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AmTrust Financial Services, Inc. Message Board

  • shadowealth shadowealth Feb 8, 2014 1:37 PM Flag

    barron's basically said: AFSI uses a very aggressive accounting practice ... it has less than $10/sh tangible book value ...

    expect to go to sub $30/sh next week and low $20 after earning reports ... hard to believe that sec hasn't knocked the door yet ... i am still expecting a single digit ...

    excerpt from barron's:

    Feature | SATURDAY, FEBRUARY 8, 2014
    An Insurer's Feat: Turning Losses Into Gains
    Insurer AmTrust has a key earnings call on Thursday. Can it persuade investors its profits result from smart management, and not aggressive accounting? Watch the stock.

    ...The report said that AmTrust's unusually big profit margins owed more to the insurer's accounting than to savvy or efficiency. AmTrust stock was properly worth just $17, said Off Wall Street ...
    While the profit benefit appears in AmTrust's consolidated financials, losses it ceded to its Luxembourg units don't. AmTrust tells Barron's that those losses are inflated "artificially" or "synthetically" and don't reflect the real world claims on its primary insurance subsidiaries. "It's a way to draw down these reserves," says CEO Zyskind. "They are self-created losses within our organization, so they get completely eliminated in consolidation." ...

    The company's book value has grown from $5 a share to $17 since its initial offering, but like its earnings, the number merits scrutiny. Much of it is goodwill and other intangibles. In an industry whose shares trade near tangible book value, the tangible book underlying AmTrust's $33 stock is less than $10.

    Sentiment: Strong Sell

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