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Tower Group International, L.Ş. Message Board

  • donedoodit donedoodit Sep 18, 2013 1:20 PM Flag

    Not Yet Ready for the Fork, but...

    Don't put a fork in this bird yet. It will take a while but it is roasting. The only thing that can save this turkey is a strong upcycle in pricing. Take a look at the Q1 financials -- they stink. Company earns about something like 30 cents a share (depending on where the investment gains are and what the taxes on them are) on an operating basis, yet operating cash flow is negative to the tune of $1.15 per share! They are screwing around with the reinsurance -- take a look at the asset side of the balance sheet.

    Plenty of cash? Not quite. Look at the reserves and then look at the cash. If their reinsurance backing fails to come through they are in real trouble.

    Reserves are 2x shareholders equity, which means that a 10% hit to reserves will lower book value by 20%.

    And what was that deal at the end of Q1 by which they increased the shares outstanding by 32%?

    I'll give 'em three years.

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