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White Mountains Insurance Group, Ltd. Message Board

  • snogreen snogreen Apr 27, 2012 9:54 PM Flag

    It makes no sense.

    I cannot figure out what is going on in WTM. So I sold today. I had a very nice gain. If you believe that "book" is $565, then at around $531 we trade at close to 95% of book already and that is NO bargain to trade on. Fully valued. After all, Warren Buffett figured similar, and he sold 89,000 WTM at $500. I got between $527 and $529.

    I would LOVE if someone could explain to me. WTM mgmt stated this (quote) in the release:

    <<We repurchased approximately 974,000 of our common shares at good prices, adding about $7 to adjusted book value per share in the quarter.>>

    Help me! There are 6.6 million shares outstanding now (as of March 31). Mgmt stated that the share buybacks addd $7 per share in book value. If there are 6.6 million shares outstanding and the share re-purchases ADDED $7 per share book.......6.6 million times $7 added in book value is $46.2 million value added.

    BUT???? WTM PAID $484,000,000.00 to buy back 974,000 shares???? So it seems to me, as a << <<< dummy >> is it possible WTM spent $484 MILLION to buy back 974,000 shares......but on a PER SHARE basis, the book value <<< only rose $7 per share >>>....and multiply by 6.6 million shares out....I get a $46 million increase in sharehiolder equity per share value. If I subtract $46 million value per share Book created..... from the $484 million they SPENT buying these shares.....I would like to know where $438,000,000.00 evaporated into thin air???

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    • What do you know about value?

      • 1 Reply to deepvalue2003
      • uhhhh, if WTM book "value" is $565 and it is now trading at $531......then WTM is no longer selling at a deep discount to "value". It's approaching 95% of book now. Which is fair value. Not undervalued.

        All I'm doing is asking a simple question, and I don't understand it. WTM stated that the buy back of 974,000 shatres added $7 per share in increased book value. There are 6.6 million shares outstanding. If the buyback added $7 in increased book value per share and I multiply that times 6.6 million shares outstanding.......that means in dollar amount the buyback added about $49 million to shareholders via an increased book value. But the problem is to get that $49 million increase, WTM paid $484,000,000 to buy back the shares. That seems like a pretty lousy deal for shareholders. They state that they paid $484 million - to get $49 million increase of book.

        I am NOT saying WTM mgmt is bad of crooks. Or to short it. They are pretty good. I just want an explanation why the 974,000 share buyback add only $7 per share in book (of $49 million), when it cost $484 million to BUY BACK thiose shares.

        But anyway I slice it....if book is$565 now in WTM, it isn't cheap, relatively...thus no longer deep value for me. So I let it go when up so strongly Friday.

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