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Fidelity National Financial, Inc. Message Board

  • ThePessimist ThePessimist May 17, 2005 10:18 AM Flag

    Thoughts on spinoff

    I'm a long, so I really want to be excited about this announcement. Unfortunately, I can't help thinking that this is backwards. I'd appreciate if someone would contradict my thoughts to cheer me up.

    Taking FNIS public would have provided a clear valuation for the high-growth part of the business. That would have made it clear that FNF's remaining stake was worth a lot, boosting FNF's market cap. After all, in that scenario no one would have valued FNF for less than the market value of its FNIS stock.

    Instead it takes its title insurance (THC) public. Well, why would THC get any better P/E ratio than FNF? And since FNF retains 82.5% ownership of THC, it'll still have to consolidate THC onto its financial statements. So now we have two publicly traded entities that both get lousy title-company P/E ratios? How does this create shareholder value?

    Add in the extra $750M in debt they're going to stick THC with prior to the spinoff, and THC doesn't look like it's going to be a very exciting stock.

    There are a few good points in this. They are effectively raising the dividend by 17.5% for existing shareholders since THC will pay its own dividend (although that dividend is largely a regular transfer of money from THC to FNF). Also, perhaps this will make it easier for Wall Street to do "sum of the parts" calculations for FNF.

    But all in all, it seems like the whole scheme creates more value for FNF executives (a new CEO position to fill, new options to issue, new board to populate) than for shareholders. I'm very disappointed.

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    • Imposter?!? Ya think?

      Took a page from ma r ntitle and just pimping fislong (pure idiot). Put fislong in a bucket with Red Barcheta and Kngaz and coolimabean, etc etc and you still have a bucket of crap.

      Um as far as your nuclear option of the Yahoo t's and c's?.......BWaaaaaaaaaaaaaaaaaaaaaa ha ha ha ha ha ha ha.

    • You poor little fire starter!

    • Well my dad makes more money than yours and I will talk until I am done. Also swearing is a great way to vent and is protected in the first amendment....asshole.

    • THE IGNORANT ARE EVER PRONE TO MOCK THAT WHICH THEY CANNOT COMPREHEND. "Steak and wine" time, my friend. See you tomorrow. Well, that is if you're really lucky. Later.

    • You are 1 CORNY mofo.

    • I really hate to have to tell you this but THERE IS NO ESCROW/TITLE COMPANY EQUAL TO THE SIZE OF FNF - FOOL!! - NOT EVEN CLOSE. Oh well, at least now we know why FNF didn't want to hire your wife. Later.

    • You can't spell moron correctly. I own 8,000 shares and have followed this stock for five years. I am also a certified industrial/commmercial real estate appraiser with a JD and MPA and my wife is the senior software consultant for 1,800 escrow/title a company equal in size to FNF (they also offered her the job).

      We are very knowledgeable concerning FNF's activities; however, we dislike the recent poor quality verbal attacks reminiscent of LEXR, RFMD, STSI, LVLT, etc. yahoo message board chatter.

      ThePessimist is asking excellent questions. I also feel the the directors of FNF know what they are doing. I hope they don't. falter although it wouldn't be the first time a hugely successful company took the wrong path. I think the chance for accelerated equity value to a 15 P/E for FNF will occur with this latest transaction.

      I strongly recommend ignoring the messages which are written in poor taste by illiterates who also swear to get their point across.

    • Thanks for the advice, but I am interested in using it as a marketing list. I sell data to those types. :)

    • wsv -

      I sure hope you're right and I'm wrong. But I'm still a pessimist.

      Your apartment REITs own appreciating assets. So in addition to the dividend yield, there's the question of the value of the underlying assets. If an apartment REIT gets too cheap, someone will buy it and sell off the apartments. So the price can go up even if the yield isn't compelling.

      By your logic FRO should be yielding 4% instead of 34%. After all, FRO's dividend is qualified. But like THC, FRO is in a cyclical business with unpredictable earnings.

      We'll know in a few months. Again, I hope you're right! I don't mind being proven wrong, especially when it means I'm richer for it. :-)

    • Pess, you've got to understand who will be the market for this stock. As the baby boomer ages and wonders about their SS they are buying ANYTHING with yield in it these days and the qualified nature of the dividend is very important.

      If you really believe that something like THC will hang out there with an 8% qualified yield then I think you are out of touch with what has happened in the investment world of the income seeker. Personally, I have been astounded how the pendulum has swung. Examples: a couple of years ago I was buying apartment reits @ about 7x c/f; now they're at 13-14x and having to give concessions to rent. Oil trusts that were yielding 14% are now below 10% (and volatile).

      Ain't no way THC will yield 8% in anyuthing like this environment. We'll shall see, but trust the 'vet.


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