I spent a lot of time this weekend listening to all the presentations since the first of the year and reviewing the financial statements. My head is spinning. I've thought for some time that DD past an hour a week is overrated. Now that I've spent hours this weekend doing it, I'm convinced of it! You either grasp the basic idea with ORI or you don't.
There is no sure thing, with ORI nor any other stock. But I don't see any risk that even remotely has a possibility of sinking the company.
There would be a selloff if the MI division goes into bk and the convertible bonds are in default. But if that happens - imo, buy all you can. It will be a temporary event and have no long term impact on the company.
As for the 180 million in debt that the MI/CCI divisions owe the corporate, it's in de facto default now. No interest is being paid now to the corporate division.
The company as a whole is cash flow positive. The toxic MI division is walled off. CCI isn't a big deal imo.
For long-term, patient investors, STRONG BUY.
Can't say I share your optimism, especially with regard to CCI.....
I take it you saw that the Kahn's sold out of almost all their ORI position (which they've had for quite some time) last quarter. They are long-term value investors who I guess see the risks. Or maybe they are just heartless shorts trying to talk down the stock with their sales...maybe Kaiserjohn (aka minute1trader) would like to comment....my guess is kaiser is the one that got hit with the sale and he's trying to claw his way out - check out his posting history.....
CCI probably the biggest economic risk at this point. But the risk in force has been coming down pretty quickly - will be interesting to see what the 3Q number looks like.
I cont. to think name is good value for dividend alone.
Regarding a one time dividend, not going to happen - - they have to guard against possibility of debt acceleration, and there isn't really that much cash at holdco.
I am still trying to understand a couple of things:
1. RFIG losses
Still losing money in addition to reserved losses. As of Q2, GAAP capital was 96.5 (180M debt less 83.4M equity deficit). So presumably, losses will stop when this is exhausted (next quarter or two). Sometime later, the 180M can be written off.
2. RFIG assets
Consolidated assets shows RFIG at 2090M. How much of this has been reserved? In other words, if RFIG fails, what is loss to ORI?
What is the real exposure here? Obviously the lawsuits are large or the legal costs would not have been taken. But how large are the other obligations? I heard something about excess of 85% claims rate is obligation of ORI.
OTOH, other parts of the business could sustain the dividend. And the excess book value provides a buffer. Long-term, yes. Patient, yes. I would add a willingness to suffer volatility as the losses continue to be felt.
When it's clear to everyone the stock will already be 10, if not 12. The mortgage insurance division is walled off and CCI has entered the "end game." This is not an open ended liability. It's in run off, not ongiong. Each claim can only be paid once. Even with the MI losses, the company is cash flow positive.
That makes no sense to me, to short a stock that is cash flow positive and paying a 9% dividend (that is sustainable), but eveidently someo people were. Quantuon started posting here when the stock was 8.06 and yielding 8.8%. So he hasn't been laughing all the way to the bank since he showed up here. And pretty soon the shorts will be on the hook for another .1775 per share as the dividend date is approaching.
I wish we'd go back tothe 9% area so I could get more. THere is risk with any stock, including ORI. But the risk was overstated imo.
I think you can feel reasonably comfortable that "worst-case" book value is btw 10-11 $ share (note i said worst case). But like any financial, the concept of book value is tenuous although contrary to banks, here it is the liabilities not the assets that are the concern. So it all becomes a liquidity issue as we know how slippery the slope can be IF there was a need although much harder here to take a run at it. So as long as you buy into management, I think this is an okay stock (as I've said before) and most likely div is fine. I just don't see any growth coming for some time.
Disclosure....i make a 7 - 10 $ market