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OneBeacon Insurance Group, Ltd. Message Board

  • snogreen snogreen Mar 31, 2011 9:20 PM Flag

    Shortie don't get dividends

    hey. I got my divi. This sucker is a wild little beast. Built up what I want between $12.95 and some up to $13.50 (pre dividend). A lot more around $13. Overall about a total $13.15-$13.25 basis. And that is BEFORE the $0.21 dividend I got on much. I'm in the black. the shorties here don't have very good marks lately..with the dividend they paid out. But OB hasn't been a great performer beforehand, so maybe they have a solid gain over year or so.. Still? It's a stupid short from here on. OB sells at about 10 x earnings.....has a solid 6.3% dividend.....OB sells a dime or two above book value....OB exited most of the personal/life and PC business that had huge profit swings...OB now totally focused on specialty lines of business. These lines will <<not>> be as fast growing, nor as profitable. But they will be steady and somewhat growing...with FAR less swings in disaster type payouts... that swell the combined ratios well above 100.. If OB can grow the specialty lines... just somewhat..and keep combined ratios in 80's or low 90's....this is a money maker.

    Further???? OB is about 76% owned by WTM. I will NOT surprise me to see WTM try an MONITIZE that investment witin the next two years:

    A. because OB is now in atractive specialty lines..good combined ratios..10x earnings..and sells just over breakup value.

    B. WTM buys and sells companies. they have 2011 and 2012 to use the 15% LT capital gains rate if they sell OB. After 2012 cap gains rates will rise....perhaps a lot. IMO? WTM is cleaning up OB for a sell out eventually.

    So? I expect WTM will suck out the dividends in meantime....clean up OB....and sell it.

    Any simpleton can back out the cash flow that WTM takes out in over the top dividends..against a "pro forma" look at what OB will make if they don't pay a 6.3% dividend........$$$$$$$$$$. OB gets knowked by shorts because WTM takes too much in divi's.

    I ain't saying OB will zoom up anytime soon. But if my basis is $13.15 - $13.25 (pre div) ....I'll take those $0.21 dividends every quarter... and still own OB at about book value and only 10x earnings. If you can take the wide swings in OB? It's better than any short term cash rates you can earn. And downside is limited. And maybe one day WTM sells OB. Probably worth 1.5x book....which is just under $20.00 then.

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