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OneBeacon Insurance Group, Ltd. Message Board

  • snogreen snogreen Feb 1, 2012 3:57 PM Flag

    trades like a deal

    OB is trading like some sort of deal. It's now pushing towards 150% of book. I suppose on a deal WTM couldget 1.5 times book. if they wanted to seel theoir 80% stake. But WTM seems more interested in yeild from OB. But I don't know how long this dividend can hold. Merrill has net income of OB for 2012 and 2013 at $103 million. OB is paying out $80 million in dividends. That means OB has an 80% payout ratio.....that does not leave hardly anything for growth and reinvestment.

    Strange day indeed. But WTM must be very happy to see! Maybe their stake is for sale.

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    • Good. We'll both do well. Just remember my objectives are different with age (sigh).

    • If you recall a couple posts back, I noted eps due grab your cohones. There is a short position on very little float. Some investors, I understand are just now moving their positions from margin to cash accounts further reducing shares for whom ever is short. This is occurring as the chart is looking very good. And if you go back and listen to the "investor day" conference there is more cash unwinding from past insurance book shuffles -- i.e., $100 million as we speak. Merrill? This stock doesn't trade much and no likely investment banking opportunities. So Merrill has a junior,junior analyst on the coverage. 1.5X, 1.75X,or 1X. Who cares; I can't find a comparable pure specialty insurer.

      • 1 Reply to mtwolfguy
      • Then if you believe that, WTM is a FAR better buy. Because OB still is at 140% of book, and WTM owns 80% of OB...and WTM is about $90 <<below book>>. And the large part of WTM's book value is cash on hand, the 80% stake in OB...and the 20% stake in SYA (plus warrants). The large reinsurance business WTM has, as well as the $36 billion under management White Mountain Investment Advisors, is valued at almost nothing. WTM is the cheaper play. And WTM is very aggressive buying back stock. They see it.

        As to Merrill? It is not a junior analyst. It is Jay Cohen. The senior analyst.

        Pay attention to the cash figures of OB. If they are on track for $103 million in net income 2012 and 2013, I don't see how an 80% dividend payout ratio ($80 million) of that $103 million is sustainable. Especially in an almost zero interest rate environment. WTM has bled OB for many years while they reorganized. WTM collected a few special dividends of $1 a share, plus the quarterly at well over 5%.....close to 6% sometimes. At some point OB needs to reinvest in their business and acquire other small specialty insurers to grow......instead of gifting 80% to 90% (with special dividends) to WTM of all their net income.

 
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