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Today was not a normal trading day. There were over 2.2 million shares traded with the spread between the bid and ask staying between $0.005 and $0.01. There was never even an attempt by the buyer to drive down the bid or for the seller to drive up the ask. So was it Legg Mason selling and just one other institution buying?
As for Snowball ... has anyone ever considered that he/she has no life and that playing on these boards is they way they get their social interaction. I blocked Snowball over 2 years ago and I am still amazed at how much air time he/she is given on this board.
A little dated
Following table shows Institutional ownership in Syncora at various reporting dates.. Data like this is always stale but it looks like no one was selling heavily before June 30
Institutions that own SYCRF
Name Shares Held Change In Shares As of Date
ClearBridge Investments LLC 2,154,961 -39,040 06/30/15
Nicholas Investment Partners LP 106,447 +61,759 03/31/15
Sound Point Capital Management LP 22,879 0 04/30/15
BMO Asset Management Corp. 5,234 +1,052 06/30/15
Neuberger Berman Europe Ltd. 849 0 06/30/15
THanks DennyCrane550
Very detailed analysis and excellent insights. Syncora is certainly worth more than its current share price.
However,as you state, until the big seller takes a break or finishes selling the share price will continue to stay depressed.
Book Value $1 or $2 or soon to be $2.8
One of the hardest things to do when trying to analyze Syncora Holdings is extrapolating between the financial statements of the two insurance subsidiaries and the Holding Company. The Insurance companies us Insurance Statutory Accounting Principles while the holding company uses GAAP.
Take a look at the Detroit swap settlement. It has no real impact on the Policyholder surplus of the insurance companies but it could have a significant impact on the Shareholders Equity of the Holding Company.
According to the Syncora Capital Assurance Q2 Report “the Company issued policies insuring interest rate swaps with respect to the City of Detroit that has an estimated mark to market value of $98 million at June 30, 2015. If these swaps are deemed terminated by the swap counterparties, as the Company contends, the Company’s policy exposure is capped at $27 million at June 30, 2015 ($13.5 million at August 14, 2015). “
So if I am reading this correctly it looks like they have settled on half of the interest rate swaps and that is why the $27 million fell to $13.5 million. If that is true then the mark to market value of the swaps should fall from $98 million to $47.5 million as of Aug 14, 2015.
According to the Syncora Capital Assurance Q2 Report… With respect to the settlement related to the City of Detroit interest rate swaps, this transaction is considered a Type I Subsequent Event that has been recognized in the Company’s reserve estimates at June 30, 2015. As the Company’s previously established reserves were in line with the related settlement amount, this transaction did not have a material effect on the Company’s policyholders’ surplus
So no impact on Insurance Subsidiary because the financials for the insurance subs are prepared under Statutory Accounting Principles and as such they never had to set up the $107 as a liability and therefore the settlement has no impact on policyholders surplus because they had sufficient reserves to cover it.
So what is the Impact on the Holding Company? Remember the Holding Company has to use GAAP reporting and as such they had to set up a liability equal to the mark to market value of the swaps.
According to Syncora Holdings 2014 Annual Report “SCAI issued policies insuring interest rate swaps with respect to the City of Detroit that has an estimated mark to market value of $107 million at December 31, 2014. If these swaps are terminated by the swap counterparties, SCAI's potential exposure is capped at $27 million. “
We know that the liability associated with the swaps dropped from $107 million, as of December 31, 2014 to $98 million, as of June 30, 2015.
We also know that half of the swaps were settled and the outstanding mark to market value of the remaining swaps is now only $47.5 million.
So in totally the market-to-market value of the swap liability has dropped from $107 million to $47.5 million. This roughly $60 million difference would increase shareholders equity by the corresponding amount.
If half the swaps settled I think it is safe to assume that the rest of the swaps will settle. Therefore the remaining $47.5 million liability will come off the books and Shareholders equity will increase by the same amount assuming the reserves against the $47.5 million are sufficient.
So is the book value $57,524/58,838 = $0.98 $57,524 = Equity as of Dec 31,2014
or is it ($57524+$60,000)/58838=$2.00
Or is it soon to be ($57,524+107,000)/58,838=$2.8
No correlation
There is absolutely no correlation between the price of these shares and the intrinsic value of the company. The main reason for that is the lack of transparency at the holding company level and the archaic regulatory accounting and reporting that is employed by their two insurance companies.
Putting a realistic value on Syncora that is quantifiably defendable is virtually impossible. Therefore we are forced to either sit back and relax and watch how this all unfolds or get out at these levels.
Over the last 2 years the company has made significant progress in both increasing its revenue potential and reducing its exposure to poor credits. Yet the stock is now trading at levels that are pre Jefferson County settlement, pre JPM settlement and pre Detroit settlement etc etc. Something just seems very very wrong with that.
Found this settlement with Detroit SWAP counterpaties interesting
From SYNCORA GUARANTEE INC Q2 report
on July 23, 2015, the Company and its subsidiary entered into a settlement agreement with an institutional counterparty, which included, among other things, the settlement of a dispute related to certain interest rate swap policies issued to the City of Detroit and or, subject to regulatory approval, a nine month assignable call option for the Company to purchase or, absent such regulatory approval, to assign to designated assignees the right to purchase 2.5 million shares of Syncora Holdings common shares at an agreed upon out of the money exercise price.
With respect to the settlement related to the City of Detroit interest rate swaps, this transaction is considered a Type I subsequent event but had no effect to the Company’s policyholders’ surplus as the payment for this settlement will be made by Syncora Capital Assurance pursuant to its existing reinsurance agreement with the Company. In addition, other portions of the transaction are considered a Type II subsequent event and will be recorded in the third quarter of 2015. These portions of the transaction are not expected to have a material liquidity or surplus effect to the Company
From SYNCORA CAPITAL ASSURANCE INC Q2 Report
July 23, 2015, the Company and its parent entered into a settlement agreement with an institutional counterparty, which included, among other things, the settlement of a dispute related to certain interest rate swap policies issued to the City of Detroit. With respect to the settlement related to the City of Detroit interest rate swaps, this transaction is considered a Type I Subsequent Event that has been recognized in the Company’s reserve estimates at June 30,
2015.
As the Company’s previously established reserves were in line with the related settlement amount, this
transaction did not have a material effect on the Company’s policyholders’ surplus. In addition, other portions of the transaction are considered a Type II subsequent event and will be recorded in the third quarter of 2015. These portions of the transaction are not expected to have a material liquidity or policyholders’ surplus effect to the
Company.
So does this that Syncora Holding will be buying back $2.5 million share?
ResCap
I might be getting to old for all this but I cannot remember what ever happened to the legal case Syncora and the other monolines had with ResCap,
Can someone just give me the highlights....is it over....?
Thanks
Good Points
I actually have a lot of confidence in the current management team. I have been involved with this stock since 2005. At first through shares I had in XL then bought some Syncora after the seperation from XL.
I cannot think back to a single wrong term that management has made and just keeping this thing alive through the crash and restructuring was amazing.
I believe that they will turn this entire business around....it might not look like the Syncora we know today but long-term holders will be reward.
The more information ...such as ABVPS that management can give the investing public the more players can join in....nothing is worse than trying to analayze and build models on a black box..
Lots of new capital options
Could be another class of pref...could be a convertible pref..
Management has the right to issue shares but is limited and is mainly capped by the authorized capitalization set in the certificate of incorporation of the company.
What we really dont know is who for sure are the major shareholders...besides the financial institituions that were given shares back in 2008. Not sure they wold take kindly to seeing their ownerships interest drastically reduced
I know what you mean
Bet they tried to use the returned prefs in the ABVPS calcuation but my guess is the auditors or legal said no no.
