This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Ambac's Rally More Like Recovery

NEW YORK (TheStreet) -- Ambac Financial Group's (ABK) outsize third-quarter profit may look like an example of a pendulum swinging back but that's not entirely the case. And while the rally in the stock makes for some impressive headlines, it's really just returning the volatile shares to where they were a few sessions ago.

Yes, both the latest quarter and the year-ago results were heavily impacted by changes in the value of the company's credit derivatives portfolio, but the gain this year and the charge last year aren't really representative of two sides of the same coin.

Before Wednesday's opening bell, the New York-based provider of financial guaranty company reported earnings of $2.19 billion, or $7.58 a share, for the three months ended September 30. Included in the results is a massive gain of $2.13 billion from the change in the fair value of its credit derivatives portfolio. This gain was comprised of $2.87 billion in unrealized gains, offset by realized losses of $732.9 million in the quarter. Reinsurance cancellations with three counterparties were also a contributor in the latest quarter, adding $303 million to net income.

This performance is stacked up against the same quarter last year when Ambac's results were overwhelmed by mark-to-market adjustments of the negative variety. It posted a loss of $2.43 billion, or $8.45 a share, in the comparable period in 2008, weighed down by a fair value adjustment charge on the credit derivatives portfolio of $2.71 billion.

The stock is seeing heavy buying interest in early afternoon action, soaring nearly 39% to $1.54 a share, and it's bringing similar companies along for the ride, including MBIA Inc. (MBI), up 11.2% to $4.57; Radian Group (RDN), rising 11.3% to $6.59; and Triad Guaranty (TGIC), advancing 14.6% to 80 cents.

Volume in Ambac shares reached 75.8 million, more than three times the issue's three-month daily average churn of 21.4 million, and its highest level since Sept. 22.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,083.80 -2.83 -0.02%
S&P 500 1,987.98 +0.97 0.05%
NASDAQ 4,472.1080 -1.5890 -0.04%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs