Ambac: Financial Winners & Losers
(Ambac and other stock prices brought current in this update.)
Ambac Financial shares rallied as much as 50% earlier in the day, touching a new 52-week high of $3.39 and extending a three-day rally. On Friday, Ambac reported fourth-quarter net income of $558.1 million, or $1.93 a share, which swung from a year-ago loss of $2.34 billion, or $8.14 a share. Results included a $472 million tax benefit.
However, shares of Ambac pulled back and turned lower, falling 21.8% to $1.76, after JPMorgan analyst Andrew Wessel maintained his stance that the common equity "has no value.""We believe any investment in [Ambac] shares at this time is highly speculative, although we still believe a short in [Ambac] equity will generate attractive long-term returns," Wessel wrote. "Basically, we feel the near-term volatility may not be worth the eventual long-term pay-off from a short." Still, Ambac's recent strength since the April 8 earnings release was attributed by some to a massive short squeeze. According to the New York Stock Exchange's monthly short interest report, short interest on Ambac Financial increased to 60.4 million shares by the end of March, up from 54.4 million on March 15, making it one of the top 25 short interest candidates on the exchange. In March, Ambac said it may consider a negotiated restructuring of its debt through a prepackaged bankruptcy proceeding or may seek bankruptcy protection without agreement concerning a plan of reorganization with major creditor groups. In addition, the Wisconsin Office of the Commissioner of Insurance (OCI), which regulates Ambac Assurance Corp., took control of $35 billion of its main subsidiary's liabilities. Ambac share volume has easily outpaced the three-month average daily volume over the last three sessions. More than 658 million shares changed hands Tuesday, compared with the average daily volume of 21 million. Fellow bond insurer MBIA (MBI) lost 4.9% to $7.70, although the stock is up more than 40% over the last month. Elsewhere, several regional bank stocks lost ground after UBS downgraded Regions Financial (RF), KeyCorp (KEY), Huntington Bancshares (HBAN) and TCF Financial (TCB) to sell from neutral. UBS also cut Commerce Bancshares (CBSH) to neutral from buy.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV