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First Eagle Global A Message Board

bobby2loaves 9 posts  |  Last Activity: Feb 13, 2015 7:38 AM Member since: Apr 19, 2008
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  • bobby2loaves bobby2loaves Feb 13, 2015 7:38 AM Flag

    Not me. I've held my WRB shares steady for several years now. I added to my position in February 2014, taking WRB from a sizable part of my portfolio to a ridiculous part of my portfolio. I wish it didn't have to be that way, but WRB seems to be one of the few value propositions left in the markets, trading at an historically low price/book, and typical price/sales and price/earnings. Throw in the fact that the company is intelligently run for the long-term by owners with 25% of the float, and it's hard to find anything else in the markets with comparable risk/reward. I have been secretly longing for a bear market, where WRB significantly outperforms, a la 2000-2003, so I can liquidate some of this WRB for names that have been demolished. But I've been hoping for that for several years now, and may have to keep hoping. So in the meanwhile, I am happy to sit in this ticker for all seasons, letting seasoned captain Bill steer the ship.

  • Reply to

    WRB buying opportunity

    by fundyisback Feb 4, 2015 10:01 AM
    bobby2loaves bobby2loaves Feb 4, 2015 1:24 PM Flag

    agreed, fundy.

    and with $5 or so of unrealized after tax gains, if any of those holdings are sold, book might even get a little more than that during 2015.

    however, if there was a quarter for weak hands to fold on, this is it.

    with stock down about 3% today, it's looking like the highest volume day in quite a few years.

    wonder who is buying today......

  • bobby2loaves bobby2loaves Feb 4, 2015 9:39 AM Flag

    That was laughable.

  • bobby2loaves bobby2loaves Feb 2, 2015 9:28 PM Flag

    One correction: I forgot about the $1.11 in dividends in 4Q14. Let's back book value back down to $38.30.

  • It is time for WRB to separate itself from the pack of lukewarm reports from TRV, ACE and CB this quarter.

    4Q14 estimates for WRB:

    avg analyst EPS: $0.82
    my EPS: $1.10 (and $1.40 net income)

    avg analyst revenue: $1.77B
    my revenue: $1.88B

    my book value: up from $37.10 to $39.45

  • bobby2loaves by bobby2loaves Dec 14, 2014 8:59 AM Flag

    Back when the stock was trading around $50, he told us to take our profits at $55 before the rest of the markets took WRB along with them.

    Sure enough, the stock peaked at $54.14 last week, and then dropped like a stone, losing 5% in 5 days.

    My buddy Shane turned his portfolio over to me last week, so I used the opportunity to buy him shares in the $51s on Friday. I needed to get him some market exposure without being over-exposed to a potential market correction in the months/years ahead.

    With interest rates dropping here, WRB's book value is going to tick up nicely this quarter, even with the $1.11 in dividends, probably up to the $39-$40 range. If the stock drops into the $40s in the next few months (and along with the $1.00 the stock price will lose when the dividend gets paid on 12/30), we could easily be looking at 1.2x book after earnings in January.

    Take it from someone who has been watching this stock for many years. Unless the market is in outright freefall, if that price/book gets to 1.15x, there is going to be support for it. A great time to buy for anyone who actually acted on otc_steve's advice!

  • bobby2loaves bobby2loaves Dec 9, 2014 8:12 AM Flag

    and here's an even wackier thought:

    what if bill knows WRB is about to have a FANTASTIC few quarters, making the stock price go even higher, the price/book even less attractive, and the spare cash piled even higher? so he figured he might as well take the $1.00 this year, especially in case the dividend rate goes up in 2015.

    not saying this will happen. just saying the time to bail on this stock has historically been around 2x book, not here at 1.4x book with some big capital gains waiting in the wings. while bill's stock buybacks have not always correlated well with short or medium term share price movement.

  • bobby2loaves bobby2loaves Dec 8, 2014 11:24 PM Flag

    One other consideration: there is a 3rd option here, right? Keep the cash until the buyback is irresistible, or business expansion needs it. However, with good investments hard to find these days, Bill may be loathe to sit on too much extra capital here, whereas in the past he would have gladly kept it at his disposal. But with 3-4% returns on bonds, it would drag down the company’s ROE too much.

  • bobby2loaves bobby2loaves Dec 8, 2014 11:10 PM Flag

    the short answer is yes. i would rather bill was spending every penny on the buyback because the stock was a bargain here.

    but the truth is, the stock has run $15 in 10 months, and Bill doesn't pay up for his own stock above 1.4x (it sits at 1.43x today).

    there may be some other considerations at play though.

    bill doled out a $1.00 dividend last year when everyone was scrambling to pay dividends before tax code changes. at that time WRB was trading at $10 less than this. so it may not be a simple buyback vs dividend question, as the stock was a pretty good bargain back then.

    dividend income may be in demand for tax code reasons again this year. or maybe some large shareholders, either institutional, or bill/rob, want to get some millions out without having to do something as tacky as selling shares, which they never do.

    also consider bill's key metric is 15% ROE. it's what the entire company is measured on. and a dividend is a nice clean way to get equity to shareholders. but if you spend $1.00 and only get 70 cents of book value for it (because the stock is trading at 1.43x book), you actually reduce the return on equity for the year. now it may be a good long term investment (ie 2-3 years from today that 70 cents may be worth a dollar of book again, and now the reduced share count is more powerful).

    but in general, i think the most bill pays for stock is 1.4x, and what he really wants to pay is 1.0-1.1x. that's when the buyback is a no-brainer, and ROE is hardly affected.

    i don't think bill is so much making a statement on the share price direction, as much as he knows if you only buy stock at dirt cheap price/book, you can't get hurt wasting profits on overpriced stock, because your best guess was the cycle was still alive and well.

    bill says it's impossible to time the the ups and downs of the share price. but over time, its returns are great. personally, 12 months from today, i could see WRB at $42 or $72. Just depends on the circumstances.

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