Maybe they're pissing good money after bad, but Warburg Pincus is injecting $1 billion of capital into MBIA. That kind of news has to give activist investor Bill Ackman at least a bit of indigestion after his very public bet that the company would implode and that he'd make a bundle for charity.
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MBIA's chief cheerleading short seller Bill Ackman of Pershing Square Capital had a great day today thanks to nasty words out of Moody's. It was only last week at the Value Investing Congress presentations that the activist investor publicly proclaimed MBIA a major short and implosion candidate -- he said that his cut of any profits would go to charity. Today's news brought him closer to making his charities a lot more flush. MBIA closed down $5.21 at $27.42. OUCH:
MBIA Inc. fell the most in more than 20 years in New York trading after Moody's Investors Service said the biggest bond insurer is ``somewhat likely'' to face a shortage of capital that threatens its AAA credit rating.
A review of MBIA and six other AAA rated guarantors will be completed within two weeks, Moody's said in a statement today. Moody's revised its assessment from last month that MBIA was unlikely to need more capital after additional scrutiny of the Armonk, New York-based bond insurer's mortgage-backed securities portfolio.
``The guarantor is at greater risk of exhibiting a capital shortfall than previously communicated,'' New York-based Moody's said. ``We now consider this somewhat likely.''
Bring on the ring girls! In what's now become a hugely public grudge fight, Pershing Square's activist hedge fund manager Bill Ackman has upped the ante against the bond insurers, which he's been shorting since 2002. Today at the Value Investing Congress he made the challenge that bond insurers MBIA and Ambac Financial would implode as soon as next year and if they do, he'll donate the hundreds of millions in fees that he knows he'll reap to charity.
Ackman said he personally stands to gain about $500 million if MBIA's holding company failed and that amount would be donated to charity. The fund itself stands to make ``multiple billions of dollars'' if the holding companies of MBIA and Ambac were to fail, he said.
``The hedge fund business is profitable. I've made more than I need,'' Ackman said. ``I also think it's the right thing to do.''
And now he gets to play in next month's World Series of Poker in Las Vegas:
Peter Dougherty, 33, an accountant at Chatham, New Jersey- based hedge-fund firm Appaloosa Management LP, took first prize in the No Limit Texas Hold 'Em competition Tuesday at the W Hotel in Midtown. The event, which lasted until almost 1 a.m. yesterday, was the Big Deal tournament benefiting Washington, D.C.-based Hillel: The Foundation for Jewish Campus Life.
Dougherty won a trip to next month's World Series of Poker in Las Vegas, where Einhorn also will compete after paying his own way. Einhorn, 38, founder of Greenlight Capital LLC, placed 18th among more than 8,700 contestants last year. He and Ackman, 41, founder of Pershing Square Capital Management LP, didn't make the top 10 at the Big Deal, and rankings for all 180 players weren't tabulated.
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According to the New York Post, activist investor Bill Ackman of Pershing Square is set to rattle his saber at a single yet undisclosed $30 to $40 billion brand name American company. He's raised $2 billion in a new single purpose fund that closed last Friday. One potential investor mentioned Starwood, Marriott, Anheuser-Busch and Kraft as potential targets.
