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.
I'm on the record as saying I'd rather have seen them issue debt rather than diluting the stock which I still believe...
Having said that, I also have added significantly to my position, in the $12-$13 range these past few weeks. I've increased my holdings by over 50%. The earnings these next 2 quarters will be up significantly.
fabulouspoodle, I believe you made a good decision.
Very disappointed in this decision. With the stock so severely undervalued we get less than optimal value for selling stock. And now there are 30% more shares outstanding for $24million. Totally not worth it.
Especially with interest rates so low, debt would've been a far better choice.
I thought they could've done at least .50 last quarter but that didn't happen. This quarter I haven't a clue because of the impact of the increase in purchasing reinsurance. The bottom line might be skewed this quarter, but going forward things look quite positive.
ballen is right. They are going to raise more capital somehow.
Selling common stock is not a good idea because the shares are so undervalued. We get diluted and we don't get full value of what we are selling.
If you look at the numbers, you can see that business is getting significantly better.
They've increased the amount of reinsurance they're buying which means they are writing a lot more policies.
They are writing policies during wind season which they have not been doing too much of in the recent past which means the rates now in Florida are plenty good.
They say that recently new players in the Florida market have come in which is another indicator that the rates in Florida are "plenty good".
They say they are doing $3-$4 million a week in NEW business and it might uptick in the fall.
Our expenses are somewhat fixed. Meaning, except for reinsurance expenses, having 90,000 policies or having 200,000 policies have similar operating costs. So if you do the math, with all the new business we are doing, it's got to flow to the bottom line in the future.
I'd really hate to see a common stock offering at this price, because we're undervalued. If it's between the two choices of preferred or common stock, then I say preferred stock
Thanks for the information.
That is terrible... I felt not only was his English good enough, but he really gave a lot of good information that helps me as an investor. Especially when dealing with a Chinese company, I think having the conference call is important as it's much harder to understand what's going on in a foreign country.
I'd strongly suggest that they re-instate the conference call.
So, does it mean the company will still hold conference calls every quarter? (just not Mr. Koo?)
That's sad that he received criticism. I found him to be very informative and helpful.