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Berkshire Hathaway Inc. Message Board

combined_ratio 17 posts  |  Last Activity: 19 hours ago Member since: Feb 8, 1999
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  • IMO, PartnerRe is likely to reduce its share count by at least 10% through repurchases in 2015. This would be equivalent to approximately 5 million shares, which is the size of the current buy-back authorization. In fact, I expect that the share count (including equivalents) will be below 50 million by year-end. Such an initiative should be highly accretive to both book value and earnings per share. Moreover, I expect a sizable increase in the company's quarterly dividend sometime early in the new year.

    Furthermore, I believe that Partmer's stated book value ($121.95@ share at 9/30/14) significantly understates "true" book value because of significant redundancies in the reinsurer's loss reserves. If correct, this makes share buy-backs even more beneficial to increasing shareholder value. IMO, PRE stock is quite attractive at current levels.

  • Both XL and Catlin announced this morning that they are in discussions regarding a merger of the two entities. Apparently, the transaction would be structured as a purchase of Catlin by XL. This development follows the announcement of RenRe purchasing Platinum Ltd, two Bermuda-based reinsurers. We expect more such M&A activity in the re/insurance sector as this industry needs to consolidate in light of significant over-capacity. We believe this trend will benefit larger carriers, such as PartnerRe, as will the opportunity to potentially be involved in this industry consolidation. The company has one of the strongest balance sheets in the industry and is well positioned to take advantage of any opportunity that presents itself. I remain bullish on this stock.

  • combined_ratio by combined_ratio Dec 15, 2014 11:15 PM Flag

    I hope that PartnerRe management is utilizing the current retreat in the stock price to aggressive repurchase shares. At current levels, I calculate that the equity is selling at about a 15% discount from year-end book value, which is likely considerably understated because of significant loss reserve redundancies. Moreover, current repurchases would be HIGHLY accretive to both book value and EPS. At current levels, I know of no better use of corporate capital than to buy-back common equity.

  • combined_ratio by combined_ratio Dec 5, 2014 10:39 AM Flag

    Central Securities announced that it will utilize the share price of $22.13 for converting its $1.55@share year-end distribution into additional stock should this pay-out option be selected by a shareholder. The closed-end fund is currently trading above this price level, so a gain would already be recorded on this transaction. With this news out, I suspect the shares will continue to trade higher, reflecting the lifting of this uncertainty.

  • The dramatic decline in the price of oil and its spillover implications for lower gasoline costs is a significant positive for McKesson. As a large distribution company, a major expense of the company is the gas required to operate their massive fleet of trucks around the US and Europe. With the major drop in gas prices reducing a key expense item for McKesson, the firm should benefit with improved profit margins. I wonder if Wall Street equity analysts have factored this development into the company's future profit projections.

  • Reply to

    Stock Buy Back

    by budandwee Nov 18, 2014 2:23 PM
    combined_ratio combined_ratio Nov 27, 2014 9:20 PM Flag

    MRH is probably the next Bermuda-based reinsurer to be acquired after the recently announced PTP transaction. Most industry pundits realize that Montpelier is simply too small and insignificant a reinsurance player to survive long-term as a free-standing entity. My prediction is that this company will be gone as an independent firm by year-end 2015.

  • Renaissance Re this morning announced that it's buying Platinum Underwriters for approximately $76@ share, or the equivalent of 1.13X book value. I personally believe that this is only the first of several M&A transactions that will occur in the reinsurance sector, as this industry has over-capacity and needs to further consolidate. Moreover, IMO it highlights the significant value inherent in PartnerRe, which currently sells at around a 10% discount to BVPS, has significant excess capital on its balance sheet, and has a worldwide franchise that is dramatically superior to that of Platinum. I continue to foresee a year-end share price target for PRE of $120.

  • combined_ratio by combined_ratio Nov 16, 2014 10:23 PM Flag

    With PartnerRe's 3Q14 book value per share at $121.95, it is reasonable to expect that the reinsurer can achieved a year-end book value per share of at least $125. Moreover, a factor which could materially increase this number is the amount of share repurchases undertaken by the company in the fourth quarter. The more aggressive the buy-back in this period, the higher the book value, reflecting the fact that PRE is making these purchases at a discount to BVPS. Obviously, we favor aggressive repurchases as the best way to enhance shareholder returns in the current environment. We continue to like our year-end price target for the stock of $120.

