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Old Republic International Corporation Message Board

  • illtradethis illtradethis Dec 24, 2005 9:29 AM Flag


    Sorry for the delay, but here are my thoughts, take what you will from them as they are only my own feelings mean to correlate to my investment style.

    The company seems to be trading at about a 25% or so discount to IV based on a 5 yr average of owner earnings of about 323.6MM with perpetual growth of about 4% - 5%. I consider that conservative as CF has compounded at about 6.36% for the last 10 yrs and about 7.8% for the last 5 yrs and net income compounding at 7.4% and 7.86% respectively.

    Returns on retained earnings over the past 10 yrs appear at first glance to be a little sub par at about 8.25%. However, the company is extremely conservative in its investments and has a very healthy payout ratio. BV CAGR for the past 10 yrs is also low compared to what I look for in companies @ 8.87%, however include in that the pay out of dividends and you have a very healthy performer. ROE is nice. Debt obviously terrific.

    I find management to be very competent in their line of work although extremely conservative with their holdings. A Buffet in management could really enhance returns.

    Overall, returns (divs included) are very satisfactory and I have taken a starting position. I will sell lower strike puts in conjunction with my current position to lower my basis and or accumulate more at lower prices.

    Anyway, thanks again for mentioning. I feel I'll be very happy over the next few decades. In my preliminary research I came across another company that caught my eye. ABK. Take a look, I haven't yet decided myself if it is worth anything, they have much higher return ratios than ORI but their payout ratio varies from 7 to 12% so they are required to have better return ratios. Some quick ones...15.89% 10 yr cagr retained earnings, 16.4% 10 yr cagr cf, 15.76% 10 cagr net inc., 13.2% cagr 10 yr BV.....Management style differs considerably from ORI and they are in different lines of insurance. They do use derivatives, etc. anyway maybe worth a look.

    I'll see you around I'm sure.

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