Syncora Holdings Ltd. (fka SYCRF)

[InvestorPM]

Back near $2 again

It has been interesting to see the significant increase in volume over the last 3 days going into month end. Roughly 1.5 million shares have been traded and a lot of those in mid to large blocks. At an average price of roughly $1.85 that translates into about $2.8 million.

People buying in at these price levels and for that amount of money are not anticipated a mere 10% to 20% return on there investment. There is still considerable risk to Syncora and as such an investor would be looking for a return significantly above those levels.

On the flip side, someone might say that if the upside has so much potential why are people selling. I believe that the people selling at this stage may have bought in the sub $1 range and as such have already made a significant return and just want to crystalize part or all their gains. Some of the larger selling blocks could be some of the institutions that were historically given shares of Syncora in exchange for concessions.

Looking back in history the last time this stock climb to the $2 level was in Feb of 2014 when it shot up from just und $1 to over $2 in a day or say when the JPM settlement was announced. The inter-day high for the stock during the first week of March 2014 was $3.85 with the highest closing price being $2.75 on March 3.

By March 14th the stock had worked its way down to $2 and was range bound between $1.8 and $2.4 until mid June 2015. It was at this point that the last of the mutual funds that still held Syncora started to sell off their north of 3 million shares position. This put strong selling pressure on the stock and without any positive catalysts to attract new buyers to offset the selling pressure the stock was driven all the way down to below $0.30 by the end of 2015. They wanted out and since it was an insignificant holding in their portfolio the prices they were able to get out at did not matter.

Then in Feb of 2016 the re-org was announced and the stock shot up to $1 again.

Since then we have seen the stock move slowly over the last year …and yes, the key word is slowly ….back up to just under the $2 level. This slow relatively steady climb shows me that Syncora has indeed turned the corner and investors are beginning to value the company based on its current fundamentals as well as its future opportunities. Syncora has a lot going for it when you include the potential windfalls from major legal cases, strengthening fundamentals of its core and ancillary businesses as well as massive NOLs.

Just my thoughts of course…..have a good weekend.