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Brian Abbott

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  • GM: Are We in Looneyland? [View article]
    what about shorts wanting to cover and get out rather than wait and risk some screwed up govt intervention?
    Jun 1 08:14 PM | 1 Like Like |Link to Comment
  • John Hussman: Comfortable with Uncertainty [View article]
    But banks are regulated public institutions. they have a duty to have a safety margin that mandates they DON'T develop that temporary negative equity. It is necessary to maintain the public's confidence..... would you want to leave your entire assets in an institution that told you "don't worry, the equity looks bad right now, but surely it will go back up soon"


    On May 05 03:03 PM user396040 wrote:

    > Under mark-to-market, aren't the banks in the same situation as Pickens?
    > Assets are marked way down but can pop up if the market improves.
    > I have seen enormous volatility, as well as wide spreads, in the
    > distressed debt market. Do we really want to overhaul the nation's
    > financial structure because several banks were insolvent for 15 minutes
    > on the afternoon of March 9?
    May 5 04:22 PM | 1 Like Like |Link to Comment
  • John Hussman: Buying Near the Bottom [View article]
    John-

    It has become cliche to talk about pain being felt be Americans..... but has there really been that much pain? The malls seem full to me. Maybe I just expected things to look worse than they do now. Deep down, I wonder if we won't say a real bottom until we get a proverbial belt-tightening by the whole country. What we've had to date just seems like a deeper-than-usual bear market that a lot of people expect we'll just bounce back from. That double top in the long term S&P chart looks very ominous to me.

    ~abbottmd
    Dec 8 09:17 PM | 1 Like Like |Link to Comment
  • Three Reasons Aspen Insurance Should Accept The Buyout From Endurance [View article]
    I steer clear of GLRE because of its equity exposure. Greenlight really seems like a hedge fund / activist short seller that happens to also have a reinsurance unit attached to it. I don't follow Allegheny because it seems to be more of a primary insurer rather than reinsurer. I have always considered insurers with lower tiers of risk exposure to be much more like a retail company, but they are probably also more predictable earnings-wise than reinsurers if they have managed to cap their risk exposure appropriately.

    Overall, I have always thought that the primary insurance lines have lower margins and traditionally have needed their investment income to make them profitable. With bond yields so low that makes me nervous, but I am not sure I feel any safer if they move into equities or alternatives.
    Apr 20 12:26 AM | Likes Like |Link to Comment
  • Three Reasons Aspen Insurance Should Accept The Buyout From Endurance [View article]
    Thanks for your comments. One correction I would mentioned is that it is not an all-stock deal, and is 40% cash. Another point is that at least initially upon the announcement, ENH stock actually went up that morning which sweetened the deal for Aspen, albeit briefly. (Resourceful arbitragers could have acted on that and shorted ENH and done pretty well with that since it did come back down, although it has not dropped the 10% that you claimed, more like 5.6% which is appropriate given the dilution they would suffer from new stock issuance). Also, I did a 5-year look-back and found that up until this merger offer, ENH was outperforming AHL by about 10% which got neutralized by the post-announcement stock moves. You mentioned Aspen is more diversified but up until very recently their newer insurance lines were a serious drag on earnings.

    ENH stock WAS more richly valued than AHL on a price to book basis, so it made some sense for them to issue shares to buy the cheaper company, but the problem with that is that the takeover premium no longer makes AHL undervalued. Ironically, ENH's price to book (based on Q4 earnings release) is now down to 94% while AHL's has increased to 110% - so it is interesting how this announcement has reversed the relative valuations.

    I think the thing to hope for now is to sell out of Aspen, hope the acquisition doesn't take place, and buy ENH as it is now the most undervalued by price to book among the universe of reinsurers that I follow.

    thanks again for your comments and analysis.
    Apr 19 09:15 PM | Likes Like |Link to Comment
  • Aspen Board Right To Turn Down Endurance's Offer [View article]
    If you have to look at those other measures rather than simpler ones like GAAP or price to book, then it suggests to me the deal isn't that good. It values AHL at 1.16 price to book which is a good deal for them, I suppose. AHL had been stuck in the 0.90-1.00 P/B range which was below the pack for a long time. The market hasn't awarded them this premium to book, so why is ENH doing it? Once M&A people start talking about synergies and operating efficiencies it's usually a time to run for the exits, because those synergies rarely emerge. Just my thoughts, I am definitely not an expert but am long both stocks so I do have skin in the game so to speak.

