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Ambac Financial Group Will Be Better Positioned Once Sale Of Financial Guarantee Business Closes, Analyst Says
AMBCAmbac(AMBC) Benzinga·2024-09-18 14:38

Core Viewpoint - Ambac Financial Group's shares have increased nearly 10% over the past five trading sessions after a decline since the beginning of 2024, with expectations for cash earnings to materialize within one to two years following the sale of its legacy financial guarantee business [1] Group 1: Financial Performance and Projections - The sale of Ambac Financial Group's financial guarantee business to Oaktree Capital Management is expected to close by year-end, resulting in approximately 180millionofdeployablecashafterrepayingthebridgeloan[2]−AnalystHarryFongupgradedtheratingforAmbacFinancialGroupfromNeutraltoBuyandraisedthepricetargetfrom180 million of deployable cash after repaying the bridge loan [2] - Analyst Harry Fong upgraded the rating for Ambac Financial Group from Neutral to Buy and raised the price target from 13 to 15,indicatingapositiveoutlookforthecompany′sstock[1]−Followingthesale,thecompanyplanstoinitiateasharerepurchaseprogramofupto15, indicating a positive outlook for the company's stock [1] - Following the sale, the company plans to initiate a share repurchase program of up to 50 million, which is anticipated to provide upside to the stock [1] Group 2: Strategic Initiatives - The company is expected to repurchase shares at current levels up to about 15pershare,asitrequirescapitalforacquisitionsprimarilyinthedistributionbusiness[2]−Therearepotentialstrategicchangesthatcouldenhanceinvestorenthusiasm,suchasthepossiblesaleofitsunderwritingoperation,whichisnotconsideredcoretoitsstrategy[2]−Therolloutofthenewspecialtyinsurancedistributionbusinesswilltaketime,butthereareotherstrategicinitiativesthatcouldbeimplementedsooner[2]Group3:MarketReaction−Atthetimeofpublication,sharesofAmbacFinancialGrouphadrisenby6.1815 per share, as it requires capital for acquisitions primarily in the distribution business [2] - There are potential strategic changes that could enhance investor enthusiasm, such as the possible sale of its underwriting operation, which is not considered core to its strategy [2] - The rollout of the new specialty insurance distribution business will take time, but there are other strategic initiatives that could be implemented sooner [2] Group 3: Market Reaction - At the time of publication, shares of Ambac Financial Group had risen by 6.18% to 11.86 [3]