Sat, Aug 30, 2014, 7:13 PM EDT - U.S. Markets closed


% | $
Quotes you view appear here for quick access.

Silicom Ltd. Message Board

bobby2loaves 8 posts  |  Last Activity: Aug 2, 2014 8:15 AM Member since: Apr 19, 2008
SortNewest  |  Oldest  |  Highest Rated Expand all messages
  • Reply to

    Typical price action after earnings

    by fundyisback Jul 30, 2014 11:57 AM
    bobby2loaves bobby2loaves Aug 2, 2014 8:15 AM Flag

    Now let's not get too greedy. Since the Josh Shanker induced selloff after the 4Q13 report, WRB went up a fierce $8 between Feb-June. That's a year's worth of progress packed into 5 months, and a pace you can't sustain by beating operating estimates by just 5 cents.

    I am actually quite pleased as the quarter was solid, but not so great that Bill can't sock away shares here. If he could manage to pick up 3% of the float this quarter, it would boost quarterly net earnings by 4 cents a quarter and 16 cents a year, allowing for a 12% ROE before any growth in policy count or improvement of rates. Not to mention, it would wind the share count up further for the elusive classic hard market we been waiting for over the past 8 years.

    We're at 133mm diluted shares today. My dream is that WRB brings the count down to 100mm shares, then makes $2B in net profit at the peak of the next hard market. sending the shares to $200. Not going to happen this week, but I can envision it happening in the next 3-5 years.

  • Reply to

    2Q14 Prediction

    by bobby2loaves Jul 27, 2014 8:18 AM
    bobby2loaves bobby2loaves Jul 28, 2014 7:07 PM Flag

    Bear in mind, that $1.35 includes a 1-time sale of real estate investments, But Bill said to expect 1-2 of these larger capital gains each year, so par for the course. Leaves us looking good so far in 2014 with $2.60 in net earnings. At that rate, the stock is trading at 8.6x trailing earnings (and 1.25x book, based on the release book of $36.20 a share).

    Operating earnings came in at 82 cents, a nickel above estimates. And revs came in at $1.77B, smartly above estimates of $1.67B and last quarter revs of $1.7B.

    I'd say WRB is indeed distinguishing itself from its peers here, increasing revenues and profits, while others are contracting. It's our reward for the years WRB was contracting and busy building start-ups, while others wrote too much bad business in the depths of the soft market.

    Vive l'insurance!

  • Reply to

    2Q14 Prediction

    by bobby2loaves Jul 27, 2014 8:18 AM
    bobby2loaves bobby2loaves Jul 27, 2014 5:49 PM Flag

    I've been thinking about this one, and I'm going to call an audible.

    In the last con call, Bill did say he was " Very optimistic for operating results for the year."

    And WRB rarely gets snagged by claims as TRV and CB did last week.

    Plus, it would be folly to predict this will be the quarter WRB has to make their first addition to previous reserves in over 7 years.

    With rates up at the other insurers, WRB could still deliver a handy beat this quarter, considering analysts are predicting operating EPS at 23 cents less than last quarter.

    And I just can't think of where the miss would come from.

    So I'm changing my call to another big beat at 95 cents operating EPS, with a few extra claims and slightly less good reserve releases overcoming modest rate and policy growth compared to last quarter.

    Hey, I've drunk the kool-aid. Might as well pour a big glass for myself.

  • bobby2loaves by bobby2loaves Jul 27, 2014 8:18 AM Flag

    2Q14 Prediction

    1 of 2 posts:

    This is a tough quarter to call - - lots of moving parts:

    1. Analysts estimates are for 77 cents in operating EPS.
    2. Last quarter WRB nailed the quarter with $1.00 in operating EPS. (not to mention $1.25 in net EPS)
    3. CB, TRV and AON all missed last week.
    4. Bill's closing words at the end of the last con call were "we expect the year to continue to show better returns." Well, 2Q13 was a 70 cent quarter, so I am guessing he at least meant better than 70 cents this quarter.

    Where does that leave us for operating EPS this quarter?

    My guess is WRB performs weakly along with everyone else. Maybe due to weakening fundamentals (readjusting the book for recent inflation perhaps), or maybe to use other company's misses as an opportunity to beef up reserves and keep the share price low for buybacks. But long-term (and we know Bill/Rob are long-term guys), there is little advantage to beating the numbers here. Until the company's earnings are just too good to keep down, and the stock price moves above the 1.15x-1.35x price/book range we've seen over the past 5 years, I expect WRB won't want to overstate earnings, losing the buyback as a good option for capital deployment and/or breaking their streak of positive reserve releases.

