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Shorting opportunity in XL

(Update July 11th, 2008)  XL shorting trade worked out well.  That being said the market maker looks to be holding inventory in the low 20’s and may move the stock higher out of this double bottom at least in the short run until more clarity over the future business prospects of XL are more clearly stated in upcoming earnings reports. )

XL is an insurance company that had some of its debt cut to junk on Wednesday by Moodies.            Friday  Jan 18th,   2008    3:30 pm

Last month an article said this would be disastrous for the company when they were put on watch by Fitch as two chairman stepped down.   The company has exposure to homeowners insurance among many other problems areas of the insurance business model.  The company should have a hard time going forward.  The limited time this company has had in the spot light over its exposure to the housing market indicates to me an opportunity to short unexploited.  Company breaking out lower of a consolidation pattern.      The argument against this trade is the company has alot of cash, earnings, and assets to offset the losses.   Earning come out in early February and  I hope will put a big dent in the share price. 

http://www.reuters.com/article/marketsNews/idUKN1627979520080116?rpc=44

  http://biz.yahoo.com/ap/071228/xl_capital_chairman.html?.v=1

entertainment purposes only

January 18, 2008 - Posted by | Stock investing links, ideas, and opinions. | , , , , , , , , , , , ,

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