while he has done very little to nothing for the other part owners of nwli but he cocstintly raied his own salary
so he still is number one in the do nothing for shareholders departrment vs himself
ANAT is also providing shareholders with fair returns via dividends. you get paid to wait. with NWLI the founder wants a low stock price i suspect for tax purposes.
if you are comparing nwli to the spy sure but that's not really a valid comparison. it's massively under-performed relative to insurance peers due to poor capital management (in my view).
Might be also because ANAT has a large P&C business - about 2/3 of premiums. Pretty much all the P&C companies have done better than the life companies and trade at higher valuations. They are seen as being lower risk as most of the insurance they sell is shorter term, so they can adjust their rates faster to reflect new claims conditions, but also the new low rate investment environment.
I think lifeco's are in the sweet spot now though with better valuations plus interest rates starting to move upwards.
I own both ANAT and NWLI, so I have known of ANAT's strong stock price performance. Actually, it has been much better than you have said if you go back farther. I bought a good bit of ANAT in October 0f 2012 at around $65. The market price was way too low then. I think NWLI's stock price is still way too low now and I have been buying more of it.
I think the underperformance is when NWLI is compared to other insurance companies. For instance, here are the approximate 1-year returns for some insurance companies, including NWLI:
NWLI - 38%
MET - 59%
HIG - 64%
PRU - 73%
ANAT - 80%
PFG - 82%
LNC - 105%
So the underperformance is frustrating looking at these results. But the question is...which one of these would an investor buy now?
NWLI is up about 32% YTD, beating the S&P 500. I will take that. It is interesting to compare NWLI to Tower Group, an insurance company that engaged in too fast growth and acquisitions that have totally imploded.
NWLI is still about as cheap as anything out there and I have been adding on dips. NWLI remains a top 5 holding in managed accounts.
Edward J. Roche
President Freedom Mountain Investments
I agree with much of what you wrote. I have asked several times to meet with president and ceo, and was denied that request.
he's going to work at NWLI as long as he wants. it's his company. he doesn't care about fudicuriary responsibility or shareholders.
have you even ever been able to speak with the president or the ceo?
the company isn't responsible to increase the stock price and it's clear that Mr. Moody doesn't view that as his job (we disagree but that's okay). He does however, talk about increasing book value. that's important we agree but he screwed it up by writing more 6% ROE policies when he could have increased book value much better by repurchasing shares significantly below book which would be a higher ROE.
they talk about not repurchasing shares to be conservative but where they get finance 101 wrong is that growing assets by putting on low margin business is the exact same risk profile as repurchasing share but just a worse return (significantly). This is not managing the company well. They could have bought back 50mm worth of stock from third avenue and increased book value.
from our DD we believe people on the board and at the company agree with this but are too afraid to speak out to the founder.
we own the stock. we think Mr. Moody and the management team have many positives obviously. But to say this has been well run 100% when a golden opportunity was there is just incorrect.
a few years after he dies i think the company will change. i don't think the market has it wrong. they are assuming he lives for a long time and the son might continue the same capital allocation strategies.
the book value could go to 500 in 3 years and the stock remains at 200. there is no way for outsiders to get capital out or get a return. the insiders obviously don't need the money and can just pay themselves whatever they need.
even berkshire is willing to buy back shares.
Let me rephrase to what I should have written:
I hope Mr. Moody lives past 100, and works as the leader of NWLI for as long as management, employees, fiduciaries and shareholders want him there.
Same old discussion...why? Why is this a public company when it is run as if it were private? Why pay an almost non-existent dividend? If the goal is to increase book value - why not buy back shares at less than 1/2 of book value? Why not engage, instead of ignoring, the investment community?
It is no wonder that some might want Mr. Moody to magically disappear when all of these things are being done intentionally.
To me, it is very clear where the responsibility for these thing lie.
I agree with your statement about Mr. Moody. While I wish NWLI had bought its stock back around $140, I think they have managed the company very well. The management is not responsible to see that the stock trades at a high price. If the market doesn't appreciate the company it is probably the fault of the investors. I have put my money where my mouth is and I bought a good bit more NWLI today. Sooner or later the market will come to its senses.
Argggh, Yahoo.... What I also wrote was that the reasoning you give I have only heard from you. I will go on record stating that I hope Mr. Moody lives past 100, and works as the leader of NWLI for as long as management and employees want him there.
while we are all excited by the increase since 150 the under-performance is pretty remarkable. it's very clear to me that management does not view stock performance as a measure of success. It's also clear to me that they don't view book value growth as a measure of success either.
we still like the company and the conservative nature but it's been a pretty subpar investment. to view it any other way.
we laugh at 3rd avenue selling but if they flipped this into any other insurer they made a great trade.
it's also sad that investors are hoping for the ceo/founder to die as a potential catalyst. especially for one that has done a pretty good job in several key aspects of his job. frankly, if he had bought back shares in 2012 and early 2013 he would be considered a top CEO given the book value increase.