Is it time to get on the Roller Coaster that is the MBIA Inc. (NYSE:MBI) stock price? The CEO of the firm, Jay Brown, thinks so, and he’s backing the action with his own money.
The MBIA stock price roller coaster
For a value investor MBIA Inc. (NYSE:MBI) is a stock to buy when it’s a value – and sell when its overvalued. Over the past year, purchasing when the price earnings ratio is near a statistical low point and then selling when it reaches a statistical high point, has produced results. This could be the strategy behind Jay Brown’s recent purchase.
After rocketing 39 percent higher on the year, the stock has backed off its torrid pace since March 6, down 23 percent since. Some funds are said to watch the price to book ratio and paid particular attention to the stock in late September to mid October, then again in late 2013 and early 2014. The stock went parabolic at the start of February, reaching a high of just under $15 per share. Since then the stock has backed off to $12.30. Brown purchased 62,165 shares at an average price of $11.71, according to research from BTIG Research.
What’s more interesting about Brown’s compensation is that his compensation is tied to the stock reaching a new peak on the roller coaster: $17.50 and $19 per share. These are the points at which is awarded fests of stock. Looking at the wave momentum on the book to value, assuming the earnings assumptions don’t change dramatically, the range Brown vests could be bench-marked by another value milestone.
Municipal bond division finally emerges to insure additional bonds, but have underwriting standards changed?
BTIG Research notes key fundamentals that also are behind the move. Among them Standard & Poors March 18 upgrade of National Public Finance Guarantee Corporation’s credit rating, which is related to MBIA Inc. (NYSE:MBI). This will allow the municipal bond insurance company to underwrite new policies for the first time since 2008. While this news has had plenty of time to get priced into the stock – March 18 was light-years away in trading terms – its importance might have been underestimated. Not only is it a sign that the division, weighted down by questionable municipal bond holdings where default is a real possibility, might pull through a difficulty. It is a sign the company could go out to insure more municipality bonds.
That could be good, or bad, depending on their underwriting standards.