Thanks, Fabulous and good to learn that you are "in the money" on your more recent buys on FNHC. I originally had bought 7-8 yrs ago, when the price was $18/19 only to watch it crater down to $4 per share. But as it came back up I picked up many more shares, around $5/6/7. I later sold my original $18/19 shares when the price hit $32/33... For my continued holdings, my cost basis is now at $5.90. I am very content to keep on holding. But one must withstand crazy ups and downs with the stock price. Thanks for helping to bolster my confidence in FNHC and to keep it as one of my long-term holdings. Though, I wonder, might I sell all my shares if/when the price hits its all time high of around $37? I might. -Scott
Thanks Fabulous...I really respect your opinions, backed up by hard data. But you would have to agree, wouldn't you, that the stock price gyrations on FNHC are a bit disconcerting? PPS can go up or down 5-7% in a day; 10-15% in a couple of weeks, 30% in a couple of months. Requires nerves of steel sometimes. But I do like the management, the high level of trust that FNHC seems to have in Florida, the steady hand they have shown despite price fluctuations. And now the Monarch deal seems to bode well. Thanks. -Scott
scott, I bought around $24 several times, and have as much as I need. I think next quarter will be strong (beat estimates), and the following two quarters should be very very strong and easily beat the estimates out there.
Relative to the other Florida insurers, I dont think all investors understand that FNHC earnings dropped last quarter because their reinsurance expense went up so dramatically.....but that's because their organic growth rate is far far far greater than any of their competitors (HCI, HRTG, UVE, UIHC). Therefore they are the only one that actually had to add a very large chunk of reinsurance which hit their earning dramatically last quarter. Plus, they are more conservative than their competitors, so I believe they pay for more reinsurance then competitors...which means they are a bit less risky when bad weather hits.
But this December quarter, just like last year, their growth rate will add new policies (and revenue) against a reinsurance expense that is now fixed for the next three quarters. More in q1 '15, more in q2 '15.....which will lead to expanding earnings. Of course, while the December quarter seemed very quiet weatherwise, their is always a small risk that they had some insurance hits...or some other one time negatives. The March and June quarters are virtually always quiet with respect to weather. So seems to me, in the short term (looking out eight or so months)....things look really good for FNHC.
And thats not even looking at the obvious positives that Monarch will add to the earning front in just a short while.
FNHC looks to me to be the best value by far relative to its Florida insurer peers.
jbear, I think FNHC discussed Monarch margins in their conf call (with slide presentation) a while back, but off the top of my head I cant remember, other then I believe they said Monarch margins are expected to be equal or slightly better than FNHC's current book of business.
Thanks Fabulous...good post, as usual, with factual reporting. FNHC requires great patience, with so many wild swings in pps during the past few months. Would you be a buyer at $26? -Scott
Great #'s to say the least. What are the profit margins like on the non-standard insurance policies that Monarch will be issuing relative to FNHC's current margins?
FNHC expects their Monarch's joint venture written premiums as follows:
q1 '15 = $650,000
q2 '15 = $1.3 million
q3' 15 = $3.25 million
q4' '15 = $6.5 million
q1 through q4 '16 to average $13 million per quarter or $52 million for full year 2016.
FNHC owns what, I think 42% of Monarch, so Monarch should have a significantly positive effect on FNHC's earnings in less than one year. And, if I recall correctly, FNHC is a 42% owner of the joint venture PLUS they will receive additional management fees from the JV for operating the business....another source of revenue and profit.
I am very impressed at how quickly this venture will directly lead to nice increases in FNHC's bottom line.
Direct from the 8k, "..it is currently anticipated that Monarch will start writing premium during the first or second quarter of 2015. It is currently anticipated that Monarch will write approximately $650,000 in premium during the first quarter of Monarch's operations, approximately $1.3 million in premium during its second quarter of operations, approximately $3.25 million in premium during its third quarter of operations, approximately $6.5 million of premium during its fourth quarter of operations, and approximately $13 million in new quarterly premium starting in its second year of operations."
Bruce Simberg, Chairman of the Board, purchases 5,000 shares at average price of $24.15 on December 1, reported on December 2.