Both MBIA and AGO report ABVPS and usually in one of the first 5 paragraphs of their quarterly earnings release.
New Information
I disagree that this report/call did not contain any significant new information. This is the first time in over 7 years that the company has provided any type of adjusted book value calcualtion.
They are telling the outside world that this is an important way to value Syncora and to compare it other like companies. The calculation of this adjusted book value can only be accurately calculated by the company itself. They also go as far as to tell us that their calculation underestimes the actual adjusted book value because they were not allowed to add back the pref shares returned by BofA.
So the adjusted adjusted book value per share (ABVPS) is roughly $4.21. Now of course the quesiton is what type of discount should it be trading at... Currently it is trading at roughly 35% of ABVPS.
The "third-party" comment has been in every annual report for the last 5 years so not sure it has any special meaning in this one vs the other reports
and adjusted common equity of $234 million
Value of Pref given back by BofA
The Annual report says there are 250,000 pref shares with a liquidation preference value of $246,593.
So $0.986 per pref share
Therefore the 84,583 shares handed back should be worth roughly $83,000... so actualy my first calulcuation of adjusted adjusted book value was wrong...it is only $4.21 sorry
Adjusted Adjusted book value per share of $4.56
The reported adjusted book value per share was $2.67 but in the in note 9 of the footnotes to the calculation of the adjusted book value they tell us that 84,584 of pref shares where given back to Syncora in the first quarter of 2015 and were not added to the adjusted book value.
If you add the value of the pref shares...roughly $106,000 to the adjusted book value of $150,300 the adjusted adjusted BVPS is $4.56. So if my calculations are correct then not a bad report after all.
Thanks
On a Mac and I can copy what i want but when i go to paste it in this widow nothing shows up.
Only big player listed
Legg is the only big player listed in the reports on Thomson One and it has been that way for the last 6 years. If I knew how to copy and paste into this system I could show the ownership tables they report for Syncora
Leggs Mason a big seller during Q1
According to Thomson ONE Leggs Mason...who owned almost 5% of Syncora.... sold of 35% of their position in Syncora during the Q1. Their share ownership fell by 1,189,000 and as of March 31, 2015 they still owned 2,194,000 shares.
You can interprate the data as you see fit but since they have been a big holder since before the 2008 crash they are selling out at a significant loss. Not sure if there is a new manager on the fund who just wants to get out of it all together and will continue selling it down over the next couple of quarters.
Best thing for the rest of us is that they have finished selling but I have a feeling that they will continue to sell off.
ClearBridge, LLC 5.7%
Only one I could find and they have owned this from pre 2008
ClearBridge, LLC 5.70% 3,715,003 31-Jul-2014
What about the side deals that needed to be worked out ?
Syncora asked for the trail to be delayed so they could settle other issue with third-parties. Does the fact that they have filed what they did today mean that the other issues where settled to Syncora's satisfaction? I would assume it does and if so I wonder how much if any it will free up in reserves that had been allocated for those issues
Any thoughts?
Detroit-Syncora deal is contingent on LTGO holders & retirees agreeing to give up any COPs litigation recovery
UBS AG and Bank of America would have to drop their pursuit of a nearly $200 million insurance claim against Syncora
My guess is that one of the institutions that recieved a bunch of shares back in 2008 is moving their shares from one legal entity to another and therefore have to do it at FMV. The shares would have been held in a corporate account and are now being sold to one of their own small cap funds or maybe just over to their brokerage arm.... Either way it could meam more liquidity which is a good thing for everyone.
over 1 million shares just changed hands....
ent this out early today but did not realize i sent it Private vs public
When an insurance company or a bank buys any asset they have to assign a risk factor to it and that is taken into consideration when they are calculating the level of regulatory capital that they have to hold. So the riskier the assets then the higher their regulatory capital levels will be. My guess is that the risk factor assigned to any of Syncora's debt/prefs/surplus notes is relatively high. So my guess is from a regulatory reporting point of view buying their own instruments back does not make sense.
