Okay, so we got the bounce. Or, at least the start of it; the market is not short-term oversold anymore. The reasons behind the rally are a lot smaller than the run we had today; chalk it up to a previously oversold market.
So where do we go from here? I’m not sure. None of the long term problems that the market faces have changed, but neither has the relatively low yields of investment grade corporate debt.
One stock that lagged today was National Atlantic. After the close they announced that they had appointed Bank of America to look into strategic options. Not sure why they chose BofA; Citigroup brought them public, and kept coverage on them amid their stumbles, not like some. National Atlantic should jump a little tomorrow. (Boing!) Personally, I view the odds of an outright buyout as low, but who can tell here? The discount to book is significant, and I regard the DAC and tax assets as valuable; they should be included in tangible book. At this point also, the reserves are clean; they’ve been scrubbed every which way, and should be regarded as sufficient.
National Atlantic is my largest position, and I expect to realize something over $10 before this is done. Be aware that the stock is illiquid, and that operating results have been uneven over time, to put it mildly.
Full disclosure: long a very illiquid little stock, NAHC