Why Wall St. Hates Ambac (ABK)

Ambac (ABK), the bond insurance company is down 19% today to a 52-week low of $30.10. The high for the period is $96.10.

Competing firm MBIA (MBI) is already signalling big trouble. According to Businessweek, "MBIA, the world’s largest bond insurer, with nearly $3 billion in revenues, is at the center of the growing mess. In late October the Armonk (N.Y.) firm announced a $36.6 million loss for the third quarter. MBIA blamed markdowns on CDOs and similar securities, which forced it to cut the value of policies it wrote on those products"

And, The Wall Street Journal points out that "independent bond research analyst Kathleen Shanley of GimmeCredit downgraded both MBIA and Ambac Thursday as "the continuing turmoil in credit markets and the major impairments taken against CDO positions."

These shares may look cheap, but the CDO mess may be far from over. Like the shares of Citigroup (C), the two bond insurance companies probably have not found a bottom.

They may not even be close.

Douglas A. McIntyre