We were bitten by the toxic unit. I thought it was behind us when they got current with the mortgages. Now it's the credit card unit. There's no real issue here in terms of the company having financial problems, but Wall Street hates to see uncertainty. I didn't buy any yet, but I have an order in.
It's not a downgrade. It sounds as if Fitch doesn't see the economic benefit of providing the ratings. But maybe it was interpreted as a downgrade. I don't know why the stock fell back to the 16.50 area. In the absence of any other news, I see it as a buying opportunity.
The other 2 main divisions are general insurance (business insurance) and title insurance. They were able to pay the dividend from the general insurance division profits during the 2008-2009 economic crisis when the title and mortgage divisions were bleeding. That's why I don't worry about the dividend. And now title is very profitable again. So the other divisions are doing fine.
I just got up from my nap. I was listening to the conference call and Al put me to sleep. I had to listen to it a second time. No need to, nothing in it. He was unwilling to answer the one question he had. He certainly doesn't care how the investment world perceives him.
I believe the news is negative, but I do not think it affects the current dividend. But until they get caught up with all the back claims and the runoff is positive, it probably means they will continue with the miniscule .01 per year dividend increases. I don't know when they plan to have the back claims current. That would have been a good question for him. Since he didn't offer any comments on it and the conference call was a downer, I'm guessing they are years away from getting caught up.
I own it for the dividend. I'll probably hold what I have for now since 4.5% beats what my bank pays. But I'm tempering my expectations for a major run in the stock price. I can't see Wall Street getting behind ORI until this albatross is finally gone. Luckily their other divisions are doing well.
I didn't get the joke. But if anyone is using a stock screener focusing on earnings growth, I can tell you that you're going to get misleading results. The company is extremely profitable and it's accelerating. I don't care what the effing stock screener says, lol!
Sentiment: Strong Buy
There was little chance of a bigger dividend increase as long as they were still under the scrutiny of regulatory oversight. I was hoping they'd get the problematic division spun off before now and reward long-time investors with more than the .01 increase that we've seen since the financial crisis - which ended some time ago.
Oh well. No reason to sell since I still expect the spinoff and bigger dividend increases in the future. But it's taking longer than I was expecting.
Ouch, that hurt my portfolio value! I wish I had waited to add. But I did buy a few more shares on Friday. I'm looking for cash to buy more next week. The dividend is more than secure (they had no problem covering it in the middle of the financial crisis) and over time it will increase faster than .01 per year.
I think we got burned by two things on Thursday/Friday - one is what the caller referenced: existing shareholders get nothing from the spinoff of the runoff divisions. At the last attempt at a spinoff (that was nixed before it occurred) even though the new company wasn't going to be worth much, at least existing shareholders were going to get shares in it.
Second, the general market selloff. If the economy weakens, ORI's 2 divisions (that will remain after the spinoff) have some economic sensitivity. So perhaps the perception is that they will be stagnant until the economy gains momentum again. That's my best guess. I think it's a misplaced concern. The "new" ORI will be profitable in all economic conditions, although some years will be better than others.
At this point the spinoff can't happen fast enough for me. It's holding us back. The company can and will increase the dividend at a faster rate once the MI/CCI divisions are officially gone. But they have to be officially gone. It should happen very soon. But in his usual unconcern over what investors think, crusty old Al didn't try to alleviate everyone's concerns over it. If he can get the deal done in a few weeks, maybe we'll be seeing a modest boost in the dividend this year - possibly .04 (.01 per quarter) instead of .01 per year as we've seen since the financial crisis. Then even more in 2015 and beyond. Particularly for income investors, this selloff is a great opportunity.
Sentiment: Strong Buy
I may be early, but I think we'll be significantly higher this year. The stock should be in the 20's by year end. A buy at 17 per share plus the dividend would be a 20% total return if the stock hits 20. Wall Street probably wants to see the specifics on the mortgage insurance spinoff before they jump on board. But I think it's coming and will be very bullish.
I have made more than I deserve. I sold shares today, but I am still long. In the absence of a general market selloff, I think ORI goes higher.
