FNHC does not actively pursue policies from Citizens like other companies do. It's possible that former Citizens customers are now FNHC customers just because some wanted to switch carriers or FNHC offers a lower rate. But that's not what we're talking about. The business model of other companies involve active pursuit of Citizens for revenue growth. FNHC is not doing that.
I don't know what analysts projections you're talking about that we missed "by quite a bit". Admittedly, I don't pay much attention to that sort of thing, so if you have a link, that would be helpful.
I have a link.
The title of this link is:
"Federated National beats 3Q profit forecasts"
It goes on to say::
The results topped Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 31 cents per share.
By my calculation 56 cents is an earnings beat over 31 cents of 81%.
So according to this article FNHC beat the estimates by 81%. Again, I don't put much weight into analysts, but if you have an article that says they missed by quite a bit and this article says they beat by 81%, that is a quite a discrepancy and we should all know about it.
As for HCI, UVE, and UIHC, you should probably do some more research. I'm not a big fan - especially of HCI. Just because a stock price goes up doesn't mean you're right, and just because it goes down, doesn't mean you're wrong. I know that HCI's stock price is having an incredible run. But I think FNHC is a far better quality company.
I don't understand. What is weak? The quarter was good, and business is still growing at the same rate, and a new income stream will be coming from Monarch which will boost business even more in the coming quarters.
Also, FNHC doesn't take any business from Citizens.
Yes, I'm holding. I still haven't sold any of my shares. Glad to see the new high and waiting for more to come.
Price was over $26 on the day of the conference call. Then takes a nose dive straight down to ~$19.50 where coincidentally they decide to do the offering. Pretty much at the lowest price possible. Then beginning the next day all the way until now, heads right back up. $25.50 as I type this. I really have no clue why anyone would defend the execution of that offering. Just look at the numbers. This company is worth far more than the $25 it's trading at now and we gave away shares at $19.50.
ok, obviously you are looking at this vastly differently than how I value stocks, which is as a die hard value investor. I disagree with most of your points, and think your logic is inconsistent in some cases. Only a few weeks ago you were talking about how this company would show a loss in q2 which I totally disagreed with, and they reported one of the highest if not the highest quarterly profit ever in the history of the company.
Now you are singing the praises of $19.50 being a great price.
It's bewildering to me how you value the company, but that's irrelevant. I have my own method of valuation which I have been using for years. I am very comfortable with it and will share my thoughts on this board to help out anyone willing to listen.
I have been very satisfied with the performance of management and have agreed with almost everything they've done in the past 5 years.
I raise the concern of being diluted by 70% between the last 2 offerings. I realize that to some people a greater number of shares outstanding is of little concern, but to me as a value investor, it is of great concern especially when done at questionable prices.
I reiterate that the prices of both these offerings are undervalued.
I wrote about the first offering last year and stated that I strongly disagreed with it. The price at the time was $10.75 and it was totally and utterly ridiculously underpriced. In the 8 months following, the stock price has done nothing go head up, and even hit prices of $25/$26. So how did that work out for us? In my opinion, horribly. Why in the world would I want FNHC to sell shares at $10.75? In short I wouldn't.
I'm saying NOW, that I absolutely wouldn't want FNHC to sell shares at $19.50 which is what they just did.
If anyone disagrees, I am open minded and willing to listen. All I ask is that the arguments make logical sense for a healthy discussion
You can make your own judgements. I'm very comfortable with mine- $19.50 is NOT a good price.
I question why "...they didn't have a choice". Where did you get this information.
I also wonder why $19.50 - pretty much the lowest price possible is reasonable. I also wonder why "..they had to wait for earnings to come out". Are secondary offerings tied to earnings release dates?
I also wonder why "...they really can't wait since we're in hurricane season". It is quite an assumption that a hurricane will send the price lower than $19.50. And by that logic, if you were so worried about hurricanes, why not do the offering in May, before hurricane season?
