RSS available
| MarketTicker Forums Read Message in NotSoBreaking |
User: Not logged on
|
| Top | Forum Top | Login | Control Panel | FAQ | Register | Logout |
| User Info | Evercore Asset Management Urges Ambac to Stop Capital Raisin in forum [NotSoBreaking] | |||
|
Madman Posts: 1287 Incept: 2007-09-13 
ct,USA 
|
Evercore Asset Management Urges Ambac to Stop Capital Raising Effort and Accept Ratings Downgrade Jan 17, 2008 3:02:00 PM -- NEW YORK, Jan. 17 /PRNewswire/ -- Evercore Asset Management, LLC (EAM), a registered investment adviser with over $500 million in assets under management, today announced that it has written to the Board of Directors of Ambac Financial Group, Inc. (NYSE: ABK) to express its opposition to the company's recently announced plan to raise additional equity capital. The full text of the letter follows. EAM encourages other Ambac shareholders to contact the company to express their displeasure with Ambac's announced capital raising plan. January 17, 2008 Ambac Financial Group, Inc c/o Board of Directors One State Street Plaza New York, NY 10004-1505 To the Board of Directors of Ambac: Evercore Asset Management, LLC (EAM) is a registered investment adviser with over $500 million in assets under management. We are long-term oriented, contrarian investors, with a typical holding period measured in years. We advise on more than 700,000 shares of Ambac on behalf of our clients. We wrote to you last month to express our opinion, as a co-owner of the company, on the undesirability of raising costly capital to preserve Ambac's triple-A rating. We were extremely disappointed to hear yesterday's announcement that Ambac plans to raise additional equity capital. When we first wrote to you about this on December 21st, the company's stock was at $27 per share and we urged you not to contemplate the issuance of additional equity in order to preserve Ambac's triple-A rating. The notion of issuing equity with the stock now at a small fraction of that late December price is simply absurd. It is impossible for the value of future business to even come close to offsetting the dilution that will occur. Municipalities are wrapping their bonds at the lowest rates in years, and Berkshire Hathaway is entering the business. Even if these things were not happening, it would still be impossible for new business to be sufficiently profitable to justify raising new capital. Furthermore, as we warned in our previous letter, there is no assurance that further capital increases will not be required by the rating agencies even if capital is raised now. Indeed, statements made by the agencies since we sent our first letter, including announcements yesterday from Moody's and S&P, suggest that further capital requirements are more likely than not. Ambac's market value has now shriveled to a few hundred million dollars. The sale of $1 billion or more of new equity amounts not so much to raising capital as it does to a sale of the company at an extremely depressed price. It is time for Ambac to recognize that, in entering the structured finance business, the company gambled its triple-A rating and has now lost that bet. Attempting to buy back the triple-A rating by giving away most of the company makes no sense. The business of triple-A guarantees must now be left to those whose previous actions have not saddled them with both a need to raise capital and a perception of potential losses of the magnitude that now causes Ambac to be priced at a small fraction of its book value. All that can be done now is to maximize the value of the existing book of business for the benefit of Ambac's shareholders. The value ultimately realized from the existing book of business will depend on whether Ambac's historically strong underwriting skills have insulated shareholders' capital from further losses. Unless Ambac is still massively under-reserved for eventual claims, there is substantial economic value to be captured even in a runoff scenario. Adding back the mark-to- market losses that the company still claims do not predict future losses, adjusted book value (which fully recognizes net unearned premiums and the present value of future installment premiums) stands at roughly $86 per share. Against that alternative, a proposal to sell a significant amount of stock at the current price is unconscionable. Even if claims ultimately amount to a multiple of Ambac's current reserves, the value realized in runoff will far exceed the current stock price. If, on the other hand, Ambac is massively under-reserved for eventual claims, then raising additional capital amounts to simply throwing good money after bad. From the standpoint of Ambac's current shareholders, the owners of the company, there is absolutely nothing to be gained from continuing to attempt to maintain a triple-A rating. It would