Wednesday, July 31, 2013

ACAS Earnings Underwhelming

ACAS announced their earnings this morning. They were not as good as expected as they are tangentially impacted by reduced revenues from mortgage REITs they provide services to.  This is another classic value play though. Their NAV is now 19.28.  But they will likely be trading this morning a bit over $13.00  the beauty of their business model is they have funds to invest in most attractive opportunities out there. And at buying $19 for $13 seems like a good deal, they are doing that with their funds. So while shrinking is not a path to greatness, I suspect it can be a path to above average returns for the next 18 months.

GNW Drops Post Earnings

GNW announced their earnings last night (Genworth Financial Announces Second Quarter 2013 Results).  In happy hour trading, they dropped about 5%.  Reading through it, I was trying to understand why the decline. 

My first thought was that they have really run up, so I do believe the expectations were for a blow out.  They are up 24% since the start of June.

Then I wondered if it was something they did not say.  I know one potential catalyst was the spin-off of their Australian Mortgage Company.  And I saw no comment on that firing back up.

Part of the issue may be the drop in book value. They did not say anything about it (that I saw), but it went from 32.90 to 29.76 in just a quarter.  That is a 9.5% free fall. Actually, the more I think about it, the more I think this is the reason for the drop, although Wall Street Cheat Sheet says it is the miss on revenues.

Recall in many ways a life insurer acts like a bond as by far their largest asset is typically bonds. And as interest rates went up about 100 bps in the quarter (and have gone even further this quarter), the value of bonds drops. A lot of insurers I am looking at are seeing about a 5% drop in BV from this issue.  GNW is clearly more leveraged to it,  which would suggest more of their bonds are in longer durations (I expect they provide some detail about this in financial supplement and I will dig in more).  So if you do some back of the envelope math and say interest rates moved 100 bps and they lost $3 in BV.  I suspect over the next year or two, we have another 200 bps to go up, so they could lose another $6.  Now the flip side is that as interest rates move back up to "normal" levels, GNW will start increasing their income as new cash will get invested at higher rates (though I was surprised to see their annualized yield was 4.8%, which struck me as high, suggesting a lot of their investments have been held pre 2008).  So I think over the next couple of years, you may see GNW book value steadily declining (even with positive operating income); perhaps to the $23 area. Still, they are trading at $13, so if we can see them move closer to a $23 par value, that would be sweet.

Long story short, I am going to do a little more digging regarding their investment portfolio.  I still think they are a good stock to hold.  Not looking to buy more, but I think people looking to buy may get a decent entry point.

Tuesday, July 30, 2013

Two Tables to Ponder

I have shown these tables a bit in the past, but I think they bear repeating.  The first shows all the stocks I owned on May 2nd and how they have fared since in ascending order.  Note how it is kind of inverse to dividends.  Meaning stocks that pay good dividends are poor performers, and more growth-oriented stocks are the best performers.  I expect this trend to continue (frankly, I think we have just started).


Stock May 2nd price Dividends Current Change
BHK                       14.95                         0.22                13.07 -12.6%
O                       51.09                         0.36                45.16 -11.6%
NSU                         3.64                         0.07                  3.32 -8.8%
RIG                       52.33                         0.84                47.84 -8.6%
OIBAX                         6.62                         0.04                  6.17 -6.8%
NEM                       32.66                         0.35                30.51 -6.6%
CIM                         3.29                         0.09                  3.11 -5.5%
STRZA                       23.91                              -                  22.91 -4.2%
STO                       23.45                         1.16                22.62 -3.5%
MSFT                       33.16                         0.23                32.05 -3.3%
FCX                       30.34                          .31                29.45 -2.9%
AOD                         4.17                          .08                  4.06 -2.5%
JQC                       10.38                          .19                10.16 -2.1%
INTC                       24.11                         0.23                23.62 -2.1%
KMF                       35.15                         0.46                34.64 -1.4%
CSQ                       10.64                         0.21                10.55 -0.8%
PRE                       92.48                         0.64                92.68 0.2%
AAPL                    445.52                         3.05             456.99 2.6%
SD                         5.18                              -                    5.36 3.5%
PGR                       25.12                              -                  26.03 3.6%
ABR                         7.43                         0.12                  7.77 4.6%
DLB                       31.61                              -                  33.07 4.6%
KLIC                       11.08                              -                  11.66 5.2%
NVDA                       13.74                         0.08                14.53 5.7%
TC-PT                       15.60                         0.41                16.52 5.9%
ABC                       54.85                         0.21                58.79 7.2%
VIAB                       67.25                         0.30                72.22 7.4%
GA                         7.63                         0.42                  8.32 9.0%
CF                    183.58                         0.40             202.14 10.1%
CA                       27.23                         0.25                30.10 10.5%
RDA                         9.62                             -                  11.19 16.3%
CYOU                       28.00                              -                  32.66 16.6%
WU                       15.53                         0.13                18.44 18.7%
BAC-WTA                         5.25                              -                    6.25 19.0%
LPS                       27.28                         0.10                32.76 20.1%
KFY                       15.99                              -                  19.45 21.6%
CSCO                       20.73                         0.17                26.05 25.7%
GNW                       10.33                              -                  13.34 29.1%
GTAT                         3.67                              -                    4.88 33.0%
UIS                       18.60                              -                  26.11 40.4%
NUS                       54.28                         0.30                82.83 52.6%


The second table just shows how the various stocks in the MFI index have performed since January 1st.  I think it is enlightening to see how many are above 80%.

