Small Addition to one of My Favorite Themes

I just added to my position in Greenlight Capital Re (GLRE), and have additional orders in to buy a bit more if it drops … and I have a suspicion that it might indeed drop over the next few weeks.

Greenlight is one of my favorite stocks to play on a theme that I think will be profitable over the next year (or longer): That insurance companies who don’t rely on just fixed-income portfolios will do very well. That’s because the reliance on fixed income will bring down investment returns at most insurance companies, which means they need to focus more on underwriting profitably, which means they need to firm up their prices and compete less on price.

That benefits everyone in the business … but for stockholders, it particularly benefits the companies who can benefit both from a firming or hardening pricing market for property and casualty insurance and reinsurance and above-average investment returns that aren’t reliant on “low risk” fixed income portfolios. The three plays on this in my portfolio are Markel (MKL), which ...

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