Bill Ackman No Longer Short MBIA

Thus ends a stunning chapter in US Finance history

Pershing Square's William Ackman ended his bet against MBIA Inc (NYSE:MBI) after profiting from bankruptcy fears that sent the bond insurer’s stock and bonds lower over the past two years. MBIA jumped 17 percent in New York Stock Exchange composite trading, the biggest increase in more than a month.

Ackman’s hedge fund, closed all its short positions in MBIA’s shares and sold credit-default swap contracts that profited from concerns the company was nearing bankruptcy. Betting against MBIA and Ambac Financial Group Inc.(NYSE:ABK) helped Ackman’s fund, Pershing Square Capital Management, return 22 percent to investors in 2007. The gains followed five years in which Ackman told regulators, rating companies and investors that MBIA didn’t deserve an AAA credit ranking.

Ackman first thought MBIA’s stock and bonds would fall in 2002 when he oversaw Gotham Partners, a New York-based investment firm. He wrote a 62-page report casting doubt on the AAA ratings at MBIA’s insurance unit, and last year seven bond insurers lost top rankings as losses on securities backed by subprime mortgages soared.

Pershing Square, based in New York, also closed credit- default swap contracts on another bond insurer, Financial Security Assurance Inc. (NYSE:FSA), Ackman said.

Please do not see this as positive news for the bond insurers, Ackman just see better opportunities.