" But when it comes to cost controls and policy pricing I fail to see how any company can have a sustained advantage over another. "
Oh I didn't say others have a sustained advantage over AIG. I think AIG can get there. But it's a matter of execution. 10% is like par and 15% is where the champions are. But if AIG isn't performing like TRV, there must be reasons. Are there legacy issues? Are these issues being eliminated? The last several quarters their performance has seemed to stagnate. And remember that 2013 was an exceptionally good year for P&C pricing. We're looking at earnings from operations in the $1 range instead of $1.50+ where they should be. AIG may be moving in the right direction in the ways you mention but we haven't seen it in earnings yet. When we do, the stock may move upward pretty fast, but until then, I think it goes nowhere.
The "dividend" is not safe. Management tells you it is safe. Basically they borrow money or issues shares to buy assets (or companies) which ostensibly have cash flows, and then pay a huge dividend without any regard for how profitable they are. DCF (or its nameless LINE variant) is the biggest scam on the market. They pay out the capital of the company while building up debt to the moon. Take a look at the balance sheet. That debt just builds and builds and builds. What happens when interest rates go up? And of course they'll have to acquire more assets in the future. The real source of cash is in the issuing of shares to buy assets and companies. Future investors will be needed to pay out current distributions. It's nearly a ponzi scheme. This whole finance model is a time bomb. If you've made money on it, great, but it's not a long term investment and there's no telling when the ticker on this bomb will run out.
"a path to improved profitability"
Benmosche needs to show that. He hasn't thus far. As I've said before, his turnaround efforts have been heroic but AIG is not showing a trajectory to greater profitability. TRV earns 15% ROE. AIG seems a very long way off from showing even 10%. AIG has been under performing its peers the last 6 months and for good reason. I think $60 is possible this year if and only if Benmosche shows us that 10% ROE is on the horizon. Until then AIG may trade sideways. For the (distant) future, AIG should be able to get 15% ROE and if it trades at 10x, then you get $100 per share. Not to mention that BV would be increasing all that time, so there is a good deal of upside from there. If it were to trade at 15x (which is historically not unusual at all), then you get $150 per share. These numbers are not ridiculous. They show the potential this stock has if only they can show improvements in operations.
Henry Waxman had nothing to do with repealing the uptick rule. The SEC does not approve requests from the finance committee. The SEC had started the process of eliminating the uptick rule in 2004, long before Waxman was ever chairman of anything. If your question is why they did it, I think that's pretty obvious -- lobbying by short sellers.
Regulation SHO concerns naked short selling, not the uptick rule. It's a regulation that doesn't really have any teeth to prevent naked short selling, but that's what it's supposed to do. Again, lobbying by short sellers. If there is another report you are referring to, provide a link.
Google the following on SEC.gov:
"SEC Votes on Regulation SHO Amendments and Proposals; Also Votes to Eliminate "Tick" Test"
I agree that the whole thing stinks though. With Washington, the more you look into something, the more it stinks.
Finance Comittee? The SEC eliminated the uptick rule. The Bush SEC. It had nothing to do with Congress. Look it up.
Here was their reasoning:
"The general consensus from these analyses and the roundtable was that the Commission should remove price test restrictions because they modestly reduce liquidity and do not appear necessary to prevent manipulation. In addition, the empirical evidence did not provide strong support for extending a price test to either small or thinly-traded securities not currently subject to a price test."
What followed was unprecedented short selling of equities.
Never chase a momentum stock. If you lose $1.30 but at the same time you learn that lesson, you've actually come away with more profit than you think. Also, never take advice from a Yahoo message board.
A little DD? LOL. Who cares what you did in 2011? I didn't say to buy RIG or DO, only that they are better values than HERO. MUCH better values. And who's ranting? You are incoherent.
"... first point out that most stocks in the sector are trading at a range of 1.5X BV to 2X BV"
Are you comparing HERO to RIG and DO and the like? That's funny. Unless my information is wrong, HERO's got 13 jackups cold-stacked. And how many high spec deep water floaters do they have? Don't look at BV for this one. What's the market for jackups? Can you get anything for them? HERO may be undervalued but I would say it's hard to value this company and that's the reason the stock stinks. You're better off with DO or RIG, both of which are better values IMO.
Everybody needs to take it easy. It's very much worth comparing these companies in a cool-headed way. Looking at Rev / Market cap may be too simple, though.
PLUG will be growing rev at ~150% and their gross margins will change drastically. PLUG gets all the attention because of Walmart. They're the ones who sparked the rally in this space. Their sales growth is off the charts. But their gross margins are negative (for now). Will they be profitable selling to WMT?
BLDP has lower revs but higher margins than FCEL. Their growth trajectory seems a better than FCEL.
FCEL has high sales and razor thin margins. Growth rates are a little irregular. From what I can tell, FCEL has projects that are in a kind of "trial" mode and could be a model for many more larger-scale power projects. Perhaps they'd then be acquired by a larger player? GE, maybe?
The problem I see with all of these companies is that there just doesn't seem to be a lot of profit potential. I really don't like to see single digit margins on $200M+ revenues.
The run up is simply attention being paid to the space after PLUG's successes lately. Hence, the reason I am here. Can anybody tell me what the deal is with gross margins? I was going to buy this but I can't in good conscience buy a company with such awful GMs. Still, they're at least positive, compared to PLUG. Is this a temporary thing? Will they rise with more volume?