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Federated National Holding Company Message Board

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  • mutinycapital mutinycapital Nov 11, 2010 11:30 PM Flag

    At least they are consistent

    I also thought the turnaround was coming, but then I saw the earnings and listened to the call. I was wrong. I would encourage you to do the same.

    Here's my take. TCHC shrunk their book of business on purpose and are now having a hard time coming out of the downturn. Too much overhead and expense, not enough revenue. In fact, the only remedy they have now is to keep asking for price increases. Not a good long-term strategy. This quarter should have had the full effect of the lower insurance costs and the first price increase. EPS needed to get to breakeven to prove to me that the problems were behind them and they were a viable company. Didn't happen. I'm now at a loss trying to estimate when TCHC might be profitable again. I just can't see it. Is it a year from now or longer? They are conservative, but they are conservative to a fault. They risk 8% of the book value to hurricane risk, but lose 20% of their book value since June '09 by operating it. That doesn't make sense.

    Here's the stat to remember: quarterly losses in 8 out of the last 10 quarters while losing a cumulative $2.72.

    Here's the transcript:
    http://seekingalpha.com/article/236422-21st-century-holding-ceo-discusses-q3-2010-results-earnings-call-transcript?source=qp_transcript

    I've love to hear other people's opinions. Tell me why I'm wrong.

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    • Dead on, except maybe for the conservative to a fault part. The trouble is, every year that goes by without a storm, the responsible companies look dumber and the ones that are gaming the system look smarter.

      For the last few years, the dominant strategy has been to take huge risks and basically bet the company on a good storm year ala UVE and HCII. Those guys look like geniuses. Of course, if the wind had blown hard the guarantee fund would be picking up the pieces.

      It's disgraceful that Crist and the OIR are fighting so hard to keep rates down that they are actually encouraging moral hazard. It's just like we saw with the banks. Privatize the profits, socialize the losses.

      The best thing that could happen to these guys (and the industry as a whole) is a big storm season.

      • 1 Reply to jcc113222
      • I agree with everything being said about this company, but I've been adding shares these past few days. I think the ugly is past us now and only good times are ahead. Yes.. it may take time, but time is all we have. Once all the sellers are gone the stock should start moving back up to a Fair Value of $3.85 a share.

 
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