I don't own SIGI but I do own their ETD SGZ. I'm trying to find the reason why it is trading at such a deep discount (50%). I also note that SIGI is trading below book value. Is this just confusion relative to the insurance market and AIG situation?
I'll listen to the call but was wondering if anyone here had some insight - Company looks pretty solvent to me and credit rating re-afirmed as investment grade recently. But the markets don't lie, so what gives?
I respond to your post only because I happened to mention SGZ a week or so ago, as a good investment as an alternative to Sigi's common stock. I still hold that view.
It is true that they are selling almost 50% below par. But they are not unique. There are many preferred issues similarly discounted without justification, in my opinion. You can check many Trust Preferred issues (issued by banks primarily) which produce great yields and should also be considered.
Remember, you are getting a great yield and you might enjoy a 100% growth!!
Selected is still a solid company and I can't conceive of them ever defaulting on these capital notes. But if you track Sigi over the past ten years or so, you will find that their results have simply been adequate at best. And they simply reacted to the forces of the industry and took from the industry whatever it gave them. Management was poor and their leader was simply not up to the job. And that's part of the reason why they are probably four or five points below where they should be. They will improve as the market permits them to improve but not because of any management actions which might produce some unusual result to a more favorable bottom line. But I repeat, I like their SGZ note and I own them substantially.
I'm sure the GURU will be teeing off on me but that's O.K. I stopped dialoguing with him some time ago.
I could not agree more. Go to Morningstar, Standard and Poors or any other rating service. Pull their top rated stocks. Go to Quantumonline.com and see if the "A" rated stocks have a preferred or bond or note issue available. Sometimes they are called CORTS or other names. If the issueing company has anything to do with the financial sector you will see the instuments paying 10% to 20% in intrest or dividends and selling at 1/2 par or better. Buy'um and put'um away unless you think the end of the world is coming.