Wanna make some Money?: Monoline insurers were top performers today!!

I don't normally make many stock recommendations, but I'm fairly confident we're starting to see the signs of a major recovery in the Monoline Insurers (symbols: ABK, MBI, RDN, PMI, MTG and a few others).

As we've been discussing, the evidence of mortgage fraud is front and center on the business and national news media. We've discussed the political ramifications, as politicians are forced to address the issue in order to appease their constituency, most of whom are living in houses that are underwater.

Now.. I'm going to post two links that provide a VERY SOUND fundamental analysis of MBI's position and how it could find itself having it's credit status restored.. It's also important to bear in mind that MBI and ABK are two of the largest issuers of municipal bond insurance. They back the governmental issuances of many local and state debt offerings. If they are unable to provide effective insurance for those municipal debts, it increases the cost of new issuances (or makes them completely untenable). It also increases the cost of Credit Default Swaps, making that debt appear to be less stable.

So it's important for an economic recovery to fully succeed that the financial surety industry recover as well, even if it means at the cost of pummeling the TBTF (Too Big Too Fail) Banks on Wall St.

Here's the first presentation on MBI:

MBI: Why The Bond Insurers May Be The Huge Winners From The Brewing Mortgage-Bond Scandal

Click on the 44 slide presentation towards the bottom of the page.

Also, there was a very negative call on Bank of America today.. Here's the link for that presentation:

Mortgage Repurchase: BAC's hidden liability

Now.. for the purpose of disclosure, I'm long both ABK and RDN. But ABK and MBI are the major players in this realm and have the most upside potential.

ABK crossed over $1/share in Afterhours trading.. It's on the brink of flipping it's weekly Parabolic SAR to an uptrend if it crosses above 1.10 tomorrow. That could trigger a major short squeeze, given that Friday is options expiration and there are 54 million shares short in ABK.

ABK, back in July, 2007, just as the sub-prime crisis was beginning to unfold, was a $95/share stock, so one can just imagine the potential for price appreciation if they can commute many of their liabilities, unlock capital reserves they had to set aside for expected losses, and commence writing new surety business again.

Just last year, in Oct, 2009, the stock went from below $1/share to $3 within just a few weeks on rumours of commutations (as I recall).

I missed that train (and probably a good thing since it plummeted afterward), but I've got my ticket for this ride.. And it's just possible that this ride is going to be for real, and the start of a significant recovery in its share price.

Scrutinizer