And it’s not just the fact of MBIA’s triple-A rating that drives Mr. Ackman batty; it’s its transcendent importance to the company’s business. As Gary. Following New York and U.S. probes of his trading and reports, Ackman persisted in challenging MBIA’s AAA credit rating for more than five. That AAA rating being essential to MBIA staying afloat as a bond insurer. Later on Thursday, Bill Ackman, of Pershing Square – the massively.
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His law firm charged him for copyingpages of financial statements and other documents,of them about MBIA, to comply with a subpoena. Following New York and U. Ackman may soon be proved right.
Ackman’s Letter to Moody’s: A Must Read –
The independent research firm Aaaa Inc. Ackman had warned that MBIA was magnifying its risks by backing instruments such as those based on loans to the least creditworthy homebuyers. People are obsessive about stupid things. They are persistent about important things. In the MBIA documents, Ackman says he saw that the insurer was guaranteeing untested asset-backed securities.
Ackman’s Letter to Moody’s: A Must Read
He also found a reinsurance transaction that allowed the company to downplay a loss. Ackman peppered rating companies and regulators with letters, e-mails and presentations criticizing MBIA’s credit rating.
He says his dad called off the wager the morning of the test for fear he would lose the bet, though Ackman ended up scoring wrong on one answer.
He says he plans to give his personal gains on the bond insurers to Pershing Square’s charitable foundation. He posted a list of the securities the two companies guaranteed on the Internet, along with a model supplied by an unnamed investment bank, so investors could do their own forecasts of what the insurers might lose. Inas the New York attorney general’s probe was under way, Ackman fired off a memo to MBIA posing questions he says the company never answered.
Chuck Chaplin, MBIA’s chief financial officer, says in an interview that Ackman’s criticism reflects misperceptions of the bond insurer’s business. He disputes Ackman’s estimates of MBIA’s losses and says the trader is benefiting more from lucky timing than smart analysis.
Ackman is a slick salesman who doesn’t know much about insurance,” Whitman said. Whitman’s firm owned more than 10 percent of MBIA’s stock, he said in the interview. Ackman earned undergraduate and business degrees from Harvard.
MBIA – Wikipedia
Straight out of business school, Ackman started his first aa fund, Gotham Partners, with fellow student David Berkowitz. In the mids, Gotham tried to buy Rockefeller Center. During the talks, Ackman, then 28, says he got a call from Donald Trump.
The two never agreed to work together.
Gotham made a profit selling a stake in the property to Goldman, Ackman says. Trump didn’t respond to a request for aclman. He disclosed taking a short position in MBIA, in which an investor sells borrowed stock, expecting to repurchase it later at a lower price adkman return the shares to the owner.
Ackman also bought credit-default swaps, financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt.
The swaps would rise in value if doubts about MBIA grew. Ackman learned in January from a Wall Street Journal reporter that Spitzer was investigating whether Gotham had engaged in manipulative trading on MBIA and other companies and that the newspaper would publish an article the next day.
The SEC later started its own probe. Spitzer, now the New York governor, didn’t respond to a request for comment.
The transaction covered MBIA for losses related to the bankruptcy of a Pennsylvania hospital group. Ackman says he recently received notification that the SEC had ended its investigation of him without any finding of wrongdoing. The letter arrived only after he wrote to the SEC chairman and the agency’s four commissioners demanding it.