One week from today, on March 7, FNHC releases its 4th Q earnings. I have been surprised that the PPS has dropped so low, given all the good ratios and valuations on this company. I mean where can you find a company today that has both a trailing and forward PE of around 8; a price book ratio of 1.5; and and ROE of nearly 20%? Where? On top of that, long term executives who do not over-promise and who have given steady leadership over the past many years. FNHC seems to have very good reputation among FL insurers. Yes, growth rates on new policies have slowed in the past couple of quarters...but there is still good growth. I am hopeful that a good quarterly report one week from today will give a well-deserved boost to the PPS. -Scott
Thanks for your thoughts, biotech. I agree fully when you say that "this sector is quite out of favor at the moment." Berkshire Hathaway showed poor returns on its insurance company, Geico, in its report released this past Friday/Saturday. Also, a good insurer recommended by Motley Fool, MHLD (which I own) has also been down...while also being a solid company with excellent valuations. So it seems that FNHC is in good company with its depressed prices lately. And hopefully, like all good companies, they will recover in their PPS as long as they keep doing what they do best, don't get too greedy, and keep providing reliable service at a competitive price. -Scott
Biotech...is your question about interpretation about the high change in the percentage participation by FNHC, from 10% in 2015-2016 to 25% in 2016-2017? Or is it the cost increase that you are concerned about? About the latter, with policies increasing about 30% per year, it seems that the cost going up about 27% is in line. But the percentage participation is more troubling. Maybe they have larger set asides, cash on hand, this coming year than the previous year. -Scott
Ah, fabulous...always have appreciated your comments over the years. This time around, however, it would have been better if you had indicated your shorting before the quarterly report today. It sorta looks like, well, Monday morning quarterbacking. And it seems to put you in the category of the windbags on various boards....boasting about their "after the fact trades."
So, for the sake of us who are not traders, but are long term holders, for the next 5 years, do you think FNHC has what it takes to steadily be increasing its profits, market share, earnings, etc? Or in the same 5 year window do you think there is a better FL insurer?
Thanks, fabulous, as always, you are perceptive and gracious. And now I understand that you posted shortly after you shorted... that helps. And to clarify, I surely do not put you in the category of windbags who boast about their profits after the fact. You are correct in your statement that you have been saying for quite a while that you think FNHC is a stock to be traded, not held for a long time at these prices. But now at $21, I think we probably have a nice base here. FNHC has always had quite a bit of volatility in its prices. I just don't have the time or the energy to watch it daily. Thanks. -Scott
Also, nicely covering divvy, with AFFO annual of .84 and divvy of only .48. Lots of plans by Wes Edens, who successfully spun off NEWM and NRZ from NCT in the past few years, with overall fantastic returns to shareholders who have been patient. The golf course business overall in the States is a bit flat, but Wes and company have fantastic plans for the future. Also, golf courses own an incredible amount of real estate, which they are seeking to convert into new centers with games, food, entertainment, bringing a younger demographic into their golf courses. This is a penny stock, less than $5, but with patience, this could be a fantastic holding. And while you wait, an excellent divvy yield which is more than sufficiently covered by earnings. Not GAAP earnings, but AFFO earnings. -Scott
I agree wholeheartedly, golly....and in the Q & A part of the CC, Wes Edens talks about stock buybacks or possibly a special divvy to reward patient shareholders. Actually, today (Wed) I bought 1500 more shares, not a lot of $, but am putting my money where my mouth is. By mid 2017 we hopefully will see good progress made on the new golf-entertainment complexes at several golf courses. Wes Edens has done very well for himself and patient shareholders, over the past several years. I am very willing to make an investment in him and in his experienced management team. -Scott
OK news this morning, about $10 million buyback of shares. But in my calculations this is only 3.6% of shares outstanding. That is good, but not fantastic news, in my opinion. The price jumped at open, on this news, but I suspect shares will end up flat for the day. At $20 per share, significant price appreciation will require patience and the continued steady hand of seasoned and respected management. But for the PPS to drop from a recent high of $32 (on Oct 28, 2015) to the recent low of $19.16 (on Mar 10, 2016), well, that does shake one's confidence. For those picking up shares now, I also imagine there will be quite a bit of selling in the next 3-6 months as the price goes back to a more "normal" price of $25+ . Some quick money to be made here, I think, which probably will mean more volatility in the months to come. And on top of that, the start of a new hurricane season, with its uncertainty. -Scott.
Fieldman...you may have "gut" feelings for SNC, over FNHC, but I am not convinced. On key stats FNHC comes out ahead, sometimes way ahead--for example PE for FNHC is 6.8, for SNC is 21. Price to book for FNHC is a very low 1.2, for SNC is 2.2. And so it goes.
And when I compare SNC to another insurance company I own, MHLD, it seems MHLD also wins, hands down. SNC is only better than MHLD in lower debt and marginally better return on earnings (ROE).
Else in comparison, first number is MHLD, second is SNC: PE=10 vs. 21; Forward PE= 6.4 vs. 11.5; Price to book: 1.1 vs. 2.2; Divvy yield 4.5% vs. 1.9% (though SNC has only started divvies in the past 3 years and might have bigger increases going forward); Estimated earnings for next year compared to this current is predicted up 20% vs. up 13%. The stats on SNC are decent, but it seems that MHLD is a better value all around.
Am I missing something? -Scott
So what are your opinions on First Q 2016?
Seems to me to be OK, though not quite as good as past quarters. According to their release,
• 27.5% increase in gross written premiums to $136.0 million
• 25.5% increase in total revenue to $69.0 million
• 23.1% increase in Florida homeowners’ policies to approximately 253,000
• 3.9% increase in book value per share, including noncontrolling interest, to $18.89
According to those who regularly post, and my own calculations, here are the previous counts on policies.
Total policy count:
For 2011 was 49,000
For 2012 was 67,000
For 2013 was 134,000
For 2014 was 182, 500
For 2015 was 243,000
Right now PPS is right at about current book value. Seems to be good value at this point. Fabulous, Hua (haven't heard from you lately), and biotechisfun, what do you think? -Scott