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Jeff Paul
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Jeff Paul has been investing since his teen years, though his professional career has been in software engineering and education. His math classes participated in online stock market challenges, providing an opportunity to share his enthusiasm for investing with his students and the chance for... More
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  • I bought in for the long term dividends and was kicking myself for entering too soon in July. Chose HGIC over CINF. Sometimes it's better to be lucky than good.
    29 Sep 2011, 11:19 PM Reply Like
  • Author’s reply » Yeah, I bought several of the stocks I recommended from my last model portfolio, but opted for larger financial firms over the smaller cap ones. Oh well, maybe I'll get lucky another time. I would have picked HGIC over CINF too.
    29 Sep 2011, 11:30 PM Reply Like
  • Same situation as nothinveryclever. I'll take lucky. So do I sell now and reinvest the gains into another dividend company?
    1 Oct 2011, 10:21 PM Reply Like
  • Author’s reply » Good question. I was hoping to have more time to think before having to deal with rebalancing issues in the model portfolio. I don't know much about the merger details, but since most DG investors seem more concerned about dividends and less about cap gains, I am planning to sell 50% of HGIC and move it to cash until the end-of-year rebalance. I figure this is the amount of the premium, so the original investment is still intact. Also, in the event there are any issues with the merger, I don't lose anything. 100% premium is already more than I was expecting for this stock. Nationwide is not on the DCC list, so I will need to find a replacement stock come December anyway. Unless you expect another firm to make a play for HGIC, there probably isn't much upside potential. I would probably sell it and find a new holding. There are a lot of good yielders at the moment!
    1 Oct 2011, 11:08 PM Reply Like
  • I sold out at $59.00. It is my understanding that you can wait into 2012 for the $60 offer from Nationwide. My plan is to use the funds to help balance out some of my current positions and/or enter new positions. In either case I am looking at dividend-growth stocks. To me it wasn't worth waiting several more months trying to scratch out an extra $1.00 gain.
    2 Oct 2011, 09:29 AM Reply Like
  • Author’s reply » Makes sense. My problem is that I only wanted to balance the model portfolio in December. With the price bump, HGIC is currently 6+% of the portfolio. If I sell half, it goes back down to the original 3% and I still collect the div, but I will be sitting on $10K in cash. I can live with that for 3 months. The model is meant to be more passive, so I'm trying not to tinker with it too much. For a personal portfolio, I would do what you are doing, sell it all and find a new stock. I did that for NYX…so glad I did, as it is now way below the original takeover price, since the buyer's stock has tanked.
    2 Oct 2011, 09:46 AM Reply Like
  • For my own education, what happens in a buyout offer like this? Is Nationwide seeking to buy every share @ $60?
    2 Oct 2011, 02:25 PM Reply Like
  • Author’s reply » Yes. Nationwide will pay $60 cash per share at the close date (sometime in 2012?) to purchase HGIC completely. Since the market price is now around $59, there isn't much upside, unless you expect another firm to make a higher offer. There's always a risk of the buyout being called off too, though I don't know of any complications with this deal. The safe thing to do would be to take your profit and find a new stock to invest in.
    2 Oct 2011, 03:30 PM Reply Like
  • Thanks.
    2 Oct 2011, 10:25 PM Reply Like
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