by Travis Johnson, Stock Gumshoe | February 2, 2018 2:03 pm
This is premium content. To view this article (and to have full access to the rest of our articles), sign up. Already a member? Log in.
Source URL: https://www.stockgumshoe.com/2018/02/friday-file-an-old-friend-returns-to-the-watchlist/
Copyright ©2024 Stock Gumshoe unless otherwise noted.
$TVIX My little insurance policy is working out well today… The question is should I stay or should I go? https://www.youtube.com/watch?v=xMaE6toi4mk Have a wonderful weekend and beyond ALL!
Hi Travis,
GLRE is like TPRE (at a discount too). I prefer Daniel Loeb like an investor. And waht about AXS (Axis Capital). I think that´s close a bottom. What y thoughts?
Regards,
António
Loeb’s TPRE has some appeal as well, and has been a bit steadier on the underwriting side (though it’s a much younger company), but Loeb hasn’t had horrible investing performance lately like Einhorn has so it’s not quite as beaten down… that might change quickly in the current environment of rising volatility, we’ll see.
Axis is a tough one to call, mostly because their disaster year was much worse than expected and worse than many of their peers in 2017… and they’ve preannounced that the fourth quarter insurance claims losses will also be worse than had been expected, mostly from the CA fires. I’ll wait and see what their actual announcement tells us, that should come on Feb 7.
It looks like Einhorn’s investing woes continued through March, despite the late weakness in some of his short positions (assuming he still held the shorts) like Tesla. Reports are that he’s telling his investors that the fund is down 13.2% on the year, though the official investment returns for GLRE’s portfolio, which is likely to be slightly different from the Greenlight Hedge fund, are “only” down 11.8%.
When do we start betting that he might recover, or that the 30% discount to book value is too high? This is the biggest book value discount GLRE has traded at since the Fall of 2008… though, of course, we don’t know what the actual book value is as of March 31, this is still based on the 12/31 book value. If the insurance company more or less broke even on underwriting in the first quarter, book value probably dropped by about 15% (the portfolio is larger than the market cap, that’s my fairly conservative guess)… so that would mean book value is probably somewhere in the $18s, not $22 like it was on December 31. If book value is $18.90, then the shares are trading at only about an 18% discount to book value. The stock has fallen 22%, the investment portfolio has “only” lost 12%, so at some point the discount could get too big to resist.
We’ll know more when Greenlight reports again, but that won’t be until May 2. At which point, we’ll also have another month of portfolio returns to chew on.
I still haven’t done anything here, haven’t bought GLRE as it falls, but I am watching.