I don't think Eddie Lampert has covered himself with glory with his management of Sears and Kmart.
"Never will happen, but it does show what the market thinks of management."
NO! The market never even looks at NWLI. "The market looks at AMZN and is willing to pay almost 500 times earnings for AMZN even though AMZN has announced that it will have a huge loss in the third calendar quarter that will probably make AMZN sell at 1000 times earnings. You have to understand that the "market" can be irrational for a long time. The "market" is infatuated with internet companies and biopharmaceuticals like it was during the dotcom boom. It won't be like this forever. I have made a lot of money shorting AMZN.
Please take a look at the Retained Earnings on the balance sheets of AMZN and compare it to the Retained Earnings of NWLI. This represents the accumulated results of the two companies records. AMZN has been a public company for 16 years and never paid a dividend so the retained earnings represents its accumulated results and they have been dismal. Even though NWLI only pays a small dividend it has accumulated a very large amount of retained earnings over many years compared to its original capital. This is the true measure of success.
Well, I thought that the recent sharp decline in the price of NWLI was a good opportunity to make a short-term trade. So I bought more shares in my IRA at just below $244 and sold those same shares today at just below $251 realizing a non-taxable short-term gain of about $7 per share. I still have a large core position in NWLI that I did not change. NWLI is my only long position in what I think is a dangerously overpriced market due to the Fed holding interest rates at near zero %. I can't find anything else that I want to buy and have nearly 50% of my assets in cash earning nothing. I have covered about 90% of my AMZN short with about a 20% realized gain. I don't know what else to do while waiting for the Fed to quit persecuting savers and old folks.
Maybe NWLI will go back down again giving me a chance to reload for another short-term trade.
To NWLI true believers and value investors:
Around the end of 2013 I thought the market was getting very frothy in the tech, biotech and other momentum type stocks and that some of them were in for a decline that would probably affect the overall market. So I sold all of my stocks except NWLI. I did reduce my position in NWLI, but it is still a very large position. In order to hedge against a decline in NWLI, I decided to short Amazon.
The way I looked at it was that NWLI and AMZN represented two extremes of what a value investor would be interested in. NWLI was selling at about 9 times earnings and 60% of book value and AMZN was selling at 635 times earnings and 20 times book value. If that wasn't irrational, what is? So while NWLI has declined
somewhat off of its highs, my short of AMZN has cushioned the loss in my account. I started to short AMZN at about $385 and continued to short it as it continued to rise. My highest short trade was at $405.99.
Today I covered part of my short at $305 and made $100 dollars per share on the highest priced short trade.
I don't think 2014 is going to be a good year in the market. Some of the warning signs are as follows:
So many IPOs of companies with operating losses.
So many companies buying back enormous amounts of stock at very high prices as compared to the very few buybacks in 2009 when they could have bought back the same shares for a fraction of current prices.
Record margin debt.
Many insider sales.
Many dividend increases and companies operating at very high operating margins. (but not AMZN)
The Fed keeping interest rates at 0% going on six years.
Markets are IRRATIONAL. If this one gets back to $65 like it was in about October of 2012 I will be all over it again. Pray for more irrationality.
I don't imagine that the Gidwitz's are "happy", but they are in an industry where it has been tough to make a buck for a few years. They did manage to make money by suing their insurance company. Then there is the matter of executive compensation. James Gidwitz makes a salary of $650,000 for managing a company that as you correctly pointed out, doesn't make money. And I don't know how much they make on directors fees, retirement pay, insurance and other compensation. So I would say that the company is run for the benefit of the Gidwitz's rather than the minority stockholders.
Finally, I would say that when you look at book value, you need to deduct the amount shown as goodwill (over $7,000,000) because this company does certainly not have an exceptionally high return on its invested capital.
I owned this stock several times and I made good money by timing my purchases and sales. However, I don't own it now and I would look elsewhere because I don't think the Gidwitz's have their shareholders best interests in mind.
Sardar and Biglari Holdings should be included in an ETF for companies run by greedy egomaniacs.
I feel hurt. You left me out of your post at part 4. f. Main shareholders
Insider transaction reports that Amazon's fearless leader Jeff Bezos recently sold 1,000,000 shares of Amazon stock. Other directors have also sold stock. I think the rats are abandoning a sinking ship.
I agree with your analysis. However, I prefer to try to trade it closer to the extremes at the risk of missing the turn. My decision relies on my belief that
the market has no clue how to price stocks. That is why I shorted Amazon.
dsouth7777 and batraa:
I am pretty much in agreement with your posts but the problem is that in a correction or a bear market, prices just keep going lower. In the short term, the market is not always rational. I sold
a lot of my stocks including some of my NWLI but NWLI is still by far my largest position. I will
buy a lot more NWLI at lower prices but I imagine it will be some time before I am interested buying.
I covered about 40% of my AMZN short this morning at about $362.50 and it was my most successful short ever. I will now hold on to the rest of the short because I think AMZN will go down more. I have made enough money on the fraction of the short that I covered so that I won't
worry too much about it anymore. This episode in shorting AMZN has been much better than another one about a year and a half ago when I shorted AMZN on a Friday at $192 and covered it on Monday at about
$205 when Morgan Stanley repeated its buy on AMZN and increased its target price for AMZN to $250. With my cover this morning, I recovered
my loss plus about 100% more.
Yes it has been a long time.
Counting yesterday only, Under Armour was a worse short than Amazon. Today amazon is a great short and I covered about 40% of my short at about $362.50. So it qualifies as my most successful short ever.
ANAT and NWLI have been great stocks for me and I need to thank you for mentioning ANAT to me. I never would have found it on my own and I found NWLI through following
ANAT. So thank you very much.
Well my average short sale price for AMZN is about $390.00 so it has not been real fun for the last month, but I am slightly in the money now and if investors begin to understand that companies actually have to make money to be successful, AMZN could take a real hit.
Well, we are busy bailing out of the market because it is getting killed. I think the market is not going to have another year like last year. I have sold a lot of my stocks. Now have 2 longs and one short. It is becoming very difficult to sell without driving down the price of the stocks you are trying to sell. Liquidity is a thing of the past. Tomorrow my short, AMZN reports earnings and I hope it dies.
I own both ANAT and NWLI, so I have known of ANAT's strong stock price performance. Actually, it has been much better than you have said if you go back farther. I bought a good bit of ANAT in October 0f 2012 at around $65. The market price was way too low then. I think NWLI's stock price is still way too low now and I have been buying more of it.