I also wonder why "...if they waited a few more weeks they could've gotten $21 or $21.5/share". Again that is quite an assumption. Why not assume they could have gotten $24 or $26 or $30? Nobody has a crystal ball so I'd argue that any of those numbers are equally as likely, especially given that it's been only days after and the price has already risen above your hypothetical price of $21.50. . If they got $26, they'd have 500,000 fewer shares.. very significant.
Timing the market is not a game I want management to be engaged in. However, I stand very strongly behind my statement that this is a horrible secondary offering. That's all I'm saying. The first offering was ridiculously undervalued and I was very strongly opposed to it when they announced it. This offering at $19.50 is also undervalued and whether due to bad luck or whatever, they got pretty much the worst price you could get. I feel very comfortable making that statement.
As a result of these two offerings we've been diluted by 70%. Meaning you and I as shareholders own a 70% smaller piece of the pie than what we originally bought. Now, some of this may be a necessary evil, but it could've been done better. I don't like it when people take away my pie and then don't do it in an efficient way. We as shareholders should be very cognizant of this. In this case,we own a valuable asset and great care should be taken in that ownership
I know they didn't but, it's as if they waited for the price that brings maximum dilution. Why $19.50? That's a foolish price to sell at. I'm not happy about this price at all. As an owner of this stock since early 2010, this is the most unhappy I've been with this company. The only other time was the other stock offering, where we just basically gave away the shares for a tiny fraction of their value. Even when the company was losing money quarter after quarter, I had no problem with that.
I'm not saying I'm selling, but this is the first time it's casually crossed my mind. A few more moves like this, and I seriously might.
This stock offering at this price was a mistake.
re:#4 You read my post wrong. I don't believe your numbers are wrong. I believe that number is right.
re#2: I don't understand your confusion. You answered your own question... policy count is up over 100%, that's the reason reinsurance is up over 100%. That's what's supposed to happen.
re#3: See #2.
re#1: if there is a .25% decrease it's totally fine with me.
That's strange. I don't remember any talk about lowering rates. What did they say? And when did they say it?
Reinsurance is up because the number of policies is up. They were not under insured last year.
Your reinsurance calculation is not incorrect. As you stated they will pay $117M in reinsurance and there will be an expense of 1/4 of that each quarter.
Let's consider this. The amount of protection they are buying is 2 or 3 times more than what they bought last year. We also know that they have been ramping up the amount policies each quarter for the past year/year and half by a lot. If you look at the amount of in force policies each quarter you can see why they have to buy more reinsurance. We know that reinsurance costs have not been going up as their have been no major disasters in the past several years and it seems the reinsurance market has become very competitive as a result. If you are concerned that we are just paying an increased price for reinsurance, there's currently no evidence supporting that. A more likely conclusion is that the rising reinsurance costs are correlated to the amount of new policies being written and currently on the books. We obviously have more exposure to hurricanes because we're insuring so many more homes.
You raise a good point about the impact in the near future. There may be an impact to q3 that might cause the ratio between number of policies and reinsurance costs to skew, because of timing as we're writing more and more policies. Over time, everything should even out and the trend is definitely a significant upward trend as we move forward.
This doesn't affect q2. And going forward, this is a good thing. I can't tell from reading your post if you see it as good or bad.
"Raymond James raises price target to $26 from $22. Rating outperform"
Seems to be happening with greater frequency lately. After all this time, looks like we're getting the recognition we deserve. Still undervalued though, even at the raised price target, but headed in the right direction.
I agree with ballen2123. The number of shares sold by the CEO is tiny in comparison to how many shares he has. Also, we're in the middle of a huge turnaround. Not too long ago the stock price was in the middle single digits and now it's over $20. It's totally natural to want to sell a few share after such a huge run up. And might I add, nobody has been selling in these past few years. Having said that, I still wonder why the stock made such a huge move in one day yesterday on very heavy volume. Absent of any news, I wouldn't worry about it. But any time something like this happens, you have to wonder a little bit about what's going on.
