Astonishing. MBIA
(MBI)
raises $2.6 billion a few months ago and then loses $2.4 billion? Hello? This is a classic: No sooner does it raise the money than it loses the money!
Once again, the suckers in the value pit are born every minute. Once again, they are never wrong, because they'll be getting a chance -- soon, no doubt -- to put more money into MBI because of these astonishing losses. The press release is just amazing: "ample liquidity," and "built to withstand credit stress levels many multiples of what we are experiencing" and a business model that is "proving we are adequately capitalized."
Yet people are buying! The fundamentals are sound! The stock opened UP!
The buyers can't really believe this stuff, can they? Open your eyes, people -- things have gotten worse, not better, in the hurting business, the absurd CDO insurance business. They somewhat acknowledged this: "While our operating results this quarter were clearly disappointing, they are consistent with developments in the credit markets."
If they are consistent, that's disastrous for the future.
Oh, and that terrific business model?
Let's see, Warren Buffett's moving aggressively into the municipal bond insurance business. That's the most lucrative part of the monoline business. He pushed this business hard last week when we interviewed him on CNBC.
I can't imagine Buffett being denied the easy business that MBIA is losing, because the company is hard to trust after these losses.
This is a remarkable statement, filled with hubris and puffery. It is embarrassing to anyone who is remotely rigorous about business.
In other words, it is perfect for those who bought in the last round. They are feeling great!
I am cynical about this, because how can you not be? Aren't the smartest people in the business the value guys? Don't they have the most money?
I guess MBIA will do just fine, because in Valueland, a sucker is born just about every second. The rejoicing, the buying, all very real, all very positive.
And nobody goes under.
Random musings: Speaking of "nobody goes under" -- Standard Pacific
(SPF)
reports a huge loss, but at least they give us some disclosure; Indymac
(IMB)
issues a stunning set of statements, which include a big reduction in the net loss from last quarter. First-payment defaults in new production are improving! Let's go buy some; not really, as 4.6% of loans are now nonperforming. Very hard hole to dig out of, particularly when they are forecasting still higher losses. ... PMI
(PMI)
reports a staggering loss, and once again the stock hangs in. The worst must definitely be over!!
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