Assured Guaranty (AGO) came out with earnings after the close today that were phenomenal. Please keep in mind that operating earnings are far more relevant than net income due to very obscure and illogical accounting rules for the financial guaranty industry. For the year AGO posted operating earnings of $3.26, and less importantly net income of $4.18 per share.
Just as importantly AGO stabilized their credit rating in December of 2011 at AA, so we should see improved underwriting volume in 2012. This is one of the most unique investment opportunities that you are going to find as the company is operating as a monopoly in the municipal bond insurance market. I have a lot of confidence in the management of this company, and I’ll be paying close attention to any statements regarding stock buybacks, which would add considerable value to the stock, at such large discounts to book and adjusted book value.
The stock has nearly double from their 52 week low but we firmly believe that it has a chance to double from these levels. The stock provides a 2.1% dividend yield that is likely to grow, and the options have extremely high implied volatility making it an ideal candidate for our investment methodology. Below is the link to their earnings announcement. Thank you very much!
INVESTING IN THE FINANCIAL MARKETS INVOLVES RISKS. OPTIONS ARE NOT SUITABLE FOR ALL INVESTORS.