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Brian Abbott

 
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  • Fiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell hit a major snag after Republicans demand use of the "chained CPI" method for calculating entitlement benefits - which would result in lower payments for Social Security beneficiaries. Pres. Obama backed the provision previously, but Democrats now object to including it as part of a scaled-down deal. Updated 5:51 p.m.: The Senate won't vote tonight and will reconvene at 11 a.m. tomorrow, Reid says. [View news story]
    Macro- the futures are up but well below fair value. they went down more after regular trading closed on friday and are still below that point
    Dec 30 08:33 PM | Likes Like |Link to Comment
  • Fiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell hit a major snag after Republicans demand use of the "chained CPI" method for calculating entitlement benefits - which would result in lower payments for Social Security beneficiaries. Pres. Obama backed the provision previously, but Democrats now object to including it as part of a scaled-down deal. Updated 5:51 p.m.: The Senate won't vote tonight and will reconvene at 11 a.m. tomorrow, Reid says. [View news story]
    don- the US has to station troops all over the world - that's how you maintain an empire. I am not an apologist for the US military, just stating the facts. if we didn't establish a presence everywhere, then someone else would, and the US would lose its influence. it's just part of maintaining an empire.
    Dec 30 07:09 PM | 1 Like Like |Link to Comment
  • Fiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell hit a major snag after Republicans demand use of the "chained CPI" method for calculating entitlement benefits - which would result in lower payments for Social Security beneficiaries. Pres. Obama backed the provision previously, but Democrats now object to including it as part of a scaled-down deal. Updated 5:51 p.m.: The Senate won't vote tonight and will reconvene at 11 a.m. tomorrow, Reid says. [View news story]
    one thing is true, and this applies whether the money was paid in by the indivudal or not, is that people REALLY like getting government checks. I think it's high time we acknowledge that. Me - I've never gotten a check from the government, but whenever I do qualify, I am sure I will eagerly await it in the mail every month.
    Dec 30 06:45 PM | Likes Like |Link to Comment
  • Fiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell hit a major snag after Republicans demand use of the "chained CPI" method for calculating entitlement benefits - which would result in lower payments for Social Security beneficiaries. Pres. Obama backed the provision previously, but Democrats now object to including it as part of a scaled-down deal. Updated 5:51 p.m.: The Senate won't vote tonight and will reconvene at 11 a.m. tomorrow, Reid says. [View news story]
    those meager seniors had a vote in the manner, and in fact, many vote republication. i think of my grandmothers sitting there watching Fox News and complaining everything....
    Dec 30 05:58 PM | 3 Likes Like |Link to Comment
  • Fiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell hit a major snag after Republicans demand use of the "chained CPI" method for calculating entitlement benefits - which would result in lower payments for Social Security beneficiaries. Pres. Obama backed the provision previously, but Democrats now object to including it as part of a scaled-down deal. Updated 5:51 p.m.: The Senate won't vote tonight and will reconvene at 11 a.m. tomorrow, Reid says. [View news story]
    Tom- you might need less in treasuries if you were going to treat SS like an annuity. You would draw it down gradually based on actuarial life expectancy.
    Dec 30 05:57 PM | Likes Like |Link to Comment
  • Fiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell hit a major snag after Republicans demand use of the "chained CPI" method for calculating entitlement benefits - which would result in lower payments for Social Security beneficiaries. Pres. Obama backed the provision previously, but Democrats now object to including it as part of a scaled-down deal. Updated 5:51 p.m.: The Senate won't vote tonight and will reconvene at 11 a.m. tomorrow, Reid says. [View news story]
    exactly right. approaching 50% of the population getting government checks of one sort or another is a point of no return. People don't willingly let go of their government checks.
    Dec 30 05:54 PM | 4 Likes Like |Link to Comment
  • Wide-Moat Put Writing: An Income Investing Alternative [View article]
    For what it's worth, the idea of owning a long call, and a covered short put, and a short equity position, sounds like the equivalent of a collar trade in reverse, where the short put sale pays for all or part of the long call. Interesting,

    I have never heard of doing that for a short stock position but it makes total sense. Long collars are used all the time.
    Dec 30 04:20 PM | Likes Like |Link to Comment
  • Evaluating Regulated Financials [View article]
    David, I enjoyed your post. I just wrote an article about applying Free Cash Flow analysis to reinsurers, including endurance (ENH): http://seekingalpha.co...

