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Investors Title Co. Message Board

  • pjv2xyw9dww4b5 pjv2xyw9dww4b5 May 4, 2005 10:42 AM Flag

    true confessions time

    bought 200 sh. ITIC yesterday
    I'm slipping....

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    • Be strong. Use the force. It's still a good long-term value, but it's far from historically cheap.

      ITIC is selling for nearly 100% of its total cash and investments (about $37.60 per share at year end). That's actually pretty high. In 1999, shares changed hands for as little as 50% of cash and investments per share. In 2000, in 2001 and again in 2002 shares sold for as little as 60%.*

      50% to 60% of cash and securities today would be $18.80 to $22.60 per share. If EPS stays at $4, we probably won't see a price per share of $20. But everyone is nervous about housing. Refis, ITIC's most profitable business, are down and probably will continue down as rates rise. If EPS drops to $2, will the price per share stay at $36? Who will want to pay 18x earnings for a title insurer???

      Fair warning.

      *How could shares have so often traded at such a large discount to cash and investments held? Simple. Investors only really own something like 60% to 70% of the cash and investments. The rest has been reserved for policyholders. Title insurance is a great business in good times ... but there's a downside. The company receives only one premium per policy, but can pay out losses years or decades later.

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