Insider buy/sell alert reported today recent FNHC director buys but no sales during the last couple of months. The last buy of 3000 shares happened recently at $24.78 or so. As stated in my previous post, I feel the consolidation of FNHC share price has reached equilibrium for the short term. IMHO, someone is gradually establishing a position in FNHC, therefore, I can see FNHC fluctuating with an upward bias towards the next quarter. Best regards,
..they should post a solidly stronger fourth quarter, followed by MUCH stronger quarters in and q2 of '15. They still have by far the highest organic growth rate in Florida insurers, and amazingly, thats without any Citizen takeouts in what, four years? Thus, they also have an extremely high quality portfolio of policies.....and high quality means homes that on average are newer and in more favorable locations than those Florida insurers using Citizen takeouts to grow.
Personally, while its moved up a lot recently, I still like UVE second most; thats b/c (as I mentioned here months ago) its is a formerly poorly run company that has successfuly turned itself around. They rely less on takeouts then HCI and UIHC....and way less then the new takeout king HRTG. UVE has culled poor quality policies out of their system over the past two years (thus their flat to negative growth rate) and are finally starting to grow.
Enuf about UVE. FNHC has a very strong management team which has somehow combined insuring conservatism (high reinsurance and no takeouts) and a very high growth rate. We cant look forward, but looking rear view it is pretty obvious the management has made all the right decisions over these past for years.
The positives are we basically know the next three quarters will be very strong. The September quarter was clearly going to be weak because of the enormous increase in reinsurance expense that hit starting July 1. But now, we have a flat reinsurance expense on a forward qtrly basis (it will go up in December, to a lesser extent, but then completely flat in March and June); while FNHC should continue to increase policies each quarter leading to three sequentially better quarters.
So, I think FNHC could make for a nice mid termish (maybe over nine months) trade. And if she heads a bit lower, it seems like an even better opp to add.
Thanks jbear....I am a long-term holder for most of my shares and will only sell them if the pps hits ridiculously high prices, say, in next 2-4 months. But, a year from now, I think pps easily could be $32 and probably will continue to go up from there. But this is a very, very choppy stock. -Scott
Keep in mind FNHC was kind of the odd man out when it just kept going up & up during the middle of the year. It is now more in line with the other similar stocks in the industry (personally I think UIHC is the best comparison). Still a great buy nonetheless.
Sentiment: Strong Buy
As previously noted, the pps of FNHC repeatedly suffers large corrections. I used to say, up to 20% corrections, within just 2-4 weeks. At least that used to be the pattern. In the past 2 months, from a 5-year high of $37, to this week's intra-day low of $24.40, the correction was a massive 34%. Incredible. Looking back I am so glad I sold some at $32, and more at $34, though I missed the peak of $37. But I am patient with this company. I implicitly trust the excellent managers, who have remained calm in the midst of meltdown to $4-6 per share a couple of years ago. They and the company seem to be trusted by insurance brokers thoughout south Florida. Based on corrections in the past, I think this might be a opportunity to pick up some shares.
Read more:- beatpennystocksDOTcom
Federated National Holding Company (FNHC) scaled a 52-week high of $30.57 on the back of positive tidings. With about 0.3 million shares exchanging hands in the last trading session, the stock closed at $30.41, gaining 4.4%.
Read more:- beatpennystocksDOTcom
Sentiment: Strong Sell
Since, all of these ratios are historical, their usefulness are limited. However, because none of these listed company exist as a monopoly, these indicators does offer useful comparisons. I feel paying more attention to PEG Trends offer more insights toward the future, which is the most important consideration for all investors with a long term view. Of course, I do agree with you on the importance of the competence and credibility of the management team. Even though the only stock I own is FNHC among these four companies. At the moment, I feel it is not the strongest among these 4. IMHO, HCI is currently the weakest going forward. I think we'll have to wait quite awhile to see FNHC make a new high again.
A question for you, hua: of the 4 ratios you listed, which for you are the top two ratios, particularly in terms of insurance companies and their kind of business? So, for example, FNHC has the lowest P/E of the four companies, but they are a bit high, in comparison, on their PEG. But maybe the standard deviations on these ratios, comparing the four, are not significant. If not, then, for me, length of management and quality of management tip the balance toward FNHC. To what degree do you weigh that factor in comparing these 4? -Scott