be far preferable to go either into a period of "hibernation" during which time the company would not actively pursue any new business where a triple-A rating from all three agencies is required or into outright runoff. Under either scenario, current shareholders could expect to receive considerably more value for their shares than they would if they are massively diluted by an attempt to maintain triple-A status. We implore you to not raise equity or any other form of capital, and we believe that other major shareholders agree with us. We are encouraged to see an announcement this morning that you are reconsidering, and we hope that this means you intend to accept the rating agency downgrades and the consequences that follow. However, since you have not responded to our previous letter, and your announcement this morning did not rule out raising capital, we feel that our fiduciary obligations to our clients leave us no choice but to make public our views on this in the hope of ensuring a stop to the destruction of shareholder value. We remain willing to engage in discussions with you at your convenience. Sincerely, Andrew Moloff Chief Investment Officer Evercore Asset Management, LLC About Evercore Asset Management Evercore Asset Management, LLC (EAM) is an institutional investment management firm that makes high conviction value investments in small- and mid-cap companies. EAM was established in late 2005 when four longtime colleagues and value investors, with working relationships that span two decades, formed an alliance with Evercore Partners - a leading financial services boutique - to create a value-based asset management organization. More information about EAM is available at www.EvercoreAM.com. SOURCE Evercore Asset Management, LLC ---------- "America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves." -- Abraham Lincoln - Corporations have been enthroned, and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by workin 2008-01-17 15:44:28
| |||
|
Hollowman Posts: 926 Incept: 2007-09-06 Deep woods of Canada
|
Is the alarm bell in this companies head not going off? If they lose their triple 'A' status, then that could result in the downgrade of over $1 trillion of bonds!! This would be finacial Armagedon, would it not?
2008-01-17 15:59:58
| |||
|
Madman Posts: 1287 Incept: 2007-09-13
ct,USA
|
it would!! plus if they lose thier AAA rating they would likely go TU! how mutch would shareholders lose then ( ALL!! ) this is about retaining value? or so they say! I think they are nuts!! better a little of something than all of nothing!
---------- "America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves." -- Abraham Lincoln - Corporations have been enthroned, and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by workin 2008-01-17 16:04:44
| |||
|
Narcissist Posts: 495 Incept: 2007-08-26
Toronto
|
Hhahahhahahahaahahahhaha!!!!!!! Looks like Evercore is sitting on huge amount of ABK stock. Imbeciles. Yes, if ABK raises equity Evercore's stake will be diluted into nothing. However, what Evercore does not realize is that it doesn't matter since ABK will be sub-$1 in a couple of weeks. As for me - ABK/MBI made me 70% profit in one night on 20% of my portfolio. 2008-01-17 17:24:54
| |||
|
Pcap Posts: 12225 Incept: 2007-08-16
Canada
|
Ambac's ticker is ABK. Let me clarify, A BK or A Bankruptcy. ---------- ``We know in a crisis the Federal Reserve tap would be open'' Former St. Louis Federal Reserve President William Poole Maximize the pain 2008-01-17 17:57:28
| |||
|
Hollowman Posts: 926 Incept: 2007-09-06 Deep woods of Canada
|
I find it hard to believe that they would downgrade ABK because they would risk being sued into oblivion themselves. How many lawyer do you think would just wait to get at them because they were the ones who rated the bonds in the first place. It's a lot like inviting someone to swim in your pool and then putting your foot on their head when they come up for air.
2008-01-17 19:21:57
| |||
|
Narcissist Posts: 495 Incept: 2007-08-26
Toronto
|
Please believe that they WILL. The very fact that these firms still have their ratings is ABSURD. Ambac took a Q4 write-down equivalent to 60% of their capital base that is supposed to be used for default payments. In a SINGLE quarter!!!!! If I were you I'd be thinking how to set up you portfolio to profit from the ****-storm that ensues AFTER they get downgraded. This may be only weeks away. 2008-01-17 19:54:09
| |||
|
Blackswan Posts: 3361 Incept: 2007-11-06
Execution Pit
|
My take away from this.. Evercore used to manage over $500 Million in Assets. Not so much anymore. ---------- The market can crash further then you can remain short. Trade the moon cycle not the tape you want. 2008-01-17 19:54:45
| |||
|
Narcissist Posts: 495 Incept: 2007-08-26
Toronto
|
Is that how much they manage?