  • Reply to

    Legal Actions

    by sambigg Nov 6, 2014 10:35 PM
    combined_ratio combined_ratio Nov 16, 2014 10:14 PM Flag

    All these plaintiff law firms start legal actions after mergers are announced. Its a game they play to extort money out of the firms to permit them to get their transaction completed. IMO, this charade is a black mark on our business environment, but for some strange reason it seems to have a life of its own. I don't believe these suits speak to the merits of the OHI/AVIV transaction,which I personally like a lot.

  • combined_ratio by combined_ratio Nov 2, 2014 12:30 PM Flag

    I'm a large AVIV shareholder via my position as a fund investor in Lindsay Goldberg. I couldn't be MORE delighted with this transaction. I listened to a replay of the investor call this morning and thought that management did an excellent job in explaining the rationale of this deal. Moreover, I believe that the synergy projection for this combination is, as it should be, a conservative number. Finally, I very much like the demographic trends in this sector. My plan is to hold on to the distributed Omega shares I receive for a very long time and perhaps even increase my position.

  • Reply to

    When is the annual dividend due?

    by arctic.char8 Oct 27, 2014 10:11 PM
    combined_ratio combined_ratio Oct 30, 2014 9:56 PM Flag

    Personally, I don't think there is a chance in hell that the year-end payout will be $4@share. My optimistic guess is that it will be in the vicinity of $1.00. However, that is only a WAG.

  • combined_ratio by combined_ratio Oct 27, 2014 9:25 AM Flag

    UBS analyst Brian Meredith has a 3Q14 $5.22 EPS estimate for PartnerRe, well above the Wall Street consensus estimate of $3.52. The reinsurer will report its results after the market close today.

  • PRE reports its 3Q14 EPS tomorrow after the market close. The consensus number is $3.60 and has been on the rise over the past several weeks. Given that the recently concluding period has had relatively benign catastrophe losses, a stronger rather than weaker result is to be expected. However, I will be looking for two other items in the quarterly commentary. One, what progress is being made to lower operating expenses and the extent such savings will show up in 2015 results. And two, what new initiatives have been undertaken to move the underwriter closer to its insurable exposures and thereby generate new sources of premium volume. I hope that analysts focus on these strategic issues during the upcoming investor call on Tuesday.

  • combined_ratio by combined_ratio Oct 20, 2014 10:28 AM Flag

    I've heard that Willis is looking for a new head of its UK unit after repeated failures in that role. Now we hear that the company is planning a complicated investment that would move its London wholesale operation to a majority-owned affiliate. This doesn't make a lot of sense to me. Earlier this year Willis announced it would move some 3,000+ employees to low cost locations, which we know are code words for layoffs. I don't expect any good news out of this insurance broker any time soon.

  • combined_ratio by combined_ratio Oct 14, 2014 2:04 PM Flag

    When PartnerRe reports its 3Q14 financial results later this month, we'll learn now many shares its repurchased in the recently completed period and so far during October. I strongly suspect we're looking at a number in excess of 1 million shares. With a new 5-million share repurchase authorization now in place and the completion of the North Atlantic hurricane season, the company is free to aggressive buy back its stock in the final interval of 2014. I believe that PRE management will continue to repurchase its shares for the foreseeable future, which should be both highly accretive to book value per share and EPS.

  • combined_ratio by combined_ratio Oct 13, 2014 9:54 AM Flag

    It increasingly appears as though PartnerRe can achieve a year-end book value per share of $125 or more by year-end, up from our previous $120 target. If so, this makes a year-end price target for the shares of $115 or more increasingly obtainable. Moreover, quarterly EPS estimates for the company have been on a rise and are currently well above $3.00@share. It would not surprise us to observe a higher than expected earnings result for the upcoming quarterly profit announcement.

  • Morgan Stanley just released an equity research report that asserted that PartnerRe's current loss reserves are redundant by at least $1.5 billion. If accurate, this sum will be released into earnings over time and add to the company's conservatively stated book value per share. I continue to believe that these shares are undervalued and will appreciate to the $120 level by year-end.

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