ForGettabLe FGL

ForGettabLe?

A quick heads up to the my readers about FGL, a stock I own and have recommended here. I was re reading their last earnings report and their S1 from their IPO. One of the reasons I have been a fan was their 4th quarter earnings were 87 cents a share and their book vale per share was $27.03 (all in) and $24.88 excluding AOCI. For a stock trading a bit under $22, those all seem like very good numbers. But when I re read more closely this afternoon, they use a measure called “weighted average diluted shares” in the denominator for those calculations (about $49 million shares). But their actual number of total shares outstanding is a bit over 58 million. In reading everything, the 58 million includes the new shares from the IPO. So it seems wrong to me to calculate a book value metric using the year ending balance sheet, which has the IPO proceeds in it) but to use the weighted average shares in the denominator (which only has a small percentage of the IPO shares in it). I have sent a question to IR about this. It may technically be correct, but seems very misleading to me. If you use the actual shares outstanding, it is about an 18% haircut on BV and 4th quarter eps. That is certainly enough (for me) to take FGL from a strong buy to a hold, maybe even sell as I feel they should have been more forthcoming. I will wait until I hear from IR (or end of day tomorrow) before deciding what to do.

Book value per common share, excluding AOCI, is a non-GAAP measure that eliminates the impact of accumulated other comprehensive income.

(In millions, except share data)		As of December 31,
Reconciliation to total shareholder's equity:		2013				2012
Total shareholder's equity		$	1,331.8			$	1,372.4
Less: AOCI		106.1				422.9
Total shareholder's equity excluding AOCI		$1,225.7				$949.5
Total shares outstanding		58,270,822				47,000,000		(1)
Weighted average shares outstanding – basic		49,142,208				47,000,000		(1)
Weighted average shares outstanding – diluted		49,263,675				47,000,000
Book value per diluted share		$27.03				$29.20
Book value per diluted share, excluding AOCI		$24.88				$20.20

(1)	Common shares outstanding and per share amounts give retroactive effect to our statutory conversion on
	August 26, 2013 and the 4,700-for-1 stock split of our shares of common stock effected on November 26,
	2013.