Massive Buyback Could Trigger a 45% Gain in Assured Guaranty (NYSE: AGO)

As the U.S. economy spiraled downward in 2008 and 2009, concerns arose that many state and local governments would default on their bonds. And if that happened, such a wave of municipal bankruptcies could have wiped out Assured Guaranty (NYSE: AGO), which provides insurance against such defaults.
Thankfully, we only saw a few select defaults in places such as Harrisburg, Penn., Stockton, Calif., and Jefferson County, Ala. Still, this bond insurer wasn't fully unscathed, as it has paid out $6 billion in claims since the start of the global financial crisis.
Yet, in the past 18 months, the default risk appears to have receded as most state and local governments have shored up their balance sheets. In response, investors in Assured Guaranty have been able to focus on the solid fundamentals underpinning the municipal bond insurance market.   (more)

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