William Ackman, a hedge fund manager and short-seller of MBIA, is submitting data to the Securities and Exchange Commission and insurance regulators in New York State alleging that bond insurers MBIA and Ambac Financial Group are understating their losses.
In his report, Ackman, of Pershing Square Capital, will contend that both bond insurers have said their mark-to-market losses are less than $1.5 billion, but according to his analysis, the losses for each firm will be around $12 billion.
Ackman has come up with this number through an analysis of the vast majority of the CDOs that have been insured by the company. He will claim that his analysis is conservative, meaning that if there is a question about a particular CDO, he doesn’t assume a worst case scenario.
CNBC has confirmed that Ackman has recently met with investor Wilbur Ross to discuss Ross’ examination of Ambac . Ross is interested in buying one of the troubled insurers rather than starting one of his own.
Sources say Ross is hesitant to put more than $1 billion into Ambac, so if Ackman is right, it might end Ross' interest in the bond insurer.
Wilbur Ross has declined to comment.
Ackman is a short seller and has a short position on MBIA . He would like to drive the bond insurer stocks down to zero, where he thinks they belong.Page 1 of 2 | Next Page