Easy come, easy go::
Ambac‘s $1.66 billion loss for the three months ended March 31, announced yesterday, sent the shares tumbling 43 percent and sparked concerns that the company’s AAA credit rating isn’t as safe as investors thought. [Bloomberg]
Ambac in March sold $1.5 billion in stock and equity units after more than $5 billion of charges on its guarantees of mortgage-liked debt. [Bloomberg]
So to recap:capital was raised in March, and istantaneously evaporated. Good job!
But hold on, they say:
Ambac Says It Has No Liquidity Issues, Ratings Solid [Bloomberg]
I don’t care what you call it: hubris, grandiosity, self-deceived, or fraudulent… with this kind of confidence, you want these guys as your bond insurers! Because that’s what the market craves!
What is left for Ambac but a do-over?! Uh-oh:
But once again, let’s give Ambac the benefit of the doubt. Let’s assume that Ambac can raise $1.9 billion.
At Thursday’s close Ambac had a market cap of $1 billion and a closing price of $3.76. To raise $2 billion at these prices would cause a massive shareholder dilution making each share worth about 1/3 what it is worth today. That would make each share worth about $1.25. There are delisting rules at those prices.
Mish explains it all fer ye in Nothing Left To Lose At Ambac.
Long, Downward Slide
Paco‘s Paragraph o’ Da Day is care of Market-Ticker:
Part of this is unfortunately that people have become conditioned to “Vote For A Living” via entitlements, but what those who are doing so don’t realize is that this isn’t a zero-sum game – its a negative amortization game for the voter, in that these promises can’t possibly be kept and what’s worse, the promise and its “attempted” fulfillment winds up picking your pocket in the process.
It doesn’t seem to matter who gets elected, the same behind- the- scenes Bozo’s who have always run things are still, well, running things, making themselves and their rich friends richer in the process, and the poor (i.e. middle class) continue to get pick-pocketed.
It was a stroke of brilliance. Wall Street created a way for ordinary people to buy things they do not need, with money they do not have, in order to impress people they do not know.