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Latest Comments185 Comments
Scottish Re Gets Belated Downgrade From Bear Stearns
"Dead cat bounce." But seriously, look at THLD, a similar situation. Dropped from 14 to 3 and change in one day, then climbed into the mid 4s. Worth a trade, these situations are.
Think about it. 2,250,000 shares traded at $3.50 yesterday. Do you think the sellers would like to have those back right now? From 16 to 6 is better than the loss from 16 to 3.50, but the gain from 3.50 to 6 is really nice!!!!!
Disclosure: I saw the sitch and am [deleted] at myself for not using margin to buy.
Yahoo Should Be a Winner For Patient Investors
Fairfax Sues the Hedge Funds
FFH most always has high CR from the U.S. unit, but that unit is lead by Crum & Forster, who specializes in WC and GL, so a high CR is expected in those LOB since they have long development tails and throw off a lot of investment income. [insert – if rates stabilize, the investment income will fall and they'll need to address the high CR!] Crum does some property and really got hammered in Florida because of it, but that's not much of their premium, their bread and butter is WC and GL. They own more equities than typical for a U.S. insurer, but their portfolio is much more conservative IMO simply because they avoid derivatives and mortgage-backed securities, and they actively hedge the stock risk through shorting SPDR. I'd rather see this, then the rat's nest of derivative and mortgage-backed investments at an AIG, etc.
I would think you should check out the potential for reserve deficiencies in the WC book – I don’t have any reason to suspect them, other than WC is an area with a typically high level of this occurring.
Check out ORH and who owns what percentage of them. When you look at a balance-sheet valuation for FFH, you have to find how they've booked ORH and remove it, figure a valuation for ORH independent of FFH, and take that percentage over to the FFH books. If there’s anything to avoid, I would look to see how much “finite reinsurance” is written by ORH and if their investments include a lot of MBS or GSE bonds.
Chanos mentioned FFH’s failure to achieve a 15% ROE. Well, duh. See slide 5 and 6 of server.iii.org/yy_obj_... . The U.S. P&C insurance industry rarely breaks a 10% ROE, why would the Canadian P&C insurance industry be any different?
Both FFH and ORH are relatively opaque about their distribution of risks, geographically and by line. I like to see when an insurer delineates what is written where. I would also be curious to know if ORH sells any reinsurance to FFH, which would be interesting …
I don't like the fact the company resorted to stock issuance for financing several times in the last few years, but it's harder to discern earnings quality for a financial than it is for a manufacturer or service provider. The proxy didn't have anything that I saw looking particularly fishy. Since it's a Canadian company, I can't really monitor the insiders like I can with a U.S. company.
I would think you need to watch the growth in interest payment expense.
I checked the list of reinsurers they use, and I don't see any incestuous relationships there. The reinsurance they purchase is good quality and they use a diversified list. Based on how conservatively they invest, I doubt they are skimping on the purchase of that.
Their premium to surplus ratios are in line with the industry. This is a good measure of survivability. They do display some results of capital adequacy modeling, such as the interest rate sensitivity in their annual report. As of YE 2004, their main companies were rated A- or A by A.M.Best. It would be hard for a company to go from an A to out of business; I've seen it done, but that involved some gross mismanagement at the very top of the organization and it went on for years before the situation became obvious (the mutual company in question was funneling assets to the partially owned stock company to benefit the executives who also owned stock in the stock company- since FFH is a publicly traded parent, this situation isn't applicable).
In addition to ORH, they have majority share in several public companies. This may be a case where FFH is undervalued because you in effect "get" these other companies "free" with your FFH shares - I don't know for sure.
Best of luck!
Symantec: Did Someone Know Something Before The Earnings Release?
Between 1:20 and 1:30 PM Eastern, SYMC traded 1.4 million shares or so and rose 11 cents on a bullish belt hold candle. In the next 20 minutes it traded another 3 million shares and rose another 30 cents. Whoever it was, decided to slip in the order after lunch - possibly a lunch with an insider?
I'm quite certain a lot of nimble daytraders made a bucket-load if they were watching their screens.
Arkansas' Best? It Just May Be
Yahoo Should Be a Winner For Patient Investors
Wallace Weitz's Dell Value Play
Waste of money to buy now. Buy later and save.
The "superinvestors of value" almost always buy too early ... while it's still falling ... we smaller investors should learn from that.
Is the U.S. Going Bankrupt?
Is the U.S. Going Bankrupt?
What to Look for In IPO Investing: Part I
I'm fairly certain you'll find that IPOs are either immediate duds, or they rocket up for another 5-10 trading sessions. After that, I think you'll find the patterns fall apart.
The empirical support is observational and not "scientifically&q... quantified ... yet. Check out OMTR, VG, JCG, GOLF, PGTI, TWLL, HOMB. Seven of seven, and the first seven looked at from this site.
My Growth vs. Value Experiment
Then perhaps entertain the notion that sectors might not conveniently have both "growth" and "value" in them. My (limited) experience with value screening suggests that whole sectors fall into disfavor pretty much simultaneously, making all the stocks in a sector "values" - and vice versa, e.g. there are no "value biotechs."
What to Look for In IPO Investing: Part I
Why 'Insider Selling' Can be Misleading: Factset Shares Fall on Nonsense (FDS)
The resumption of the downslide isn't caused by his selling - his selling is caused by the downslide. You've got negative divergence on the PPO and RSI, the stock has been in distribution since the first of May, and don't forget the stock has almost doubled in the last 52 weeks and is a almost triple in the last 3.5 years - it's just time to take profits.
Per Nick's comment - Chuck can't do much about stock performance. He may be in a position to do something about COMPANY performance, but that's not the same thing. In regards to stock movement, he's along for the ride, just like any retail investor ...
Hewitt Associates is Worth a Second Look (HEW)
What the Botox Boom Means for Allergan (AGN)