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Brian Abbott

 
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  • Aspen Shareholders Reject Endurance's Acquisition Bid [View article]
    MoneyGreen-
    I couldn't agree more that G&A / overhead is an important factor. However, growth of book value over time incorporates all of this, as well as underwriting profitability, and indeed also factors in capital allocation decisions too if one looks at book value over a long enough horizon. That's the other reason I quit using combined ratio (or loss ratio and overhead separately as you point out), because book value growth already incorporates that. It sounds like you have really followed Aspen and I appreciate your comments and experience on this. Happy investing!
    Brian
    Jul 29, 2014. 05:51 PM | Likes Like |Link to Comment
  • Aspen Shareholders Reject Endurance's Acquisition Bid [View article]
    MOneygreen- thanks for taking the time to comment. I guess I didn't explain much about combined ratio because I am not aware of any data that have ever shown combined ratio has predictive value as a forward-looking metric. I would be happy to check out any data and attempt to refute but I haven't really seen it published. I was commenting on others who track it. Indeed, I used to track it but found that it fluctuates so much quarter to quarter that it almost just seems like noise.
    Jul 29, 2014. 02:51 PM | Likes Like |Link to Comment
  • Prospect: Portfolio Debtor Files For Bankruptcy, Meet New Century Transportation [View article]
    right, but the author states that other Level 3 assets should be questioned as well - not that this loss was the main event
    Jun 14, 2014. 11:41 AM | Likes Like |Link to Comment
  • Today's Market: Is Amazon's Smartphone A Game Changer? [View article]
    definitely sarcastic! left off the </sarcasm> tag :-)

    but seriously, has nothing been learned from Nokia and Blackberry? Even HTC. These things are fads and come and go. I am sure they will use it as a sales channel and that's probably the whole business model, just not sure if it's worth the 5% pop today especially since it's been in the works for a while and isn't even really news.
    Jun 5, 2014. 01:45 PM | Likes Like |Link to Comment
  • Should People Listen To John Hussman's Forecasts? [View article]
    all I took away from Larry's piece was to NOT invest like Hussman. Seemed like good advice to me.
    May 7, 2014. 05:30 PM | Likes Like |Link to Comment
  • Should People Listen To John Hussman's Forecasts? [View article]
    Great article! Bears tend to be very intellectual people and can always present a good case.... and occasionally they also happen to turn out right. (But can any brief periods of outperformance ever overcome the drag for doing so poorly the rest of the time? Your article helps answer that with a resounding "no").

    It seems like maintaining cash in liquid reserves serves the same type of downside protection with a non-correlated asset without the expense drag and without the risk of loss in nominal terms.
    May 6, 2014. 02:40 PM | Likes Like |Link to Comment
  • Dividend Growers Portfolio That Has Outperformed The Market [View article]
    I agree with your comment in principle, but the boards of public companies are so enmeshed with management and have such disregard for shareholder interests, and large index funds fail to vote their shares and use the power they have, that the whole thing is kind of a farce.... and yet we still need to invest in stocks. I would love to see a list or even an index of shareholder-friendliness, any ideas where something like that exists?
    Apr 30, 2014. 10:10 PM | Likes Like |Link to Comment
  • Dividend Growers Portfolio That Has Outperformed The Market [View article]
    i think executive comp is egregious for any company I've ever looked at except for Berkshire Hathaway. If that were a criteria for investing how would you ever find any potential investment. (And I hate saying that as an answer, but to invest in stocks it seems like we have to make a conscious decision to admit we are powerless as shareholders)
    Apr 30, 2014. 02:29 PM | Likes 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, 2014. 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, 2014. 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, 2014. 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, 2014. 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, 2014. 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, 2013. 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, 2013. 10:12 AM | Likes Like |Link to Comment
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