Third Avenue's Whitman ups stakes in MBIA, AMBAC and GMAC
NEW YORK, Aug 14 (Reuters) - Martin Whitman, co-chief investment officer and portfolio manager of Third Avenue Value Fund, said the firm has increased its equity stake in bond insurance companies MBIA (MBI.N: Quote, Profile, Research) and Ambac Financial Group (ABK.N: Quote, Profile, Research), while adding to existing positions in the senior debt of GMAC.
"Both Ambac and MBIA are distressed securities because there clearly seems to have been a permanent impairment of their businesses as monoline insurers providing AAA wraps to municipalities and financial structured instruments," Whitman said in his recent letter to shareholders.
Both Ambac and MBIA have lost their AAA credit ratings.
But he said it seems likely the companies will generate large amounts of cash and favorable tax attributes, even assuming a reasonable worst-case basis in which claims prove to be two or three times larger than what they have allocated for reserves. (Reporting by Jennifer Ablan; Editing by Grebler)
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