Davis Selected Reveals 5.1% Stake in MBIA

Asset management firm Davis Selected Advisers reported on Wednesday that it holds a 5.1 percent passive stake in MBIA, the world's largest bond insurer.


Shares of the company rose almost 11 percent Wednesday.

The filing comes just two days after Davis agreed to buy $1.2 billion of shares of Merrill Lynch, the largest brokerage in the world. Singapore state fund Temasek agreed to buy up to $5 billion Merrill shares.

Davis reported in a filing with the U.S. Securities and Exchange Commission that it holds 6.4 million shares, but did not reveal details such as when it acquired the shares or the reason it acquired the shares.

Bond insurers are expected to get hit as higher losses in insured mortgage-backed securities and collateralized debt obligations threaten insurers' top ratings and eat into capital.

MBIA's shares have fallen more than 70 percent this year, even accounting for the gain in Wednesday afternoon trading, which brought the company's shares to above $21.

MBIA said last week that it had guaranteed $8.1 billion of the riskiest mortgage securities, imperiling its entire net worth and sending its shares plunging 26 percent.

The company said in a statement that it had already disclosed its exposures in August, but its shares fell to their lowest level in 13 years in their biggest one-day decline ever.