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Federated National Holding Company Message Board

  • libra_100270 libra_100270 Apr 8, 2010 6:41 PM Flag

    Heres a thought...

    ok. No divy for the next 2 qtrs. Not really much of a big deal unless you are a really big player...

    Does anyone think that this might be the chance that Mgmt. might buy back more stock then before?

    I think that would be a very wise move on their part. Second, I think we will see an increase in our Divy 3 Qtrs from now. If they are really interested in keeping the divy on track, I think this will be the way it should play out. Opinions?


    Respectfully,
    L

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    • Yes, probably one of the worst I have ever owned. If you look at last year they had $59MM in revenue and $75MM in expenses. And there were no major hurricanes in Florida, so it could have been worse. So, pre-tax they are losing $16MM a year and they have $67MM in equity. How long will it take them to burn through all of the equity? They may be building a deferred tax benefit, but with no income they may never be able to use it.

      I can't totally blame them, because the state of Florida may have made it impossible to make money there. I am not sure how the other insurance companies are doing there.

      Please let someone buy the company. No reasonable offers will be refused!

    • At risk of wrath from the message board, I'll answer your question. The two quarters with no dividend were a minimum. The stipulation is two quarters of underwriting profitability. Here is why I went off on the Q4 numbers. There is no way they are going to be profitable in Q1. Q4 proved that they are still going down. They had new volume, but none of it dropped through and expenses went up. I have no idea when/if the dividend will be reinstated. I'm guessing not until Q1 2011. There will NOT be a stock buyback. That was a rouse so the Board didn't have to take the HCII offer. The dividend will come back before the stock buyback.

      Based on the current situation, I'm suspicious the Board isn't liable for breach of fiduciary duty. They had to have had an idea of what the Q4 earnings were going to be on Oct 29 when they rejected the HCII offer (which is still superior) and put out their press release. At a minimum, the Board should have shopped TCHC based on the scenario, which they didn't do. They didn't announce it if they did. The book is valuable, but it's losing value everyday that they continue to operate it. You're also missing the big question. How is TCHC going to pay for Homewise? They haven't said. Because they haven't said, I'm guessing they will try to pay in stock which will dilute your common stock value down even more. Hence, my breech of fiduciary responsibility scenario.

      I'll be honest. I'm stuck. I have too many shares to sell in a reasonable amount of time or without greatly affecting the price. If you're up, you might want to take the profit. If not, we're all better off if we start pushing for a sale of the company.

 
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