    I think I tangentially made the same point that you did, when I write about reinsurers having great FCF in periods without catastrophe losses. Interestingly enough, in at least the most recent quarter (an admittedly small time frame), ENH actually had the worst P/FCF of the reinsurers I analyzed, and Axis Capital (AXS) looked the best. I would appreciate your thoughts on that.
    Dec 30 02:16 PM | Likes Like |Link to Comment
  • This Benjamin Graham Rule Encourages More Disciplined Investing [View article]
    Great article! Summarizes something I have felt throughout the 20 years I've been investing, but never have seen articulated so well.
    Dec 30 11:43 AM | 2 Likes Like |Link to Comment
  • A Homemade 130/30 Investment Strategy: A Longer-Term Perspective [View article]
    Great article, Daniel. I have a pending article that will show TLT has a -0.78 correlation to SPY, although I drew a different conclusion: that with such anti-correlation, TLT would merely serve to offset (dampen) the movement of SPY, which seems would be the opposite of leverage. There is also the problem that if interest rates rose, it could cause TLT and SPY to both lose, meaning that anti-correlation could fail at exactly the time of market turmoil due to emerging inflation.

    I think of 130/30 as a way of capturing mean reversion, by shorting overpriced and overextended stocks, and also shorting the ones with higher betas in order to capture some additional leverage through beta. This probably isn't the right way to implement it, I am sure!
    Dec 30 11:40 AM | Likes Like |Link to Comment
  • Assurant: Insurer With Huge Share Buybacks And Cheap Valuation [View article]
    With a P/FCF of 4, and a P/B of 0.52, I wholeheartedly concur that this company is a cash cow selling at a nice discount, and any buybacks are highly accretive to book value. It's been on my shopping list for 3-4 years and I never pulled the trigger - thanks for focusing on it. Nice article!
    Dec 30 11:25 AM | Likes Like |Link to Comment
  • Comparing Berkshire Hathaway To Other Reinsurance Companies [View article]
    But you can't pay book value for it. $BRK.B is currently 1.17 of book value and they have a repurchase authorization for approx 1.20. You also can't buy GEICO individually. You have to also buy a railroad, a pipeline, a private jet leasing company, and many many other businesses with it.
    Dec 29 01:50 PM | Likes Like |Link to Comment
  • Reinsurance Companies As Free Cash Flow Cash Cows [View article]
    most ratios compare share price to the selected metric, in this case FCF. For the example of AXS, it means that at least for the most recent quarter, that for every $4 invested in equity, they produced $1 in FCF.

    Also, ss the comment below points out and as I mentioned in the article, one quarter is a short time frame so looking at trailing twelve months or year to date, or longer, may be better, but those FCF numbers are not generally available and would have to be manually derived.
    Dec 28 12:11 PM | Likes Like |Link to Comment
  • Reinsurance Companies As Free Cash Flow Cash Cows [View article]
    Yes, I agree about the need to look longer term. It's not just a comparison of a company's own long term combined ratios, but also to its competitors - and that's a lot of data to maintain. The earnings press releases don't always break CR into segments (are you comparing just reinsurance CR, or overall with primary insurance lines, and Lloyd's syndicates?), and sometimes requires digging into 10Q footnotes, plus you can also have later reserve releases or charges, so even the stated numbers can change from the initial report, especially for companies with more long-tail underwriting.

    Realistically, one can also look at book value growth over time, because without underwriting profits and investment profits, you don't grow book value, and poor underwriting leads to loss of book value through catastrophe payouts (complicated by dividend payouts which do subtract from book value).

    I disagree about many companies going out of business. There haven't been any high-profile bankruptcies in the past 10 years that I am aware of. What I have noticed happens is that a company with worse results tends to trade at a big discount to book, then gets acquired, and the certain lines of business then go into run-off while the better lines are retained.

    thanks for reading and commenting!
    Dec 28 12:05 PM | Likes Like |Link to Comment
  • Investing In Reinsurance Stocks: Part 2 [View article]
    @CarLoad- usually I will sell LEAP calls (in other industries) but reinsurance usually doesn't have longer than 6-7 months. With LEAPs I will usually go one or two strike prices higher for better potential capital gains, when the numbers make sense. Thanks for the comments!
    Dec 24 12:39 PM | Likes Like |Link to Comment
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