In the News: Bunge (NYSE:BG), Ambac Financial (NYSE:ABK), and Fannie Mae (NYSE:FNM)

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Shares of Bunge (NYSE:BG) have been falling for more than two weeks, but the big option trade yesterday was bullish. The agriculture and food company finished yesterday at $59.22, down 0.94 percent. The stock has essentially fallen every day since breaking above $66 on March 23. Shares are back near the low end of the range for the last year and 20 percent off the 52-week high of $74.04 set in mid-January. Despite the bearish action in the stock, one option trader apparently still likes its upside potential. The average option volume in the name is just 2,000 contracts a day, but one trade bought 9,800 of the January 2012 90 calls for $2.70, according to OptionMonster's real-time systems. This trading was against open interest of just 204 contracts, so it was a new opening position. The call buying is a long-term bet that Bunge's shares will be at a level it hasn't seen since August 2008. It is one way of using options to play an extended recovery without laying out all of the capital need to buy the stock itself. – CNBC

Shares of Ambac Financial (NYSE:ABK) continue their amazing run this morning after last night’s surprise Q4 profit, the shares now up 48 cents, or 75%, at $1.12.  Ambac last night reported a $1.93 profit per share where analysts had been expecting a $3.34 loss per share. A tax gain helped, but so did an improvement in credit derivatives and an 8% rise in net investment income. The press is for the most part oddly quiet on the matter, but the tweets are of a fairly negative sort. – Barrons

A federal commission will examine the role that government-supported mortgage entities played in the financial crisis, with former executives from Fannie Mae (NYSE:FNM) and key regulators set to testify on Friday. Former Fannie President and CEO Daniel Mudd, and former Chief Business Officer Robert Levin, plan to give testimony about their experience at the firm, and how subprime lending and securitization affected the economy and financial markets. James Lockhart, onetime director of the Office of the Federal Housing Enterprise Oversight, and his predecessor Armando Falcon will also testify. In a draft report released on Wednesday, the Financial Crisis Inquiry Commission outlines a broad factual overview of the history of Fannie and its sister firm, Freddie Mac(FRE), and the increasingly enormous role they played in the housing market over the past few decades. In 1995, the two firms had roughly $1 trillion in exposure to outstanding mortgage-backed securities. By the end of September 2008, when they were placed into conservatorship, the figure had more than tripled to nearly $3.75 trillion. They controlled more than 75% of new originations by that point in time.  – More at the TheStreet

 

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