The minor stock selling by insiders doesn't concern me, but I'm curious about the irregular stock price movement. One theory would be that some entity with a big long term position decided to take their profits here after making X times their money and exit. Who knows? If anyone has any idea, please let us know.
As for earnings, I agree with ballen2123 again. I think $1+ is definitely do-able in Q2.
Unfortunately, I don't think they'll be enough of a pullback for me to increase my position. Especially with Q1 numbers coming soon. After that, there won't be any chance to buy. I think people on Wall Street are starting to catch on and pay attention to our stock here which will make it really hard for people trying to go long at a bargain basement price. Although even at $20 it's still quite undervalued, I think the days of fire sale/bargain basement prices are over.
If that's the case his $1.75 doesn't make any sense at all. These "analysts" just aren't doing a good job at all. Without going into too much detail, let's just take the most glaring inconsistency. If his estimates for Q1=.59 and Q2=.67, that's $1.26 right there. Those numbers quite possibly are off but I don't even need to go into that to prove my point that these analysts are off. Anyway, using his numbers, that means he believes $1.75 -$1.26 or $.49 will be made in Q3 and Q4 COMBINED. How does that make any sense??? We made almost that much in Q4 of 2013 alone and revenue is going to be a helluva lot higher in Q3/Q4 2014 than it was last year.
Whatever analyst is in charge of this company, really has no idea what he's talking about.
Needless to say, I still think this stock is grossly undervalued, and judging from the stock price action, I think a few more people are finally waking up to this fact on Wall St. We'll see how long it takes for these guys to figure this out.
I don't see much evidence of a buyout on today's volume. It's possible that it's the end of the month and last day of the quarter and maybe some players have been trying to put on a position in Q1 since the positive conference call. But there has just been a relentless upward trend in the stock price giving no chance of buying on a pullback. Finally giving in and buying on the last day. That might be one way to explain it.
As I've said, someone on this board mentioned that they targeted a $19 stock price by the end of the year, but I believe $19 is way undervalued and I'd be disappointed if this wasn't in the $20s after the next conference call. I think the rest of Wall St. is finally waking up to this stock for a few reasons.
#1 The market cap while still small is starting to become significant allowing some funds to be able to take on a position. A few years ago we were at below a $30M market cap.
#2 Quarter after quarter of improving business conditions and bottom line numbers. This stock is showing up on people's stock screens.
#3 Ever since late 2011/early 2012, the stock price has been heading up and up and up. That gets people's attention.
$19 by the end of the year is incorrect. If you look at the analysts general consensus number, I believe there are 2 analysts and the consensus is $1.23 eps. That is wrong by a wide margin. They made 46 cents last quarter and they're going to beat that this quarter. I'd be mildly disappointed if the price didn't get into the $20s after they report Q1. IMO if we're at $19 at the end of the year, something bad happened that impacted the company or stock price.
Although he didn't make a huge purchase, I don't think Simberg bought above $16 because he thinks it's worth $19. He thinks it's worth more than that. I think it's worth more than that right now.
There reason there is no announcement of a dividend increase is because they will not raise the divided any time in the foreseeable future. They went through the effort of selling more stock to raise capital. They pretty much need the money that they have. To put it in simple terms, the reason they sold more stock was to cover the rapid increased policy count. There are regulations which specify how much money you need to hold to cover the costs of the insurance that you write. So to pay out more money in dividends hinders their ability to support this rapid policy growth that we're experiencing now and for the past several quarters.
As for the current stock price, we are still way undervalued by my calculations, and there is in my opinion absolutely no reason to sell even at the new highs of $16. There are plenty of business reasons why this is a solid company selling at a discount, but to keep things simple, even just looking at policy count alone and where that number has been, where it is today, and where it's going, it's hard not to think that $16 is a bargain price.