Primus Guaranty Ltd (PRS)

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All Comments on PRS

  • commenter
    grahamfan
    Jun 27 08:41 AM
    Notes from My Conversation with Primus Guaranty [view article]
    James, my two concerns with Primus are that 1. they wrote most of their business when credit spreads were too low - so their risk management was wrong to begin with - the result is that they can't write business now when they would probably get paid well to insure A+ credits. 2. if their timing was poor , you have to question the quality of their underwriting also & for a new business with not a long track record its nearly impossible to gauge how their reserving will hold up as things toughen in the economy

    Reply
  • commenter
    Bankman007
    Jun 25 08:47 AM
    Notes from My Conversation with Primus Guaranty [view article]
    I agree with you that the stock price appears undervalued right now. However, Lacking the ability to raise capital, a share buyback is impractical also. The best use of capital IMO, is to create more swaps when spreads are wide. The passage of time and the opening of credit markets is the only thing that can heal this company's stock price. Disc. I own PRD and am considering PRS at these prices. Reply
  • commenter
    James Cullen
    Jun 02 05:05 PM
    My Website
    Battle of the Building Material Makers: Owens Corning vs. USG Corp. [view article]
    John,
    I strongly disagree. They use the capital retained (at about 30x leverage) to back their credit default swap portfolio. Especially with spreads being elevated right now, I'd rather they retain the cash and use it to write more business at attractive rates.     Reply
  • commenter
    John McAfee
    May 29 09:05 PM
    Battle of the Building Material Makers: Owens Corning vs. USG Corp. [view article]
    If PRS really wanted to show its value they would declare a dividend. Reply
  • commenter
    James Cullen
    May 29 07:15 PM
    My Website
    Battle of the Building Material Makers: Owens Corning vs. USG Corp. [view article]
    DavidR,
    When you look at how the CDS spreads have blown out, I find it hard to believe they accurately reflect the increased intrinsic risk of default. I understand your concerns - I've had them myself - but I really do think that the headline GAAP numbers are creating an inefficiency here.     Reply
  • commenter
    daver
    May 28 10:44 PM
    Battle of the Building Material Makers: Owens Corning vs. USG Corp. [view article]
    Regarding PRS I think you are totally missing the point. Market prices on PRS's liabilities reflect somewhat of a market view of the fair price of the risk that they are carrying. When prices fall it means that either expected default rates are increasing or the price of such downside risk has become more expensive. Either way, the value of those contracts is now lower and could be replaced at more favorable prices by competitors.

    Additionally, I would not want to rely on the company to give me an unbiased and accurate view of the likelihood of their current contracts costing them a lot of money. All of their incentives point in the other direction. I would be a bit suspect if there is a large gap between what the market is implying and what their management is telling investors.     Reply
  • commenter
    daver
    May 28 10:38 PM
    Battle of the Building Material Makers: Owens Corning vs. USG Corp. [view article]
    Paul, the appeal would be grounded in the likely cash flows available to USG in years to come. This may come as a surprise to you, but the majority of a company's value is usually not totally captured in the next 2 years of earnings. Reply
  • commenter
    amateur
    May 27 11:19 PM
    Primus Guaranty, Ltd. Q1 2008 Earnings Call Transcript [view article]
    How is the counterparty panic to be overcome?
    First, nothing can be done whilst the environment is generally negative.
    But after the credit climate improves, Primus will have to issue a large amout in new equity, so to "shock" the market with a massive leverege reduction.
    Is there any other way?
    Selling insurance is a credibility based business, and financial managers will need powerful reasons to buy insurance again from Primus.     Reply
  • commenter
    Paul Price
    May 24 08:45 PM
    Battle of the Building Material Makers: Owens Corning vs. USG Corp. [view article]
    USG is now expected to show a loss of $1.30 - $1.42/share for 2008 and to lose about $0.26 /share in 2009.

    It still sells well above book value of about $21 /share and the entire book value came from their [very smart] 2006 rights offering at $40/share which more than doubled their share count when times were still good. That took BV up from a negative $6.77 due to the anti-dilutive nature of that rights subscription.

    USG, with good reason, pays no dividend.

    With losses for the next year or two likely and no yield...
    What's the appeal?     Reply
  • commenter
    Budlab
    May 24 08:57 AM
    My Website
    Battle of the Building Material Makers: Owens Corning vs. USG Corp. [view article]
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    Bud Labitan
    frips.com     Reply
  • commenter
    Prudent
    Speculations
    May 23 05:08 PM
    My Website
    Battle of the Building Material Makers: Owens Corning vs. USG Corp. [view article]
    Great article. USG clearly has a lot of smart people as shareholders but I still think OCs international division and relatively limited exposure to new home construction will help it outperform USG in the long run. Reply
  • commenter
    SeekingAlpha
    Editors
    Apr 06 05:22 AM
    My Website
    General Discussion on PRS
    Is this a buy or a sell? Reply
  • commenter
    James Cullen
    Mar 12 12:51 PM
    My Website
    What Tuesday's Wild Trading Says About Housing, Financials [view article]
    Tony,
    I think a buyout is a possibility, but not enough that you should be buying the stock only looking for a quick pop on such news.

    My figures are similar enough to Morningstar's that I'll say I agree with them - my last estimate for fair value is about 10% above theirs, and I think USG is a good stock to buy now for long-term investors.     Reply
  • commenter
    Tony Soprano
    Mar 12 09:18 AM
    What Tuesday's Wild Trading Says About Housing, Financials [view article]
    Do you think USG will be taken over and at what price? There are two big boys a German and an American that have very big positions in this company.

    Morningstar has a Fair Value @ $50.00 with five stars and a buy recommendation under $37.50. What say you?     Reply
  • commenter
    dhatkoff
    Mar 07 04:01 PM
    TheStreet.com on Primus Guaranty: Wacky and Uninformed [view article]
    Tom, thanks for the great discussion of Primus' merits. One point in your post that I think needs a bit of clarification though. Yes, spreads have widened significantly, and no, I don't think most people believe that that is because fundamental credit risk has increased in proportion. But that disconnect could exist for one of two reasons: 1) As you explained, we're in fear mode so spreads are unduly wide, or 2) A tremendously benign credit environment allowed spreads in the recent past to tighten to record levels, suggesting perhaps risk was underpriced in the past.

    Reality is probably a mix of the two, but with a $29Bn book of business I think the clear downside risk is that that book is slightly mispriced, given how levered the business model is.

    Assuming their in-force book of business performs ok, you're right, they're in an amazing position to take advantage of significantly more profitable business. As a major investor in the company, how did you get comfort in the quality of their portfolio?     Reply

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