It Was A Pretty Good Week

The broad market fund was up 85 basis points this week, against a disappointing 25 bp loss for the S&P. My balanced mandates were up 40 basis points, also good. In general, my cyclical and foreign names outperformed.


On the insurance side, Conseco reported that it would be taking some middling charges — the reaction in the stock market was muted. My own estimate of reserve insufficiencies is higher than what they took, so if this cleans it all up, this is a net plus. I’m still waiting to hear back from Conseco IR, so I can’t really tell what is going on yet. From my recent conversation with James Prieur, the CEO, I think the company is on the right track; the only real question is how bad the old long term care [LTC] block is.

Lincoln National increased its buyback today. I appreciate the shareholder-friendly actions of many insurers. Rather than being hyper-competitive, many companies are returning capital in the soft part of the pricing cycle, and that is the right thing to do.

Long LNC CNO

2 thoughts on “It Was A Pretty Good Week

  1. David, I took a look at Conseco after you mentioned it here. I was somewhat familiar with “old Conseco” ages ago but haven’t kept up with “new Conseco”. The share price held up pretty well in the market downdraft today. Is their stated book value a reliable figure?

  2. I think that the book value is mostly reliable. I had estimated a larger hit to book value than their recent reduction. My adjusted book value estimate is a little higher than $25/share.

    I am not crazy about CNO, but there is downside protection here, and room for positive surprises.

    Long CNO

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