I thought we could have some fun with the new year. Below is TCHC's closing price per share on the last trading day of the year over the past five years. Information is all from Yahoo Finance.
12/30/05 – $17.11
12/29/06 – $23.75
12/31/07 – $13.44
12/31/08 – $4.63
12/31/09 – $4.02
12/31/10 - $?
Guess TCHC's closing price on 12/31/10. You can also throw in other predictions.
I'll kick it off. 1) $7.50 because they get a buyout offer based on a discount to book. 2) They decide to take the buyout offer after the Management Option plan is rejected for a second year in a row and they still don't have expenses under control. 3) They repurchased less than 100K shares during Q409.
Worst hurricane season in years. Losses at $1/shr for the year. They are getting low on discretionary capital and keep buying assets with negative returns. It is not the nature of the assets as HCII makes money, it is because they are stupid.
Bumpity bump bump. #3 came true. The operating expense side of #2 is true. We just need the annual meeting date set so we can vote against the incentive plan. #1 here we come. Although we might not get $7.50 now because the erosion to book value has been much worse than I ever expected.
My Part 3 was correct. I purchased more shares during Q4 than they did. Part 2 is soon to be correct. Good luck getting any incentive plan through with the results they've put up. They should have given forward guidance and a detailed strategic vision on where this company is going. I'm not sure I've ever seen a management team as unfriendly to shareholders as this one.
The problem with these guys is they are stupid and the directors are greedy for their fees-- bad combination. With the $.50 loss to be reported for the December Q, BV will decline to $8.75. They will then assume 45,000 new policies right before hurricane season in 2010. They will take a $1/shr hit on losses in 2010 on this awful book of business. Reinsurance costs will again go up and the new policies will have mitigation credits and they will lose another $1 in addition to the normal hurricane season. BV will shrink to $6.75 and the stock will sell at 50% of BV or $3 3/8. HCII will bid $4 and the BOD will turn them down again so they do not lose their fees. Hopeless situation---I am out of this loser.
Give us some more great revelations, Nostradamus. How about two years from now our 1/2 as many shares are worth 1/2 as much! And my measley buck is now worth 75 cents after taxes. Or how about HCII sells out to TCHC.
Given the fact that they want into the markets in which we hold the ability to sell policies, You may be very correct.
This Company is WAY undervalued for the policies and divy they provide for share-holders. .06 divy per quarter P/S equals closer to 10.23 P/S...
If you look at the world largest Company (which offers .10 P/S @ 4x the price), We have a no-brainer here...
I would say $9.50 since they have 19% increase on rates and 45,000 and about 15,000 under last years take-out policies from Citizens.
If these company is going to be taken over I think it is going to take at least $9.50-$12.50
I say this because of the licenses for auto and general liability insurance and licenses to write business in states outside of Florida should be worth something.
A buy-out at $9.30 or less is like giving away capital, licenses, and policies to the acquiring company.
I would agree with you that any share price less than book value would be like giving away money if this was a well-run company. This is not a well-run company. Book value will take a hit in Q4. TCHC already warned that Q4 will be a loss. I'm guessing that is why they didn't crank up the share repurchases because they didn't want to inflate the loss number. I know you're hoping the premium increases and additional policies will flow straight to earnings. I'm not quite as confident.
They'll have to take a discount to book to get this thing is sold. They should only have until summer to get the share price up. August is the one year anniversary from HCII's preliminary acquisition proposal to the BOD. That proposal is still superior to the current TCHC share price.