The only times the volume has been higher in the recent past was when there was news. It was impressive to see the buying occur at the end of the day on a Friday, with no news, and as other stocks were falling. ORI buying was accelerating as the overall market decline was accelerating. Very bullish IMO. I'm looking forward to tomorrow.
Sentiment: Strong Buy
Thanks for the comments, Harold. Not all my insights work out as well as they have on ORI. So I'm grateful when things do work out.
I do feel confident about ORI's dividend - the stock price is a lot less predictable. Just the hint that the Fed might stop QEIII caused a selloff a few weeks ago. Ironically, ORI will benefit from higher rates because their investment returns will jump. And if rates are rising, it should mean that ORI's premiums are increasing because the economy has improved.
Nonetheless, the market interpreted higher interest rates as a reason to dump all dividend stocks. ORI was not exempt. I think ORI should approach a 4% dividend yield ($18 per share) as long as interest rates aren't rising. So I'm expecting it to go past $15 and keep going. But bear markets do happen.
I'm just guessing on the 2014 dividend. I think people who buy ORI for the dividend and intend to hold it long term will be very glad they did, whether the faster dividend growth starts in 2014, or 2015 and beyond..
This is just me reading between the lines and referring back to some prior conference calls. IMO I think ORI wants to avoid its mortgage insurance division filing bk. The N.C. regulatory agency can force that. I believe - again just my interpretation - that ORI feels that it will be the wrong message to send to the regulatory agency if they raise their dividend aggressively as long as they aren't paying 100% on the dollar on the mortgage insurance claims as they are filed. Currently ORI is only paying 60% and accruing the rest on the books.
ORI has a loan on the books that has a covenant that if any of their subsidiaries files for bankruptcy, the whole loan comes due immediately. Al Zucaro (ORI CEO) took a lot of flak from the investment community on conference calls last year because he said he wasn't particularly worried about that happening, but if it did, ORI would refinance elsewhere. He was 100% correct, imo, that it was a non--issue. But Wall Street didn't like his answer.
So that is another reason that the company wants to avoid bk. It muddies the water and requires action by the company. It won't hurt ORI financially - the mortgage insurance division is a separate entity. But it would be a PR nightmare and affect the stock price short term. Also in a conference call last year, Al said they wanted to add another $100 million in liquidity on their books. I am guessing that behind closed doors, Al said "never again" would he be caught short on cash.
So because of all that I suspect they will go slow on dividend increases. At least until they are paying 100% on mortgage insurance claims as they are filed. But no matter what, I think the dividend is secure and will rise every year, "forever."
Sentiment: Strong Buy
millionaire, your post disappeared for a couple of days. Now it's back. No big deal. Just seems odd to me.
I bought more today. 5% is a good yield. IMO the dividend is rock solid and will increase every year. I realize that .01 per year increases in the dividend aren't much. But this is a company that insured sub-prime loans before the bubble burst. What were the odds that they'd survive, much less INCREASE the dividend in the middle of the crisis?! They are now much stronger financially.
Just my take but I don't think the company will increase the dividend by a larger amount until they go back to paying 100% on their mortgage insurance obligation. The two are not directly tied, but I think the company will want it to happen that way. Currently they are paying 60% on the dollar on their mortgage insurance claims and accruing the balance for a future payoff. I am hoping they will go back to paying 100% on the mortgage insurance claims in 2014. So I am expecting 2014 to be another .01 dividend increase, with larger increases starting in 2015. In the meantime 5% is a good yield level, even without any increases.
I was expecting the price to rise today - good thing I'm not a trader. We have another day before earnings are released. If we sell off again tomorrow, I might start getting worried! I think earnings could be very good - maybe even excellent, in both the general insurance and title divisions. And I'm hoping that the runoff division will show us the light at the end of the tunnel.
But there are less-predictable things, such as the investment returns and claims. That's what happened a few quarters ago with the worker's comp policies when claims exceeded projections. The company always makes it up - another reason to read the annual report, to understand that that news like that is not devastating.
No matter what, I think there's virtually no possibility that the dividend will be in jeopardy.
Their title on the report says it all - ORI is best suited for long term investors. There's a lot of good stats in the report as well as the business strategy.
Sentiment: Strong Buy