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American National Insurance Co. Message Board

  • readyever123 readyever123 Aug 31, 2010 9:38 PM Flag

    Any insights on what's really going on?

    Just wondering because this stock and NWLI have been both getting pounded. Both of these stocks are controlled by the Moody's.
    I have a theory that maybe the Moody Foundation and Moody Bank are having to pull back some of the funding they infused when the hurricane hit Galveston and the beginning of the financial crisis. Now they are needing extra funds..

    The value of this stock at 78 is great. Hurricane season is over around Oct 31st and it seems like a no brainer to purchase if Anat reaches 65 and NWLI reaches 110.

    Any insight?

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    • fschwedman4:

      Thanks for the comments about RDS-B. I did sell about 25% of my RDS-B yesterday before the Fed announcement and it appears that I left a little money on the table. That is OK. I was worried that the FED announcement might result in a sell off. I actually sold to pay off my margin balance. I have been fully invested in stocks since about the end of 2008 and I have done exceptionally well as Mr. Bernanke and the Fed has flooded the markets with money and credit. As the market goes up, I become less bullish and tend to scale back in my stock investments. This latest move by the Fed has been interpreted by the market as very bullish so I will plan to hold most of my stocks into next year. NWLI has gone up so fast that I am reluctant to buy more. They have an earnings report due shortly and I am hoping that is a good one.

    • Royal Dutch looks pretty good to me, although at a P/E of about 12-13 it is more expensive than Conoco-Phillips (the one I like and own). I would not sell it just because it trades above book value because book value is not that important for industrial companies. RDS-B may be undervaluing their oil assets, but industrial companies like RDS also depreciate their fixed assets at rates much faster than the actual value declines. I'm an engineer at a big industrial company and we generate hundreds of millions of dollars in sales and profits off of machinery that is "on the books" at next to nothing, because although we finished depreciating the original capital expense many years ago, we continue to use the machinery.

      If selling RDS-B would result in a big taxable capital gain, I would keep the shares or maybe just sell any high cost group of them (to minimize the tax). NWLI looks like a pretty good buy if you wanted to reinvest the proceeds, though.

    • fschwedman4:

      It is nice to find someone who thinks like you do investment wise. In my experience with message boards, it is also rare. So I hope we can stay in touch and maybe help each other with regards to investments in the future. I have a pretty big position in ANAT and a smaller position in NWLI so I will be hanging around both boards for some time.

      I am currently thinking about selling some RDS-B and buying more NWLI. Royal Dutch Shell currently sells about $20 above book value, but I have always thought that the oil companies book value is understated because their reserves are stated at historical cost. I have a pretty good gain in RDS-B and I would like to buy more NWLI. Do you have any thoughts about this proposed trade.

    • I own NWLI, and in my opinion it is much cheaper than ANAT. ANAT will earn $4.75/share this year and the shares are at $76, so the P/E ratio is 16. NWLI will earn $21-22/share and the shares are at $145, so the P/E is 6.75. A P/E of 6.75 is a much better value than one of 16.

      It is interesting that Value Line and Barron's both list the NWLI P/E at 10, because they simply tote up the last four quarters of earnings results. But NWLI took a special charge in the 3rd quarter of `09 and declared a small loss. If NWLI has a routine result this 3rd quarter of, say, $5.50/share in earnings (the average of their 1st and 2nd quarter 2010 results), then the toting up their last four quarters of earnings will jump from $14.35/share to $20.17/share, and the P/E ratio listed in Value Line and Barron's will go from 10 to 7. Alot of these "value investors" on Wall Street use simple computer screens for things like P/E ratios to make stock selections. It will be interesting to observe whether something so simple and easily anticipated will move NWLI stock. If it does, it will sort of fly in the face of the "efficient market" theory, because everyone can see this coming if they pay any attention at all to NWLI.

      Any thoughts on this from fellow "Moody investors"?

      • 2 Replies to fschwedman40
      • fschwedman4:

        Well, NWLI has done very well since you posted the previous message. I bought at about $140 on average, so with todays gain I am up about $20. And ANAT is finally making some progress. The hurricane season is about over and from what I know there was minimal property damage. This may give a boost to earnings because of fewer and smaller claims. I am looking for a pretty good earnings report from ANAT.

        I think we Moody groupies are going to do well with NWLI and ANAT in the current bull market.

      • fschwedman4:

        I had some very good luck buying ANAT during the "great recession" and then selling it at about $115. Recently I have been buying it back around $76. However, a poster mentioned NWLI so I took a look at it and bought some based on an analysis similar to the one you presented. I think you are right on target, but I think it is possible that ANAT may earn more than $4.75 this year or next year and I also think it should not sell at such a discount to its $130ish book value. So I think they are both substantially undervalued with an edge to NWLI being more undervalued.

        The market is "efficient" except when it is not, which is most of the time. I have had much better investing results since I began to ignore all the insanity provided by "Wall Street" and the financial media. They don't know much.

    • readyever12:

      Thanks for mentioning NWLI. I already owned some ANAT, so I looked at NWLI and liked too, so I bought some.

      I guess that I am becoming a Moody groupie.

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