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|Subject: Re: MBIA Bonds?||Date: 12/14/2012 11:46 PM|
|Author: howardgt||Number: 34558 of 35563|
you think there is any upside to get in now?
I don’t know if your question was directed to Charlie or me, but since Charlie hasn’t responded yet, I’ll add my 2 cents.
I really have no idea if MBIA will survive in the long run, but I’m guessing the odds are on their side now. MBIA bonds presently represent about 2% of my junk allocation, so I don’t think I want to add more exposure now. Experience has taught me that diversification is the key to making consistent profits in high-yield assets.
I bought MBIA debt awhile back in the 70’s because I thought they would do everything possible to avoid default. Default would be catastrophic for a company in their business. Also, I respect Bruce Burkowitz’s (Fairhome Funds) opinion, and he is a holder of MBIA equity and has said he thought they would come out whole in the end. Now that they have won "consent approval", I think the odds are even more positive than when I first bought.
Here is an article about CreditSights opinion on the company:
But I know that anything can happen... I have learned that if I diversify enough, I can make sufficient profit on the surviving majority of my holdings to more than cover the small percentage that may default. So I think MBIA may be worth a small weighting in a junk portfolio.
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