Nothing to worry with insiders selling a few shares
I would say in most situations that insiders selling shares is a negative. The CEO and CFO of FNHC sold some shares but not all of the shares that they exercised in there options. The Chairman of the board (Simberg) has not sold a share. Simberg stands to lose a lot if things are going bad. Remember that the CEO and CFO were not buying up shares when Simberg was when the stock was at much lower prices. Looking at the increase in earnings in the first quarter, I foresee earnings of 1.00-1.10 in the second quarter roughly a 3.5-4 million increase from the first quarter.
Ballen, I agree with your comments, and maybe would even have made them a bit stronger. Look, even wealthy people, CEOs, etc. need to raise cash once and a while: a new home, a new car, some vacation expenses, etc. There are probably a dozen good reasons to sell a stock in which you have gained 200-500% over the past 5 years. Many of us who are not wealthy, but try investing smart, will even sell 50% of our holdings when a stock doubles in price. Thus giving us the remaining shares for free, essentially. Our downside is then fully protected. We also sell, from time to time, to rebalance our portfolios, making sure that no one holding is more than 5-7% of our total holdings. As you and s12 mention, one always has to consider how many shares an "insider" continues to hold, in comparison to how many shares he/she just sold. For those insiders who sold some, the percentage is very, very low. Absolutely nothing to worry about. If FNHC is going to earn $3 per share for the year going forward, we are still at a ridiculously low forward PE of just over 8. In this market, where most companies are at PEs of 17, 20, 24....well, a PE of 8 is very, very cheap. And in a growing area, in a growing sector, and, barring a disastrous hurricane season coming up, very high profit margins going forward. That's probably the biggest risk: the unknown upcoming hurricane season. How many seasons have had little or no insurance claims in Florida? Maybe 5 or 6. The odds are now against us, in terms of this coming season. So, there could be some correction on the price here, if some hurricane claims come in. But I would consider that a golden time to buy more shares. -Scott
scott, re: " How many seasons have had little or no insurance claims in Florida? Maybe 5 or 6. The odds are now against us, in terms of this coming season."
This is not meant as a recommendation to buy or sell. But the National Hurricane Center has came out with their hurricane forecast for '14 last week, and they said they expect a lower than normal number of hurricanes forming in the Atlantic this year. Of course last year the forecast a higher than normal, and we got bubkas, so they aint right all the time.
Also, the probability that a hurricane will occur is basically a memoryless function. In other words, if there are ten straight seasons of no hurricanes, the probability of a hurricane in the following season remains unchanged. Just like if you flip a coin and get heads nine straight times, the tenth time you flip it, the odds are still 50% for heads, and 50% for tails.
I agree with ballen2123. The number of shares sold by the CEO is tiny in comparison to how many shares he has. Also, we're in the middle of a huge turnaround. Not too long ago the stock price was in the middle single digits and now it's over $20. It's totally natural to want to sell a few share after such a huge run up. And might I add, nobody has been selling in these past few years. Having said that, I still wonder why the stock made such a huge move in one day yesterday on very heavy volume. Absent of any news, I wouldn't worry about it. But any time something like this happens, you have to wonder a little bit about what's going on.
The minor stock selling by insiders doesn't concern me, but I'm curious about the irregular stock price movement. One theory would be that some entity with a big long term position decided to take their profits here after making X times their money and exit. Who knows? If anyone has any idea, please let us know.
As for earnings, I agree with ballen2123 again. I think $1+ is definitely do-able in Q2.