within that industry." and the kicker: "We would note that the large short interest in the stock relative to its float - 28.5 mm shares short versus a float of 140.4mm shares – combined with highly concentrated institutional ownership could set the stage for a dramatic short squeeze as short sellers might have to scramble to find shares to cover." Remember: "Is MBIA A Volkswagen-Like Short Squeeze Candidate?"  Mmhmm.

 

 

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Wed, 11/30/2011 - 14:30 | 1931414 orca
orca's picture

$8,96 playing along. My target is $100, for dreaming is not (yet) forbidden by TPTB

Wed, 11/30/2011 - 14:31 | 1931419 SolidSnake961
SolidSnake961's picture

making good money eh Tyler? anti-tilson and MBI

Wed, 11/30/2011 - 14:37 | 1931461 Tyler Durden
Tyler Durden's picture

It was really a pair trade with BAC.

Wed, 11/30/2011 - 14:41 | 1931490 equity_momo
equity_momo's picture

Heres a nice pairs trade. Short market long cash.  Yes yes , THEYRE PRINTING MONEY!!

Get over it. You can worry about the price of bread and eggs in 2015. Buy physical gold with your profits. Welcome.

Wed, 11/30/2011 - 14:51 | 1931529 tallen
tallen's picture

Short the market when they're printing like there's no tomorrow?

My pairs trade, Buy Silver, Buy Silver. Because saying it once just wasn't enough.

Wed, 11/30/2011 - 14:52 | 1931541 equity_momo
equity_momo's picture

If you think theyre printing enough to counteract the credit destruction then you havent been paying attention. Theyre barely printing enough to stand still.   If they even think about printing enough to get back on that exponential curve we all need to stop mad max coming to town , well , oil will be at 300 and mad max will pay us a visit anyway AND they lose control of their fun and games as a consequence.

Theyre doing just enough to stay in control of the levers and that means a controlled deflation. It doesnt mean gold is going down so all you gold bugs dont freak out , youre gonna be ok. Silver - not so sure. Poor mans gold. Kinda pointless. Just buy a smaller gold coin.

Wed, 11/30/2011 - 15:26 | 1931742 defn8Dog
defn8Dog's picture

I thought the Court would have issued its ruling on MBI v BAC regarding the causality issue around Nov. 17.  That still may be coming, which continues to make MBI a binary trade.  There's around $2bn in the balance. 

As to the pair trade, most days, MBI shares have been lumped in with the banks... had to look away.

Wed, 11/30/2011 - 15:01 | 1931597 Flakmeister
Flakmeister's picture

Great, another company writing CDSs that cannot be covered....

Fucking mono-lines are a great example of exactly how fucked our financial system became...

And to think I used to work for one...

Wed, 11/30/2011 - 15:12 | 1931639 rd
rd's picture

I would be cautious:

Wed, 11/30/2011 - 15:13 | 1931656 kaiserhoff
kaiserhoff's picture

If they can beat the fraud charges, and hell freezes over, and pigs grow wings...

Wed, 11/30/2011 - 17:13 | 1932355 CharliePrince
CharliePrince's picture

any options on this one..a leveraged way to play upside  ?

Wed, 11/30/2011 - 18:58 | 1932948 ghostfaceinvestah
ghostfaceinvestah's picture

Thanks for the update Manal

Wed, 11/30/2011 - 19:11 | 1932992 Piranhanoia
Piranhanoia's picture

What is it Fezzini said you aren't supposed to do to a Sicilian?

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