If I am correct on my guess and at this point it is nothing more than a guess it does raise an interesting question. If they are moving/selling shares to a mutual fund or another type of investors based vehicle they must feel the shares are at least safe at the $2.00 level.
Large Trades
I wonder if some of the institutions who were given common shares as part of the restructuring are moving some of there shares from one part of their company to another. Could be moving from their corporate balance sheet to one of their mutual funds.
In order ensure that amounts are deemed to be transferred at fair market value a pre-arranged trade at a price between the bid and ask is a way of doing that.
Just a guess but I have done this myself when moving investments from one mutual fund to another mutual fund that I managed
Detroit will turn out to be a lot of noise...lots of smoke but basically a non-issue. Syncora may have to pay out slightly more than they have already reserved for but if so not much. The entire SWAP issue is going to slowly go away. My guess is the banks will not want to go to court to chase Syncora because they realize...just the banks did in the Jefferson County SWAPs that their hands are not clean.
On one hand I wish Syncora would just cancel the SWAP insurance but this might force the bank to take them to court. There must be a time limit as to how long the banks have to take action to try to collect on the SWAP insurance but I don't know how long that is.
There was a massive 500,000 + single trade the other day by someone who is not playing around. You don't put $1 million into a stock like this to get a 10% or even 25% return.
Would be nice to see the year-end operating sup....but in 2-3 weeks we should be getting the 1st quarter financials.
Any one know when the sup docs should be out
My guess is that has been one of the counterparties that received shares way back in 2009 that has been doing a lot of the selling. The only non-counterparty institution that has a significant position in Syncora is Legg Masson and they where in the stock before the crash so why sell this low after riding it out for over 5 years
Weak selling... the trend of chasing the bid has continued again today. Price at the end of the day will probably be below $2 per share and by the end of Friday it will probably be down be low $1.75.
Its only 11am and the volume is over 260,000...we should have another 500,000 + day in volume.
I would not be selling at these level but then i am sure the sellers have their simple reasons.
very nice summary thank you
Roughly $14 million dollars has been spent by buyers to accumulated Syncora stock since the anouncement of th JPM settlement and the subsequent filing of the Y/E financial statements. That should be telling all of use that at least 1 if not a couple of institutions have been accumulating shares. I for one dont know to many day traders or individual investors that can throw around that kind of money over 8 trading days. They have not been accumulating because they are hopping that one day down the road the company may be allowed to write new business....they already know they will be ..and that it will happen sooner vs later.
Policyholder
Y/E Surplus
2010 $132,553,217
2011 $186,071,015
2012 $510,658,687
2013 $973,332,107
thanks for the video always knew there were lots of games being played but it was interesting to here Cramer be so open about it
Yes that would be nice but what would be nicer would be having the sellers today use some common sense and stop chasing the bid down down down... Over 650,000 share sold and bought today...that would have happen if the price at stayed at $2.7. I have to applaud the buyers today they have totally out played the sellers today....
Why are sellers chasing the bid.........I have to admit that I just shake my head when I see sellers chasing the bid on this stock. You watch the bid/ask for a while and you see that it is tight…maybe 1 to 2 cents off. Then all of a sudden the bid drops 5 cents and the ask follows down 5..then a bunch of shares trade hands and the bid drops another 5 cents and the ask follows.
The sellers need to wait….the buyers will buy at higher prices they are just trying to get your shares a little cheaper. Right now anyone buying shares has calculated the fair value of the stock to be at least $4 and above. This is not a stock you buy into at this stage expecting to buy at $2.6 and sell at $2.8 or $3 you cant get enough volume to make it worth while and that limited upside does not compensate you for the risk your taking.
My guess is everyone who wanted to sell today could have sold every share they wanted at $2.7 a share by the end of the day.
