I have been looking, and don't really see anything "wrong" with the company. Price has decreased ~16% over the last 12 months. Compare that to Prudential +28%, and Berkshire +2%. Just can't figure. Perhaps small cap nature. Perhaps something looming we are not yet privy to.
1. Concerns I have if interest rates increase sharply. Very interest rate sensitive. Company claims that a gradual increase in interest rates would be a positive development, as there would be a rise in incremental net investment income, as well as increased sales of fixed rate products.
2. Best’s ratings claims “conservative portfolio,” in their July 2010 report.
3. Underfunded Defined Benefit Pension Plan of $3.4M. Discount rate of 5.75% to determine benefit cost(previously 6.0%), Discount rate for benefit obligations of 5.25% (previously 5.75%). Expected long-term return on plan assets is 7.005 (previously 7.50%). 62% of plan is in equities.
4. Company owns 6.9% of related party, Moody Bancshares, Inc. Moody Bancshares owns 98% of ‘The Moody National Bank of Galveston.’
5. Third Avenue owns almost 8% of common at 12/31/10. Yet, both Third Ave. and Tweedy sold a few shares as of 12/31/10.
6. At current price of $154, and using 12/31/10 book value, the Price/Book value ratio is 45.83%.
7. No insider selling for as long as I could see.
>>Third Avenue owns almost 8% of common at 12/31/10.<<
Third Ave's filing as of 3/31/11 showed ownership of 219,435 shares or 6.39% of the company. On 12/31/10, they owned 271,434 shares.
Today Third Ave filed (no link, sorry) a 13-G, showing ownership of 149,533 shares, or 4.35% of the company as of 6/30/11.
didn't you ever know that you can sue for justice even as a minority sharholder?
Anyone with 1 share can do anything he wants.
And Mr. Ichan has sued many companies he was not majority owner of.
>>>4. Company owns 6.9% of related party, Moody Bancshares, Inc. Moody Bancshares owns 98% of ‘The Moody National Bank of Galveston.’<<<
Bank of Galveston has stockholders' Equity of $81M. Value to NWLI (6.9% *.98 * $81) gives value of Bank (using 1X BV)of ~$5.5M.
Question would be, is there any material value of other assets besides Moody Bank in Moody Bancshares?
Ben would like to thank you for the information about the moody's bank holdings of nwli.
Maybe this is part of my estimated $100 a share worth of hidden book value I think they have.
Never heard this before. would love to see more documentaion on this holding and where you found it.
Thanks and I have one more response to your comments on my post which will come shortly
have you ever talked to management?
The price action is even worse when you go back a few years. On 12/31/08, when the economy was collapsing and the market averages much lower than today, NWLI was selling at $170. Since then they have made (and re-invested) lots of moneyback into NWLI, and the shares are down ~10%.
I don't know about the insider selling mentioned by "denniscloes," but with tangible book of $310/share the NWLI mgmt. should be embarrassed by the stock price. There is clearly concern in the market price that the accumulation of book value is not real. The only way to address this is to pay a dividend. If the earnings are real, NWLI could easily afford a dividend of as much as $10/year, and if they started such a dividend the shares would instantly go above $200/share. American National Insurance (ANAT) is owned by the same cabal down in Texas and ANAT pays a good dividend and trades much closer to book value-- why not NWLI?
According to Yahoo statistics ANAT's book value is $136 and it is currently priced at about $77. Therefore it is trading between 55% to 60% of book value, not really much different than NWLI.
Financial stocks are not in style currently. The market is infatuated with "growth" and stocks like PCLN and CMG are all the rage. Someday they will lose their luster like CSCO, MSFT and INTC. A higher dividend may help the price of NWLI, but more growth and a stronger interest in financial stocks by investors would do even more good.
Completely agree with your written words - down to the last period. Except one thought you express out loud, I don't see anything wrong with the company at all -zero.
When you have a management that refuses to do anything at all for the minority investor for over 20 years, you have to be prepared for a long long wait for NWLI to reach its full potential if it ever does-in your or my lifetime.
In my opinion NWLI is the best "deathwatch" stock since Armond Hammer was running Oxy Pete. Only here, the problem is worse. We the minority shareholder might have the problem continue after the death of Mr. Moody Senior, because the next management will be Mr. Moody, Jr. - his son.
Here is my reason why the shares are down now, and probably won't go anywhere in the foreseeable future:
The two minorty largest share holders are selling stock. While it is only 12% of the entire capitalization, It still takes a long time to eat through hundreds of thousands of shares when potential buyers know ahead of time, there will be no cash dividends, there will be no buy backs of shares - even though the company sells below 50% of its own stated book value.
So while it is undervalued in my opinion NWLI will remain undervalued for a long long period of time and and will not - if ever, reach its full potential.
But it is a safe place to invest based on value but not for capital gains or dividends until these shareholders have sold out or decide to sue the moody's for hoarding cash as was sucessfully done by some minority shareholders of Ford Motor company early in the 20th century.
Now that law suit I would really like to see and then, it is possible NWLI reaches something close to its potential.
Where oh where are these ambulance chasers who go after all the companies in the world -and I would even sign up to be the lead plaintif.
You know maybe I will contact these lawyers myself, I am getting tired of waiting.
>>When you have a management that refuses to do anything at all for the minority investor for over 20 years, you have to be prepared for a long long wait for NWLI to reach its full potential if it ever does-in your or my lifetime.<<
Appreciate your post, but I respectfully disagree for some of the following reasons.
1. Book Value has increased nicely in last 20 years.
2. Healthy balance sheet, unharmed in 2008/2009 financial crisis.
3. They have built a balance sheet that is considered conservative and secure by Best's. Had they paid out dividends, the balance sheet would not be as fortress like.
4. The growth in their stock price exceeded the growth of Berkshire Hathaway since 1990.