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Federated National Holding Company Message Board

  • guppy_in_a_shark_tank guppy_in_a_shark_tank Oct 13, 2009 2:45 PM Flag

    TCHC will tank once mgmt rejects the offer

    TCHC will tank once mgmt rejects the offer

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    • You're missing one thing. The BOD has a fiduciary responsibility to review all viable offers. This is a viable offer. This should force the BOD to evaluate strategic alternatives. If the BOD arbitrarily rejects the offer without looking at all the options available, they will be sued. HCII put TCHC in play.

    • I disagree. If management rejects then it is a sign that the earnings will give reason for a larger counter. Take a look at the timing. TCHC regularly releases earnings a week after the drop dead date that was set for this deal. If they reject then it means they have a basis to say we are better than the offer.

      I feel the offer is light simply because they are giving ~$40M in cash for access to what was previously reported of $63M. Cash is not speculative in anyway so for that fact you need to look at the deal like they are giving cash for cash. Null value achieved or given. Now we need to look at the company (less conveyed cash) and ask is it worth $4.30 per share. If earnings and excess assets over liabilities support a position of greater than $4.30 per share then I say hell yeah reject the offer. As of the last reported period, if you subtract the cash offer from the balance sheet then there is still $4 per share in book value.

      That said if the companies book value remains stable for the next reported period then as a shareholder would you value the stability of the dividend and the possibility of earnings growth at roughly 30 cents?

      They have a dividend of 6 cents per quarter and 8 cents of earnings a quarter. I would say that the offer is significantly less than value. Unless you think this company will see a significant decline before the next 3 quarters then I can't see how you don't agree.

      • 2 Replies to matthewaedwards
      • HCII is not offering $40MM cash - the offer is $8MM cash, the rest in overvalued HCII stock.

        HCII does not disclose its reinsurance agreements, although they do mention the existence of a captive reinsurer. Captives can get you into a lot of trouble if they are undercapitalized. I believe that HCII's unbelievable ROE (a significant red flag) is at least partially due to their poor quality reinsurance. Soon we may see the earnings of HCII and TCHC change places. If there is a major hurricane, HCII may be in real trouble. They probably dodged a bullet again this year.

        JMHO

      • there's still no tellin what other garbage is buried in TCHC's balance sheet and ready to blow up in our faces, management has done a poor job managing TCHC's investments unlike their peers such as HCII and UVE

        we'll see, i wont vote my HCII shares for this merger unless I know that TCHC management will be shown the door

 
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