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Endurance Specialty Holdings Ltd. Message Board

  • mwhuffington mwhuffington May 2, 2008 10:21 AM Flag

    wow, whats not

    to like? Except for the fact there were investment issues, the business continues to be strong. They've offset lower premiums with a more diversified book and put capital to work. Book value now as a result of share repurchases is $36!! Anything below $38 is a gift. The mark-to-market will improve over the next few quarters. jeesh!

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    • Totally correct !! Hopefully the "investment issues" were a one time deal.

    • Are ENH going to write down investment securities like AIG?

    • To make things even better share repurchases made on shares that are priced at a price to book value greater then 1.0 make the price to book value go down. So even with ENH buying back large chunks of shares they have been able to increase book value.

      This happens because even though the number of shares purchased drops more slowly than shareholder equity on the balance sheet.

      While this quarter was not a blow out quarter and future competiveness looks to reduce margins whats not to like. The company in a few short years has made up for the losses in Florida and Katrina and things are humming along. Furthermore they seem to be diversifying better and have less catastrophic exposure.

      If a PE of 10 was applied to annualized earnings from this single quarter the expected price would be well over 40.

      The only negative I see is that with such a low price to book value this could be a buyout target. Normally this would be good. But I've had a few small companies bought out in my day that didn't sell for near the amount they should have. Sometime's management and the larger shareholders get inside deals that while making in lucrative for them not so for everyone else. Its like WE THE INSIDERS get a good deal by screwing everyone else. The good news is that after reviewing the list of major shareholders the ownership is pretty diversified and true insiders own only a small percentage. On the otherhand these lesser known companies can still be sold at a steal sometimes. I think any buyout would be at least in the mid 40's. I think the stock is worth at least $85 per share.

      Strong Buy

      • 1 Reply to southardengineering
      • I believe, there will be an accumulation at a slow and steady pace between now and second quarter release date. Retail investors will sell out to go after quick gains, while institutions will get lower entry for better returns in 3 month's time, IMO.

        They may have more earnings for next three quarters as they mentioned that the end of first quarters premiums will be spread out as income for the balance of 2008 and also second quarter earnings will be boosted by better investment income.
        The problem is retail investor's time horizon will be short, IMHO.

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