Recent

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

TORM A/S Message Board

j0n_48195 53 posts  |  Last Activity: Feb 5, 2016 10:13 AM Member since: Apr 2, 2001
SortNewest  |  Oldest  |  Highest Rated Expand all messages
  • Reply to

    Still lagging...

    by jtbc5000 Jan 29, 2016 5:41 PM
    j0n_48195 j0n_48195 Feb 5, 2016 10:13 AM Flag

    I'm in the same boat. I share your pain, but see enough upside to risk a future on Social Security. I keep telling myself, great investments don't look so great at the time. I juggle these numbers every which way, every day. If the stock stays depressed, there will still be enough buyback profit to hedge mediocre profits. If profitability doesn't improve, AIG will self liquidate and the double adjustments to the warrants will give them a windfall. I can't imagine a scenario where the warrants can lose through 2021. But then, I would have never imagined they would get back down to $17 again either. Screw it. If I'm going down, I'll go down swinging.

    Sentiment: Buy

  • Reply to

    Improving AIG's Commercial P-C Profitability

    by combined_ratio Feb 4, 2016 10:51 PM
    j0n_48195 j0n_48195 Feb 5, 2016 9:39 AM Flag

    The responses to Peter's plan seem split between "it's not enough" and your "easier said than done". It would be nice if the truth were in the middle. Unfortunately, both statements are probably equally true. Even if AIG can pull it off, it probably doesn't justify risking two more years to find out. The only upside I see is that the justified skepticism has increased the buyback profits to ridiculous levels. AIG might make more profit on buybacks than running the business. (200 trading days X 1 M shares/day X $25 book "profit"/share = $5B) Sad, but some consolation.

    Sentiment: Buy

  • Reply to

    Still lagging...

    by jtbc5000 Jan 29, 2016 5:41 PM
    j0n_48195 j0n_48195 Feb 2, 2016 1:46 PM Flag

    Of the $25B being returned to shareholders over the next two years, $6B of the $8B (one-third of $25) or so in dividends will be adjusted. Most of the remaining $17B will be buybacks. The booked "profit" on buybacks would be about $7B, plus $10B or so in operating earnings, minus $8B in dividends paid gives us a new book value of $87 or so. (I'm assuming we will be in the 1B share-count range.) The new strike would be $39 and the conversion 1.15 shares/warrant. At book, that values the warrants at $48 X 1.15 = $55. In other words, if AIG can meet their goals, and the stock stays cheap until late in the game, reaching book value at that time, the warrants should triple. That's a long list of "ifs", but the math is there. Unfortunately, there's a thin margin of error in those assumptions and there's a lot more that can go wrong. On the plus side. All spinoffs and excess dividends will doubly benefit warrant holders. The more AIG is liquidated, the more it works in our favor. In theory, if $44 were distributed, each warrant would have a strike of $1 and convert 45 shares. At remaining book value of only $36, the warrants would be worth $1600! I really believe the option holders fail to see the effect of that share conversion adjustment.

    Sentiment: Buy

  • Reply to

    The "kitchen sink"write- down I feared

    by j0n_48195 Jan 26, 2016 4:52 PM
    j0n_48195 j0n_48195 Feb 2, 2016 10:49 AM Flag

    "non material"? only to the extent that 3 quarters of feeble operating earnings are non material. If it's only a paper loss then book value has no meaning either.

  • Reply to

    The "kitchen sink"write- down I feared

    by j0n_48195 Jan 26, 2016 4:52 PM
    j0n_48195 j0n_48195 Feb 1, 2016 3:49 PM Flag

    Thanks, I saw that. I suspected AIG would try to slip that through. I regret the more cynical analysis seems too often to be true. That's why I'm now hoping Icahn wins. This program sets goals that AIG has shown little evidence they can meet. If all this is an elaborate stalling tactic, so Peter can keep his empire together, he needs to get the boot. There's a fine line between patience and gullibility. Accepting Peter's program at face value seems to require more of the later. The analysts don't seem to be buying it and neither am I.

    Sentiment: Hold

  • Reply to

    The "kitchen sink"write- down I feared

    by j0n_48195 Jan 26, 2016 4:52 PM
    j0n_48195 j0n_48195 Jan 27, 2016 8:31 AM Flag

    But it does mean, for the second quarter in a row, that despite the windfall from buybacks, book value will be heading in the wrong direction yet again. AIG was bragging last year about double digit gains in book value, despite low profitability. What they failed to admit, is that more realistic reserving would have negated much of that gain. I've heard this song before. Better times are always one or two quarters down the road, with a renewed reason every quarter for us to reset that calendar of expectation. I'm fully vested, but the objective truth is that AIG has fallen short, not just on their goals, but their promises as well. Unfortunately, the conference added needed clarity on AIG's circumstances, but little promise of fundamental change. Changing the organizational chart does not change corporate culture.