Index Stock Start Last Week Current YTD Change Weekly Change Shares
1   APOL      20.92         18.10         18.17 -13.1% 0.4%         11.14
2   AGX      18.00         16.44         15.79 -12.3% -4.0%         12.95
3   BAH      13.92         18.91         19.16 37.6% 1.3%         16.75
4   CA      21.98         30.18         30.34 38.0% 0.5%         10.61
5   CPLA      28.23         48.81         48.96 73.4% 0.3%           8.26
6   CF    203.16      181.40       201.53 -0.8% 11.1%           1.15
7   CSCO      19.65         25.84         26.29 33.8% 1.8%         11.86
8   DELL      10.14         13.10         13.05 28.7% -0.4%         22.99
9   DLX      32.24         40.48         41.10 27.5% 1.5%           7.23
10   DMRC      20.70         22.36         21.51 3.9% -3.8%         11.26
11   DLB      29.33         33.01         33.01 12.5% 0.0%           7.95
12   GME      25.09         46.40         47.00 87.3% 1.3%           9.29
13   GNI      67.20         73.60         73.13 8.8% -0.6%           3.47
14   GTAT         3.03           4.74            4.88 61.1% 3.0%         76.93
15   HLF      32.94         59.05         63.70 93.4% 7.9%           7.08
16   HFC      46.55         45.96         47.08 1.1% 2.4%           5.01
17   IDCC      41.09         40.94         40.34 -1.8% -1.5%           5.67
18   INTX         9.48           9.87            9.92 4.6% 0.5%         24.59
19   ESI      17.31         26.79         27.02 56.1% 0.9%         13.47
20   JCOM      30.60         46.46         45.95 50.2% -1.1%           7.62
21   KLIC      11.99         11.17         11.74 -2.1% 5.1%         19.44
22   LPS      24.62         32.96         32.89 33.6% -0.2%           9.47
23   MANT      25.94         29.41         29.63 14.2% 0.7%           8.99
24   MSFT      26.71         32.08         32.31 20.9% 0.7%           8.73
25   NATR      14.48         19.13         18.84 30.1% -1.5%         16.10
26   NSU         4.28           3.46            3.31 -22.7% -4.3%         54.47
27   NTI      25.44         27.69         27.76 9.1% 0.3%           9.16
28   NUS      37.05         82.56         83.03 124.1% 0.6%           6.29
29   PDLI         7.04           8.45            8.44 19.9% -0.1%         33.11
30   PETS      11.10         17.05         16.75 50.9% -1.8%         21.00
31   PBI      10.64         14.98         16.85 58.4% 12.5%         21.91
32   POOSF         1.42                -                  -   -100.0% #DIV/0!      164.63
33   POZN         5.01           5.72            5.70 13.8% -0.3%         46.53
34   QCOR      26.72         51.12         52.47 96.4% 2.6%           8.72
35   RTN      57.56         71.11         72.33 25.7% 1.7%           4.05
36   RPXC         9.04         18.83         18.45 104.1% -2.0%         25.79
37   SAI      11.32         16.14         16.36 44.5% 1.3%         20.59
38   STX      30.42         41.43         41.42 36.2% 0.0%           7.66
39   SVLC         2.52           1.68            1.67 -33.7% -0.6%         92.51
40   SAVE      17.73         35.57         32.97 86.0% -7.3%         13.15
41   STRA      56.17         44.01         44.40 -21.0% 0.9%           4.15
42   TNAV         7.99           6.23            6.14 -23.1% -1.4%         29.18
43   TZOO      18.99         29.64         29.31 54.3% -1.1%         12.28
44   UIS      17.30         25.81         26.16 51.2% 1.4%         13.47
45   USMO      11.68         15.54         15.78 35.1% 1.5%         19.96
46   USNA      32.93         78.60         82.11 149.3% 4.5%           7.08
47   EGY         8.65           6.06            6.00 -30.6% -1.0%         26.95
48   VCI      25.78         28.49         29.12 13.0% 2.2%           9.04
49   VG         2.37           3.39            3.41 43.7% 0.4%         98.36
50   WCRX      12.04         21.29         21.65 79.8% 1.7%         19.36
Total    11,656      15,143       15,272 31.0% 0.8%