My view on ABK, a speculative play

ABK is down 0.63 today on probably biggest volume on its history: 727 million shares, down 28%. ABK\'s common has no value a report dated April 12 (yesterday, after market close) from JPMorgan\'s analyst Andrew Wessel were circulated in Wall Street. That report said nothing new on ABK\'s 4Q report published last Thursday after market close. ABK is essentially in a run off mode. There are so many variables on ABK\'s business: Recent split of ABK\'s insurance contracts (segregated accounts), CDO commutation, Mortgage modification, Housing price variation as economy recovers. I believe no one on the street can have a clear view on the valuation of ABK commons. There are so many insurance contracts in ABK\'s business, each one is customized, even ABK\'s insiders will not know exactly what would eventually turn out to be.

What we know is that ABK issued bonds is trading at about one third of its face value on professional bond market. Book value per share: ($7.95), I believe recent CDO commutes are not reflected on the book value calculation.

ABK is definitely a speculative play at this stage, it hit a low of 0.51 after the news of government taking over of its residential mortgage insurance account. I believe that is a historical low should not be broken in the near future unless new bad news surfaces. Upside is pretty significant considering ABK\'s small market capitalization (low share price) and its large business scale, a little positive change in its business will reflect big on its share price. My ABK positions with a cost of 0.79 is still pretty good considering its risk/reward. I am willing to let the story play out on itself for the next couple of months. I may do some trading if I have spare time to watch market, violent share price movement should provide good opps, just keep a cool head.