    Sentiment: Hold

  • $3.6 B write down in the fourth quarter for legacy policy reserves: That's nine months of operating earnings down the tubes. Assumptions about buy-back profits need to be adjusted downward based on a lower, but more realistic book value- by $2 per share, after factoring in $1 positive Q4 operational earnings (?). Given that, the market response was about as positive as I could have hoped. When an amateur like me can see that coming, what does it say about the denial management has been living in?

    Sentiment: Hold

  • Reply to

    AIG move not rewarded

    by kevinharrell86 Jan 26, 2016 12:08 PM
    j0n_48195 j0n_48195 Jan 26, 2016 4:34 PM Flag

    The seeking alpha article on the conf' call details says 1/3 of the $25B will be dividends, the rest presumably predominantly buybacks. I don't think the Mortgage spin-off moves the needle much, if only 20% is being spun off. The real news for me is the "kitchen sink" write down I feared. $3.6B for legacy reserves. THAT is about 3 quarters worth of profits. Given that, I think the market's reaction was generous.
    Dude, people are only here to get information. We all get lazy at times and we all have different areas of expertise and insight. If you are insulted by a post, I suggest you ignore it. About the only thing I have no tolerance for is self righteousness. All of us are fools here, starting with yours truly. We're most dangerous when we don't realize that.

  • Reply to

    "Very poor P&C profitability" - KBW

    by buy_hold_invest Jan 25, 2016 9:29 AM
    j0n_48195 j0n_48195 Jan 25, 2016 5:27 PM Flag

    Nobody is carrying pitch-forks for Peter. Well, at least I'm not. But other P&C companies are returning 10-15% in this same environment. Peter needs to at least quantify the legacy drag, so investors can hold him to a fair standard..

  • Reply to

    They will breakup

    by zissi022000 Jan 22, 2016 2:24 PM
    j0n_48195 j0n_48195 Jan 25, 2016 1:17 PM Flag

    I expect so too, but market price can be determined in any number of ways. I don't think they could wait for the shares to trade before pricing them. But they might be able to estimate a market value based on analysts' appraisals. No matter how it's done, the warrants would benefit more. Given the pre-conference buzz, it's doubtful that the spin-off will happen at all. If Peter's plan doesn't fly, my guess is that he's history.

    Sentiment: Buy

  • Reply to

    "Very poor P&C profitability" - KBW

    by buy_hold_invest Jan 25, 2016 9:29 AM
    j0n_48195 j0n_48195 Jan 25, 2016 11:22 AM Flag

    The real question is how much is that Peter's fault. To hear AIG tell it, there are legacy policies dating back more than a decade that are responsible and that they have been competitive with policies written over the past few years. If that's the case, Icahn has little to offer. Nobody seems to believe that story though. I'm not qualified to know. I just think Benmosche had no business committing to 10% ROE, which was later reclassified as "aspirational", if he knew it was an impossible goal, as AIG now claims.

  • Reply to

    They will breakup

    by zissi022000 Jan 22, 2016 2:24 PM
    j0n_48195 j0n_48195 Jan 23, 2016 3:23 PM Flag

    Don't agree that it's dilution, except to the extent the warrants get double benefit. It's potentially huge for warrant holders, but only a moderate annoyance to common holders. Based on a recent Seeking Alpha article, the unit is expected to be valued at $5-$7B. plus "hundreds of millions", for a brokerage being sold. Using the high end, for convenience sake, this means the distribution will be worth $3.5B- say $3.6B with the brokerage sale. Assuming 1.2 B shares on distribution date, the spin off and sale will be valued at approximately $3 per share. The new strike on the warrants will be approximately $42 per share. And each warrant will convert approximately 1.07 shares.. Thats about $4.40 in value (less whatever the price of the common drops on distribution day). On a $20 warrant that's a 22% immediate return . If the does stock drop $3 on that day, the return will only be 7%, which is more likely. In all fairness. warrant holders have gotten "nada" for 3 years. You'll have to forgive me if I consider that 7-20% fair and overdue. Hopefully all will benefit. Common holders will get approximately $3 per share worth of Mortgage stock and it is likely that AIG won't drop that much.

    Sentiment: Buy

  • Reply to

    They will breakup

    by zissi022000 Jan 22, 2016 2:24 PM
    j0n_48195 j0n_48195 Jan 23, 2016 1:28 PM Flag

    And as a little follow up (I ran out of window space), It's not crazy to think Life and Retirement could be spun off under the same terms. So my fantasy scenario might get more realistic.

