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Federated National Holding Company Message Board

  • ballen2123 ballen2123 Aug 11, 2013 11:01 AM Flag

    Raising additional capital

    What will it be preferred or common stock? How high could the stock price go up if it is common stock? I don't see management wanting to dilute shareholders at this price, the stock will have to rise to a higher offering price. My forecast is the stock will continue to rise over the next month if it is common stock that will be sold.

    Sentiment: Strong Buy

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    • ballen is right. They are going to raise more capital somehow.
      Selling common stock is not a good idea because the shares are so undervalued. We get diluted and we don't get full value of what we are selling.

      If you look at the numbers, you can see that business is getting significantly better.
      They've increased the amount of reinsurance they're buying which means they are writing a lot more policies.
      They are writing policies during wind season which they have not been doing too much of in the recent past which means the rates now in Florida are plenty good.
      They say that recently new players in the Florida market have come in which is another indicator that the rates in Florida are "plenty good".
      They say they are doing $3-$4 million a week in NEW business and it might uptick in the fall.
      Our expenses are somewhat fixed. Meaning, except for reinsurance expenses, having 90,000 policies or having 200,000 policies have similar operating costs. So if you do the math, with all the new business we are doing, it's got to flow to the bottom line in the future.

      I'd really hate to see a common stock offering at this price, because we're undervalued. If it's between the two choices of preferred or common stock, then I say preferred stock

    • Ballen...not sure if you are responding to these boards, or maybe you are responding to a statement on another board, another stock. I don't think FNHC is talking about selling more stock. At least I cannot find references to that in their quarterly report or in their CC.

      • 1 Reply to scottr2958
      • There was talk about bringing in more capital on the CC because they need additional capital for the purpose of supporting certain financial ratios. I think they need more capital to build statutory surplus because they are growing the book of business so fast. Look at Micheal B answer paragraphs 2 and 3 for Doug Ruths question

        Sentiment: Strong Buy

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