Introduction
Assured Guaranty (AGO) is one of the most undervalued stocks that I am aware of, mostly due to concerns about company's insured exposure to the bonds of Puerto Rico. The company trades at a roughly $2.75 billion discount to its $6.839 billion book value and at about 46% of its adjusted book value of $9.02 billion. The company has been enormously profitable over the last five years despite dramatically increasing reserves for Puerto Rico.
While estimating ultimate Puerto Rico losses with precision is a Herculean task, one can make general assumptions of