    Sentiment: Buy

  • Reply to

    They will breakup

    by zissi022000 Jan 22, 2016 2:24 PM
    j0n_48195 j0n_48195 Jan 23, 2016 1:25 PM Flag

    It's very clear that they would have to adjust the warrants. Although it's anything but clear exactly how that would be calculated, I have to trust that it will be done fairly, more or less. What is really interesting is that we are now in the range where the warrants are "doubly adjusted". What that means is that a 10% adjustment on the strike, also creates a 10% adjustment on the number of shares converted. This is something that was noted years ago and I have repeated off-and-on, unsure whether I believed it myself. (I did check the prospectus, but seeing is not believing with legalese.) Nevertheless the first strike adjustment proved it to be true. The strike dropped a dime to $44.90 (roughly 0.2%. Now each warrant is good for 1.002 shares at that price. Sooo,... a 10% adjustment is really a 21% adjustment (1.1 times 1.1). That may not be exactly right, But it's close. So a hypothetical $5 adjustment (a number I'm making up because I'm too lazy to dig into the statements, since they might adjust on market value anyway) is really worth something in the $10-$11 range for the value of the warrants. Not bad.
    I find exaggerating numbers often helps in understanding their dynamic. As a fantasy thought experiment, let's say AIG spun off $44 worth of business. Warrants would then have a strike of one dollar, and each warrant would convert to 45 shares at that price ($45 dollars for 45 shares at a dollar each!). Presumably the remainder of the company would have a book value of $35. Think about that. At book value, each warrant would be in-the-money by $34 TIMES 45 shares- $1530 each. While that's clearly crazy, the math is real. To the extent AIG returns remaining capital to shareholders, the warrants are exponentially rewarded. Although the good angel on my shoulder is rooting for the best long term strategy for AIG, if Paulson and Icahn force AIG into a partial liquidation, it's us warrant holders who have the most to gain- by a lot. Cha-ching.

    Sentiment: Buy

  • Reply to

    They will breakup

    by zissi022000 Jan 22, 2016 2:24 PM
    j0n_48195 j0n_48195 Jan 22, 2016 4:44 PM Flag

    A partial mortgage spinoff was just "unofficially" announced/leaked. Give some shares to existing common holders? I don't see the point. If they can get top dollar on the open market, sell the unit outright and plow the cash back into buybacks. This "partial" stuff is nonsense. The point should be to simplify. This just makes the balance sheet messier and I fail to see any operational efficiencies to be gained.

    Sentiment: Hold

  • Reply to

    found this in 3rd quarter cc

    by starcraft_1998 Jan 21, 2016 2:43 PM
    j0n_48195 j0n_48195 Jan 21, 2016 3:24 PM Flag

    Maybe, but I would hope any more such losses would be vetted. There's no excuse for waiting for earnings to give a "heads up". My sense is that there will be a pile of restructuring charges thrown in for good measure. 777 disagrees. I hope he's right. But for whatever reason, a lousy quarterly report will all but give the upper hand to Ichan.

    Sentiment: Buy

  • Reply to

    energy loans

    by xanasde Jan 15, 2016 11:10 AM
    j0n_48195 j0n_48195 Jan 20, 2016 4:21 PM Flag

    Thanks, I needed to hear that. I put a limit order in at 9.05 thinking it wouldn't be filled till I could finish my homework. Well.... it was, earlier today. Then I had an attack of buyer's remorse. What if they are neck deep in oil loans? So much for due diligence....

  • j0n_48195 j0n_48195 Jan 18, 2016 10:43 PM Flag

    I like what you're saying, but size is usually the result of profitability- not the cause. AIG will be surpassed by the likes of ACE (run by Hank's son), if they cannot make their capital more productive. I bought AIG warrants over BAC because I agreed with your assessment of the insurance industry. I still don't think we know what banking will look like in 5 years, much less in ten. But just because the insurance industry looks good, doesn't mean there won't be losers. The fact remains that AIG has over-promised (remember Bob's 10% ROE goal, that became "aspirational" after it became apparent it would never be reached?) and under-delivered (6.9% ROE over the last 12 months). You are right, AIG has unlimited potential. But the difference between "can" and "do" is vast. AIG has yet to prove it hasn't stalled. Nobody has more to lose here than I do, but facts are facts.

    Sentiment: Hold

  • Reply to

    ceo

    by jtirich Jan 11, 2016 9:04 PM
    j0n_48195 j0n_48195 Jan 15, 2016 10:30 AM Flag

    I'm over 90% in the warrants. I can afford to be patient, but I cannot afford a failed strategy. I hope you are right about last quarter being the "big bath". If I'm right, my dreams of secure retirement will be delayed by another year. Oh well..

    Sentiment: Hold

  • Reply to

    ceo

    by jtirich Jan 11, 2016 9:04 PM
    j0n_48195 j0n_48195 Jan 12, 2016 1:18 PM Flag

    The only thing that's not to like is the fact that the company has poor profitability, and it appears their ambition was to take six years get it up to a minimally healthy 10%. I'll say again, admitting that got Herzog fired. The stock is cheap for a reason. Unless combined ratio and ROE get back to healthy levels, AIG can and should stay cheap. Buybacks only hedge that partially- to the extent they are unsuccessful, they compensate more with discounted repurchases. That's OK, except they will eventually run out of excuses. I also think we're likely to get a major housecleaning announcement in January. It will be packaged as a fresh start, but the bottom line will be major write offs and reserve adjustments. You will be expected to applaud the bad news. We'll see.

    Sentiment: Hold