Based on the aggregated intelligence of 160,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, bond insurer Ambac Financial (NYSE: ABK) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Ambac's business and see what CAPS investors are saying about the stock right now.

Ambac facts

Headquarters (Founded)

New York City (1971)

Market Cap

$507.5 million

Industry

Property and casualty insurance

Trailing-12-Month Revenue

$3.5 billion

Management

CEO David Wallis (since October 2008)
CFO David Trick (since January 2010)

Return on Assets (Average, Past 3 Years)

(9.8%)

1-Month Return

126%

Competitors

Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B)
Assured Guaranty (NYSE: AGO)
MBIA (NYSE: MBI)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 37% of the 1,143 members who have rated Ambac believe the stock will underperform the S&P 500 going forward. These bears include wolfhounds and All-Star TSIF, who is ranked in the top 1% of our community.

Just last week, wolfhounds explained why Ambac's recent results feel like a one-time anomaly:

Take away the $470m tax refund, [and Ambac] had an operating loss of $385m. Its asset base continues to deteriorate while it is barely covering interest on debt with cash on hand. It is still most likely to fail.

In a pitch from the same day, TSIF also pointed out holes in the bull case. Here's an excerpt :

Most of the rationale seems to be around two areas (myths).

1. Ambac had a profit this quarter. That isn't quite correct. Ambac had a gain this past quarter on the back of ONE TIME events. ...

2. Ambac peaked at $96 only three years ago. ... Ambac had a net tangible assets of POSITVE $6.1 BILLION. Today its a negative $3 BILLION and dropping. ... NET LOSS of $9 Billion in tangible assets. Why would a company that had a $9 BILLION drop in tangible assets and now has a NEGATIVE $9.8 Dollars per share, be worth $96 per share when it is writing NO new business and can't value what it has?

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