2008-01-17 21:39:08
| |||
|
Signas Posts: 589 Incept: 2007-06-26 Reno
|
Looks like it's Supreme Court to the rescue.Quote:WASHINGTON (AP) - The Supreme Court on Tuesday ruled against investors who sue businesses for scheming to manipulate stock prices of publicly traded companies. http://news.aol.com/story/_a/court-rules.... Looks like just being an agent to the fraud is not enough for liability. ---------- Carbon Credits "FOR SALE" Bring a wheelbarrow full of money!! 2008-01-18 00:22:56
| |||
|
Oxfordrick Posts: 2550 Incept: 2007-07-09
san diego
|
Evercore's arguments are very persuasive. If you buy into the argument that management has a fiduciary duty to maximize the best interests of shareholders then clearly you will agree that ABK should discontinue new business and simply run off its existing book. 2008-01-18 06:05:41
| |||
|
Pcap Posts: 12225 Incept: 2007-08-16
Canada
|
rick wrote..If you buy into the argument that management has a fiduciary duty to maximize the best interests of shareholders then clearly you will agree that ABK should discontinue new business and simply run off its existing book. Agreed, even if ABK or MBI is downgraded, it is NOT the death of them. I will buy 1,000 shares when/if it hits $2. ---------- ``We know in a crisis the Federal Reserve tap would be open'' Former St. Louis Federal Reserve President William Poole Maximize the pain 2008-01-18 07:10:14
| |||
|
Oxfordrick Posts: 2550 Incept: 2007-07-09
san diego
|
Go baby go! $7.30 Bid 2008-01-18 08:47:56
| |||
|
Madman Posts: 1287 Incept: 2007-09-13
ct,USA
|
January 18, 2008, 8:38 am Update: Ambac drops stock sale plan! I guess they took evercores advise. -------------------------- Update: Ambac appears to have taken up Evercore’s advice. The firm claimed Friday that it “remains confident in its insured portfolio” and thus has scotched Tuesday’s decision to raise $1 billion through stock and equity-linked securities sales. The firm said it “has determined that as a result of market conditions and other factors, including the recent actions of certain ratings agencies, raising equity capital is not an attractive option at this time.” The market seems to agree, sending the stock up 13 percent in early trading. ---------- "America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves." -- Abraham Lincoln - Corporations have been enthroned, and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by workin Last modified:
2008-01-18 09:01:40 by madman
| |||
|
Pcap Posts: 12225 Incept: 2007-08-16
Canada
|
Now that they are not getting capital, I think their rating actual may take a hit. In which case, I hope you are short the likes of MER, C, DB, LEH, GS, etc, etc, etc... ---------- ``We know in a crisis the Federal Reserve tap would be open'' Former St. Louis Federal Reserve President William Poole Maximize the pain 2008-01-18 08:59:15
| |||
|
Oxfordrick Posts: 2550 Incept: 2007-07-09
san diego
|
Ambac are threatening to leave the reservation. What will the US cavalry do? 2008-01-18 09:07:34
| |||
|
Crossdefaults Posts: 434 Incept: 2007-06-27 
Southern California
|
"If, on the other hand, Ambac is massively under-reserved for eventual claims, then raising additional capital amounts to simply throwing good money after bad." Re: "throwing good money after bad." Gee, you think? Re: "If Ambac is massively under-reserved,"-if I continue to inhale AND exhale. If dogs continue to lick themselves. If the letter A continues to proceed the letter B in the alphabet. . . -Matt R. 2008-01-18 09:22:19
| |||
| Top | Forum Top | Login | Control Panel | Logout |