Shorting OTC…..yes you are permitted to short them…but in practice it is almost impossible since no reputable brokerage firm wants or will permit their customers to short either penny stocks or most OTC stocks.
Such stocks are not marginable, therefore firms have problems in borrowing the stock and there are very few firms that will lend these stocks. Even if your brokerage house allowed you to try it is impossible to borrow most penny stocks, so not possible to sell short.
There are two typical sources of stock lending. Neither is available for penny stocks.
1) Institutions normally don't bother with penny stocks. If they do hold any it would not be cost efficient to lend them because the admin costs and compliance costs would be significantly higher than the $ they could earn lending them.
2) Individuals must hold penny stock positions in cash accounts. They are not eligible for margin accounts, which also means not lendable.
Volume .. There is significant volume today. Over 1.1% of total shares outstanding have been traded today...as a quick comparision Wells Fargo and Visa and have only had 0.1% and 0.3% of their outstanding shares trade hands today. In the old days lol when Syncora was trading at $0.3 to $0.5 a share todays volume would have only cost $200,000 to $330,00 roughly....today this volume cost roughy $1.7 million.... some one is backing up the truck and accumulating big time and they have deep pockets.
good day.....two blocks ..one of 50,000 and another of 25,000 both went for over $3. This would be new money from large investors trying to establish and/or augment their position. Seems to be lots os small sellers at these prices (2.70-2.9) but not any big sellers.
Only reason any one would buy buy in large blocks at $3 is because they believe Syncora is worth a min of $4.50 to $6.00 no point taking the risk if they dont expect a 50% to 100% payout
Detroit Swap settlement- The City of Detroit late Monday entered into a proposed settlement with UBS and Bank of America Merrill Lynch to pay off a controversial debt deal called swaps, which helped plunge Detroit into bankruptcy.
The city and the global banks are offering to settle the $293-million debt by paying the banks $85 million.
The latest agreement is $80 million less than the most recent settlement, which was rejected by U.S. Bankruptcy Judge Steven Rhodes in January.
The regulators will base their decision on their (very subjective) overall assessment of Syncora's ability to
1) Contintue paying the claims that they are already on the hook for and any future claims that might arise from the business they already have on the books.
2) Can they get access to additional capital should they need it.
They might allow them to write new business but they could potentially put a limit on how much they can write.
There is no way to determine at this point how the regulator will rule... however I feel that Syncora has substantially improved their financial situation since they were put in the dog house.
The rating agencies have no direct impact on whether or not the insurance regulator lets them out of the dog house.
However, the lower the rating is on Syncora then the fewer companies and cities etc will want to use them to insure their bond issues.
Full statutory reviews are only done once a year and they are based on year-end numbers and that is why it was very critical that all of the reserve adjustments were included in the year-end numbers
As i have said before i will be very interested in seeing how quickly management releases the F/S for the publicly traded holding company SHL
I should have said F/S not press release... below is cut and pasted from page 14.36 of SGI dec 31/13
F/S
JPMorgan Litigation Settlement and Release
On February 24, 2014, the Company settled its RMBS-related claims with JPMorgan and affiliates thereof.
Pursuant to the agreement, the Company released all claims against JPMorgan and certain affiliates arising from certain insured RMBS transactions that were the subject of litigation or dispute and made certain other agreements,for which the Company is to receive a cash payment of $400.0 million.
Upon execution of this settlement, the Company obtained additional information on estimated amounts recoverable from RMBS-related claims from JPMorgan and certain affiliates thereof. This information is considered a Type I –Subsequent Event that should be recognized in the Company’s ultimate reserve estimates for unpaid losses at December 31, 2013. Accordingly, the December 31, 2013 reserves for unpaid losses and loss adjustment expenses recorded in the financial statements reflect the updated assumptions and estimates derived from the terms of this settlement. Furthermore, the $400.0 million cash receipt described above is considered a Type II – Subsequent Event, which is not recognized in the December 31, 2013 financial statements