    My prediction: 79 cent operating EPS, a beat, but nothing like we saw last quarter. And net EPS of $1.02, giving the stock downside to ar$41 this quarter.

    I'm not counting out the fact that WRB may just pull away from the pack, and strut their stuff with another nice beat this quarter. When the stock tumbled to $38 earlier this year on Josh Shanker's downgrade, WRB did come out with a release refuting his claims, saving the stock price from its fall and eliminating the possibility for cheaper buybacks. It is possible that WRB just shoots straight, with information and with earnings, and they don't try to paint reality one way or the other.

  • Reply to

    On CB's Lame 2Q14

    by bobby2loaves Jul 25, 2014 10:25 AM
    bobby2loaves bobby2loaves Jul 25, 2014 12:23 PM Flag

    I wonder if the missing ingredient here is inflation? If CB and TRV under-reserved based on inflation, that would upset their entire book of business, easily offsetting decent rate increases from this quarter's writings.

  • bobby2loaves by bobby2loaves Jul 25, 2014 10:25 AM Flag

    Same story as TRV here. Missed EPS despite share buyback, and throw in a healthy guide down for 2014 numbers. Rather than cat, they are blaming "unusually high level of Homeowners' and Commercial fire losses." Boy, if it weren't for claims, the insurers would really have it made, wouldn't they?

    The only saving grace here is ""We remain encouraged by the mid-single-digit increases in our U.S. rate change metrics that we achieved in all of our businesses during the second quarter, while also attaining our highest overall level of retention in three years." WRB destined to a lousy quarter as well? And current rising rates will not be enough to overcome the skeletons in the closets of the insurers (ie under-reserving and poorer terms)?

    Or will WRB distinguish itself from its peers on Monday?

  • Reply to

    On TRVs Lame 2Q14

    by bobby2loaves Jul 22, 2014 8:30 AM
    bobby2loaves bobby2loaves Jul 23, 2014 7:49 AM Flag

    Right. I guess we might also see companies fighting for any good business to write, which would drag down P&C business lines as well. I noticed in TRV's presentation that Business Insurance rates continued to grow more slowly this quarter, now down to 3-5% increases, after having been at 6-8% last year. Combine that with the fact they 2Q14 business division just had a combined ratio of 99%, and I'm not sure why these guys are so happy about their business segment.

    Listening to TRV on their call is way less straightforward, and less optimistic, than WRB. When asked why they didn't write more in their business segment, if it was so great, these guys danced around like they were being chased by hornets. Also, they basically have resigned themselves to a 12% ROE target due to lower interest rates.

    I guess until we get Bill's "unforseen event", whether it be a hurricane, bond crisis, or plain old inflation that deals a crushing blow to the under-pricers, we are going to have to plod along, relying on WRB's superior model to make a decent return in an indecent marketplace.

  • bobby2loaves by bobby2loaves Jul 22, 2014 8:30 AM Flag

    I like to pay attention to what TRV says in their earnings report. It comes about a week before WRB, and their commentary on their business unit usually gives a glimpse into WRB's results ahead of time.

    Well, TRV just missed the quarter after a year of huge beats. Their EPS of $1.93 missed estimates of $2.07, despite buying back 3% of the float this quarter. They blamed the miss on Midwest weather.

    With that said, the one bright spot in the report was their Business book:

    "In Business Insurance, the cumulative effect of the price increases we have achieved over the last several years, combined with our highly analytic approach to risk selection, has resulted in a product portfolio that is achieving meaningfully improved and attractive returns."

    I expect WRB will trade down today in sympathy with TRV.

    But to me, this is a good setup for WRB: a solid business rate environment with soft pricing in other areas keeping upward pressure on rates across the board, so that companies can keep their heads above water.

    Maybe this is the kind of thing Bill was talking about on the last con call when he said the "Differential between good and bad areas have never been greater." I doubt he wasn't referring to the personal lines that affected TRV this quarter. But the dynamic may be the same: If only a few select lines of business are working for companies, it would be suicide to start a bidding war on those as well.

31.05+0.80(+2.64%)Aug 29 4:00 PMEDT

Trending Tickers

Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.