Ambac Sees Biggest Stock Price Reversal Of The Year (ABK)

By Douglas A. McIntyre Updated Apr 13, 9:02PM EDT · Published Apr 13, 3:46PM EDT

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Ambac Financial Group, Inc. (NYSE: ABK), the troubled muni bond insurance and financial guaranty company, was up to $3.39 earlier after opening at $2.95 this morning and after closing at $2.25 on Monday. At about 2 PM, the stock reversed course and moved down 24% to $1.65 with an unofficial close of $4.62 today. How can a stock trade in a range of $3.51 to $1.79, and be up 30% in the morning and down 20% at the close?

Short sellers were probably pushed out of the stock on Monday when Ambac was up over 100%. And Friday the stock closed at $1.10 after closing at $0.64 on Thursday before its earnings report acted as a catapult rather than a mere catalyst on top of regulatory efforts which may split the company up. The company reported an unexpected profit of $558 million in the last quarter compared with a $2.3 billion loss in the same quarter a year ago.

Funds and more sophisticated speculators almost certainly took profits today, leaving retail investors holding the bag. The smart money doubled its investment, maybe even more. Day traders who got in over $3 this morning or those low-priced stock chasers got crushed.

When you see a 100% gain on over 400 million shares followed by a huge gap-up and then a loss for the day on over 700 million shares, you know many felt some severe pain. Getting caught holding the bag in these low-priced exponential momentum gainers is never fun, yet it happens over and over.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.