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Federated National Holding Company Message Board

  • sage533 sage533 Mar 25, 2010 6:44 PM Flag

    Great quarter!

    I was way off. They did not lose $.50 in the quarter, they lost $.93 or $7.4 million or 10% of book value. Book value shrinks to $8.44 from $9.37. Nice going fellas. They bought all the policies the others did not want. Now they make a dilutive acquisition and effectively buying 50% more policies. Homeowners did not want Homewise because they are losing even more money than TCHC. TCHC increases the volume of premums and losses much more money. Great. Braun is young and inexperienced and will be taught the big lesson. The directors appear completely incompetent to manage your money.

    Now there are real problems. They are going to lose their A rating and then nobody will renew and they will go into runoff while taking all the remaining money for salaries and bonuses. Book value is an illusion. Based on how fast they are losing money, book value will comfortably be $6.50 by this time next year. Even worse Homewise could sink the whole ship. Note they are bragging that they have turned into an acquirer like Homeowners. Homeowners would not touch them today as they would not touch Homewise. These guys are a loose cannon. I suggest you all sell now or risk losing it all. I made money in this pig from $1.50 to $4 but knowing what I do now I would buy back in for $1.50.

    Read this and decide how safe is the dividend.

    Federated National Insurance Company ("Federated National"), a wholly owned subsidiary of the Company, received notice from Demotech, Inc., a rating agency, requiring a capital infusion of $10 million by March 31, 2010 for Federated National to maintain its "A" rating with the agency. We are exploring various options to comply with this requirement.

    By the way where is the 10K? I guess they will be a little late as they try to figure out what the hell they are going to do next. How about some raises and big bonuses for buying all those policies!!

    Did you notice that they recently lengthened their fixed income maturities-- a lot. The 10Q says the yield was 3.7% at 9/30/10 which means they bought 10 year bonds. The timing was just dandy as they bought at the end of Q3 2009 missing 90% of the interest rate move for 2009. Now we are in Q1 2011 and the bond market is going against them. So expect 1Q to show a decrease in investments and, yes , a hit to book value. The worst investors of all reach for yield in low current rate environments. Do they qualify as the worst?

    http://www.sec.gov/Archives/edgar/data/1069996/000105104210000019/0001051042-10-000019-index.htm

    Did you all see Financial and Investment Group dumped there 5.4% or 450,000 shares. They have 300 shares left probably to remind them to never do this again.

    Well that's all for now until the 10K comes out. I am sure we will find some great stuff in there.

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    • Mr. "Einstein" Sage 533:

      Your post is highly suspect. I call you out with regard to your comments. A person of character you would state their bias to the board, that readers could weigh comments with their investment objectives.

      You claim you purchased this "pig" at $1.50 per share. I highly doubt this is factual. The stock only traded below $1.50 on one day, March 6, 2009. The stock never TRADED at or below the $1.50 level except on this one day. Had you purchased at $1.50 you would be this company's biggest fan! I would have to congratulate you on your impeccable timing.

      Let me just state for the board I am a private investor, trying to increase my holdings. I have done quite well purchasing below BV stocks and watching as the "Bad" news turned out not quite as bad as most thought. I am sure this company is not without problems. But certainly the HCII offer was not a fair offer at the time, nor at this time either.

      Best Regards to you with your investing program,

      Kevin

 
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