Using Veritas to Construct the "Per…

29-04-2017 Hits:93347 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:84579 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:84489 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:89049 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:87533 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:87341 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:58504 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:86876 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:86493 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:86837 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:93144 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:90472 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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I haven't written much about MBIA lately, primarily because I had closed my bearish position on them at about $9 per share. This was originally initiated in the $60's last year, and really intensified in the $40's and $20's after a decent amount of research . Well, the CEO who over saw the move into structured product insurance (Jay Brown) has returned. He is the guy who said and I quote, "If you don't like structured products, you don't like MBIA" - ain't that a fact! I feel he has been lax in management oversight, judgment and execution. The letter to the shareholders is proof in the pudding. So,  I decided to add a cowboy traded to the mix, buffered by the profits made from the very profitable short earlier this year and last year.

So, MBIA released results this morning. Anlayst consensus estimates (which never, ever seem close to my estimates) was $-0.19, and MBIA reported a loss of  $13.03 per share (it's share price is only $9 and change per share). This is not all mark to market losses, either, operating losses seemed to be significant. According to the news articles $3.58 billion were derivative mark to market losses, hence the balance of the $13.03 was most likely investment and operating losses. This was a company that was literally the dominant underwriter of municipal bond insurance, with a majority market share. As of the last quarter, it had 2.5% market share - exactly as I anticipated. Remember, S&P and Moody's have affirmed its AAA rating. This is a damn shame. This is also an opportune time to review my CDS and counterparty primer as well. Remember, one of my big shorts, Morgan Stanley, has some of the most significant counterparty exposure to this (ahem) "AAA" company. I noticed the media has stopped covering this systemic risk which will be hard for the Fed to plug.

From Bloomberg:

MBIA Inc., the bond insurer that lost 87 percent of its market value in the past year, posted a net loss of $2.4 billion as the slump in mortgage securities deepened.

The first-quarter net loss was $13.03 a share, compared with a profit of $198.6 million, or $1.46 a share, a year earlier, Armonk, New York-based MBIA said in a regulatory filing today. Unrealized losses from derivatives were $3.58 billion.

The loss was MBIA's third straight and comes less than three months after the bond insurer successfully retained its AAA credit rating. MBIA, Ambac Financial Group Inc. and the rest of the industry have posted record losses after misjudging the value of collateralized debt obligations and securities backed by home- equity loans they guaranteed. MBIA, once a dominant provider of municipal bond insurance, had 2.5 percent of the market in the quarter, according to Thomson Financial data.

``We're not out of the woods yet,'' said Richard Larkin, senior vice president at Herbert J. Sims & Co. in Iselin, New Jersey. ``I'm not sure AAA bond insurers will ever be viewed the same way as in the past.''

MBIA raised $2.6 billion in capital to help convince Moody's Investors Service and Standard & Poor's to preserve its AAA rating. Chief Executive Officer Jay Brown said this week the company won't need to raise more.

``We have adequate equity capital to get through this crisis,'' Brown wrote in a letter to shareholders published May 6.

MBIA fell 21 cents to $9.22 in early New York Stock Exchange composite trading. The stock traded above $70 a year ago. MBIA's book value slumped to $8.70 a share on March 31 from $29.16 at Dec. 31, in part because of new shares sold in the capital raising.

`No Longer' AAA

MBIA estimates it will have $827 million of actual losses from paying claims on nine CDO transactions.

``Earnings pressure will remain for several quarters as writedowns continue,'' Peter Plaut, senior vice president at Imperial Capital, wrote in an e-mail today. ``This is no longer a AAA industry for the players that diversified into volatile financial derivatives.''


MBIA took $3.5 billion of writedowns in the fourth quarter of last year, mainly on CDOs it guaranteed through derivative contracts. Those contracts, backed by the repayment of subprime mortgages, have contributed to $323 billion of losses at banks since the beginning of 2007. Derivatives are financial instruments linked to stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in interest rates or weather.

`Mere Mortals'

``This valuation task is clearly one that stretches the ability of mere mortals,'' Brown said in the letter.

New York-based Ambac, the second-largest bond insurer, reported on April 23 a first quarter net loss of $1.66 billion, wider than analysts estimated, after $3.1 billion of charges related to mortgage securities. New business at Ambac slumped 87 percent after municipalities balked at buying its insurance and sales of CDOs dried up. Ambac shares tumbled 43 percent on the day of the announcement.

The bond insurers faltered after expanding beyond municipal debt into subprime-mortgage securities and CDOs, which package pools of debt into new pieces with varying ratings and risk. As subprime defaults soared to records, MBIA and Ambac were forced to write down their value.


Rising defaults on home-equity loans have also dragged down bond insurers' results. Ambac set aside $1 billion during the first quarter to cover claims on second lien mortgages. Hamilton- Bermuda-based Assured Guaranty Ltd. reserved $59 million, largely for two deals backed by Countrywide Financial Corp. loans.

MBIA had insured bonds backed by home equity lines of credit and closed-end second loans totaling $21 billion at the end of 2007, according to the company's Web site. Almost $9 billion of those securities were originated in 2007. The company said today it had $265 million in additional loss expenses related to home loans.

Billionaire Warren Buffett, who created a bond insurance company to insure municipal securities, told attendees at Berkshire Hathaway Inc.'s annual meeting earlier this month that an insurer forced to borrow at a 14 percent yield doesn't deserve AAA credit ratings. MBIA sold $1 billion of surplus notes with a 14 percent yield to raise capital in January.

Competition from companies with stable AAA credit ratings has eaten into MBIA's municipal bond business.

Financial Security Assurance Holdings Ltd., owned by Dexia SA, insured 65 percent of the $22.2 billion of municipal bonds sold in the first quarter, according to data from Thomson Financial. Assured Guaranty had a 30 percent share.

``It's up to the market,'' Larkin said. ``Either it's going to give MBIA another shot or not.''