User 245808

Universal Insurance Holdings: A Worthy Speculative Play

I bought in early 05, sold at $8.50.

It is a value play again now.

1) Too well capitalized to go away.
2) Has government connection and support. They were one of the only ones to continue to service the FL market after 04/05 and received a great loan deal in return. I would expect them to continue to do the same in the future and reap similar benefits again.
3) Before my initial purchase, I did thorough diligence and this is not a shell game stock. Its a legitimate company trading at 3x.

Risk is really getting pushed out should major insurance cos come back in again and use their balance sheet to take market share. Company, as all do, would struggle to right size business and stock would definately get punished.

This is one (given hurricane/competition risk) I would stick to prudent levels relative to total capital. 5% max as mentioned is probably a good #, although 10% if you are young and making $$$ somewhere else could probably be done. Don't bet your life savings though.