    One other thing.... statutory accounting or surplus measures.... can a private investor even look at those things? Even if we can access them, how would it be used to make an investment decision? - especially since those measures change over time and you only get a rear-looking assessment of it. At the end of the day the main way a small investor can evaluate these companies is GAAP reported earnings, combined ratio, and price to book. The further you go than that, the more opaque these companies rapidly become.
    Apr 16 04:15 PM | Likes Like |Link to Comment
  • Aspen Board Right To Turn Down Endurance's Offer [View article]
    AHL's buybacks show that the company is putting its money where its mouth is and is acting on its notion that the shares are undervalued. The question I would have for ENH shareholders is how do they feel that management is willing to pay a 20+% premium for another company rather than use the cash to buy back their own ENH shares on the open market? ENH has traded almost back down to 2011 levels. (Disclosure: long AHL and ENH)
    Apr 16 02:34 PM | Likes Like |Link to Comment
  • Do Low Dividend Stocks Belong In A Roth IRA? [View article]
    Great article. I hadn't considered adding a high growth stock to a Roth as a way of accelerating the growth of the Roth. Since the annual contributions (and the income limits) put such a cap on Roth size, this is an important consideration - thanks for encouraging us to think in a new way.
    Feb 19 06:47 PM | Likes Like |Link to Comment
  • Reinsurance: 2013 Q3 Earnings Comparisons [View article]
    Michael- Combined ratio trend would be the best measure of underwriting skill and cost-effective management, if valuation were no obstacle. Pure-play underwriters like MRH, RE, and RNR have the best combined ratio in quarters lacking large catastrophe losses, such as we have seen recently.
    Nov 12 10:56 PM | Likes Like |Link to Comment
  • The Fairy Tale Of Amazon.com [View article]
    unless a disruptive technology comes along and either changes the landscape of business models. The lowest cost buggy whip producer went out of business long ago.
    Oct 23 10:12 AM | Likes Like |Link to Comment
  • Biogen Gains A Leg Up In Fiercely Competitive MS Field [View article]
    News since this article published: WIth recent case of PML in patient with competing Novartis drug, may mean less competitive situation for Tysabri, which to date was the main treatment associated with PML risk.
    Sep 3 02:02 PM | Likes Like |Link to Comment
  • Blending Alpha And Beta: Building A 'Mini-Endowment' [View article]
    i totally agree with international index stock ETF. That's the best value I have found and also where I have been putting my new money to work.
    Aug 25 11:29 AM | Likes Like |Link to Comment
  • Reinsurance Update: 2013 Q2 Results [View article]
    I did not make that adjustment for accumulated other comprehensive income. I just track the book value per fully diluted share and the top-line combined ratios, for ease of comparison. The more individualized one makes adjustments for different companies, the harder it is to make comparisons or keep track of the differences. Over long of time, the book value should track the company performance - but even that omits the impact of paid out dividends as a component of total return.
    Aug 7 02:27 PM | Likes Like |Link to Comment
  • Reinsurance Update: Summary Of Q12013 Earnings [View article]
    you can't calculate it without knowing all the administrative costs and also the total underwriting profits and losses, and I believe reserve releases or charges as well. An individual investor will never get all of that data. It's an internal calculation and they report it quarterly with earnings reports.
    Jul 25 05:57 PM | Likes Like |Link to Comment
  • Writing Uncovered Put Options On Reinsurance Stocks [View article]
    Thanks for the comment. Combined ratio is reported by the companies quarterly as a basic metric for insurance companies. There isn't anything for us to calculate. Combined ratio combines the administrative overhead cost and the underwriting profit/loss. Obviously those are hard things to calculate and a lot of assumptions probably have to made along the way, but the bottom line is that an outside investor is not going to get enough of those details to calculate this metric on their own. Don't look at just one quarter, because of the noise some of those assumptions cause, but over a long view this number helps you compare the underwriting skill across companies - but even then you don't know the risk they took to get there,.
    Jul 24 05:12 PM | Likes Like |Link to Comment
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