More About PTF ABK...

Apparently our PTF had some bit of interesting news out today... its CFO resigned to pursue other interests.

Not only is that not a valid excuse, but what kind of euphemism is that?

In case anyone was wondering, I have both ABK shares and an Ambac bond issue, with the majority of my position invested in the bond issue.

Shiny Happy Forex Traders...

Whilst I'm definitely not going to be singing Shiny Happy People any time soon, I do feel a lot better after my weekly massage, even though my portfolio's -0.69% today.

It seems low beta is where the money's been headed today. Basically a lot of low beta stocks on my MarketCaster have seen price increases ranging from 0.04% up to 2.96%, most of them outperforming the minor market decline. I hope there'll still be some low beta + high dividend stocks for me to add to in the New Year. If market conditions change then, I'll have to go with a different strategy at that point. But what?

CPB has been moving quite a lot lately, so hopefully I'll be able to recover my losses on it and close out the position this year in favour of PDO.

On the prince turned frog front, ABK was -4.44% and one of its bond issues (CUSIP 023139AF5) is trading at $0.07 on the dollar on my E*Trade bond trading platform. This is definitely a bond issue I won't be adding to even if ABK does ROTB. I have a feeling something is going on with ABK. It has survived the global financial crisis almost unscathed even though everyone has been saying it's only a matter of time. The fact that it hasn't succumbed to the pressure says a lot about its resiliency. Most of all, it indicates that the market needs ABK as a counterparty. Or at least it needed it up until this point. Was ABK's going-concern statement a secret ultimatum? But what could really be going on with ABK?

OK, Shiny Happy Forex Traders... Happy Thanksgiving in advance.

May no one be hit with any retracements...

More Thoughts On Ambac...

My portfolio was down -0.77% today, but since I was in a better mood, it didn't affect me that much. Yesterday, I was feeling bitter and +1.68% wasn't even good enough.

Anyway, more thoughts on our prince turned frog, ABK!

I've been researching possible reasons to declare a technical default, but so far have a lack of evidence.

If this was based on morals alone, I'd have tons of moral evidence against ABK, including a clearly two-faced approach to doing business:

Ambac Misses Interest Payment On $400 Million Bond Issue (circa 15 August 2009)... this was only a $12.3 million payment on the entire bond issue.

Ambac Financial Posts $2.2 billion Profit

Ambac Issues Going Concern Statement One Week Following $2.2 billion Profit

Ambac Misstates Financials To Meet Minimums

Ambac Financial Misses Regulatory Filing


Not having studied law is a bit of an impediment, but I am quite sure I will no longer invest in subordinated bonds after seeing this article about Bradford & Bingley, a company in the UK that deferred interest payments and got away with no technical default.

I'm not even sure if ABK was one of those financial institutions that received TARP money, but ABK keep mentioning that their financial regulators are prohibiting them from paying dividends to the holding company. So is it better to hold bonds in the holding company or the subsidiary? I'm still figuring this out.

Whilst I'm at it, I would go so far to say that the whole bailout was premeditated. Apparently, Congress is 'teeming with millionaires.' Fair weather friends, indeed!

When I Grow Up...

I want to be a Stop & Reverse Momentum Player. I'd probably be really into GBP/USD and GBP/JPY. Since I'm in one of my moods, I am not going to do a forex trade today. My GBP/USD trade of yesterday failed to restore my faith in my trading.

Right now, I suppose I'm content with an occasional day where my portfolio advances by +1.68%. Now, this is uncanny. Why does my portfolio always seem to be moving in percentages involving an 8? This is a lucky number according to most Chinese. But it's real. My portfolio does end up moving in those percentages, which is what makes it uncanny.

Anyway, it turned out AMD was the second runner-up turned frog turned prince today. It was +10.57% based on news that it is aiming to retire $1 billion in Senior Notes. Good on you, AMD! Perhaps ABK can take a hint... AMD has been reporting loss after loss, quarter after quarter and even a company like this can have the honour to repay its debt. ABK, on the other hand, reports a $2.2 billion profit one week and issues a going-concern statement the next. Maybe it should change its trading symbol to WTF, which would certainly be more apt. I wouldn't be surprised if AMD closes the year with a try for $10. Would I be able to stick with AMD for the long term considering I'm really into PDO at the moment?

I've been doing some more research and found an interesting strategy that hedge funds use to trade junk bonds.

I'm not sure how applicable this strategy is with ABK bonds, but I seem to recall ABK issuing the going-concern statement prior to indicating its failure to file statutory financial statements. So is that a preemptive strike, ABK? At the least have the decency to offer us a tender for these prince turned frog junk bonds of yours!

I Apologise, ABK!

So apparently the Ambac bond issue that I own (CUSIP 023139AF5) has a very special term included. Ambac can apparently defer payment for up to ten (10) years without triggering technical default.

So, I apologise very much, ABK! You're not in technical default. You're simply deferring your payment for up to ten years. Congratulations on the ingenuity.

And once again, another ForexDiva Colossal Failure moment...

The thing that ticks me off most is that there's seemingly nothing to do about it.

Since I've had a few of these bought the cow for less than a gallon of milk situations, I am now going to be much more diva about corporate bonds. The first and most important step is to check the book value and ensure there's a good margin to work with. Scrutinise every last dot on their balance sheet and go through their budget line by line.

Hmmm... that sounds a bit familiar, doesn't it? Oh, yes, that's how you run up the 10 year national deficit to $9 trillion.

Fine, laugh all you want at my trading...

Ambac Suing Everyone In Sight?

Ambac sues Bay Area Toll Authority...

+

$400 million was the original size of the Ambac bond issue I mentioned below (CUSIP 023139AF5). All of it is still outstanding and the interest payments are issued twice a year, which means that Ambac couldn't even make an interest payment of $12.3 million, originally due on 15 August 2009.

The strange bit is no one has mentioned this technical default anywhere else. On the FINRA site, the bond isn't even labelled as trading flat - just a subtle mention of a 0% yield.

Am I sadly misinformed - or does its book value of negative $18.80 speak for itself?

Ooohhh... Santander unveils €16bn bond buy-back!

Santander unveils €16bn bond buy-back...

How I wish ABK would do the same. If they bought their bonds back on the secondary market now at a fraction of the face value, they'd be able to offset a lot of their liabilities and boost up their balance sheet. Or maybe it won't work since they're so short on cash?

ABK: Ouch! One of My Better Trade Ideas Turned Out To Be A Colossal Failure...

ABK was almost +8% today. Is this market even sane anymore? I know I shouldn't be complaining as I've been a major beneficiary of the market rally that's turning out to be a never-ending story thanks to BAC, NYX, and even the beloved C. But when even first-rate junk like ABK and AIG are being bought up (this diva is a proud shareholder of both no less), you really need to start wondering. Is my analysis really so bimbo? Does weighed down with debt and very little cash flow not mean anything anymore? Sadly, I can't even label it a dead cat bounce if I want to maintain any level of dignity.

Then, GBP/JPY does the unexpected and drops 200 points for no apparent reason. Or did I miss the reason? Not that I was in a trade, but still...

Yes, I'm really hurting from the recent Finlay and ABK bond defaults and hence the extra sarcasm.

I've done the unthinkable and raised my limit sell on both ABK and AIG. I know it's self-contradictory, but I've never been above that. If there's a trend party happening, why miss out, right? Don't forget to pull out all the stops...