26 April 2007 – The Aleph Blog

Post 100

Posted on 26 April 200722 June 2017 by David Merkel

This is post 100, as WordPress counts. I am going to take a brief break from writing about the markets to write about the first two months of blogging.

First, this blog is not what I would like it to be yet. I have many more things to build out, but given my responsibilities as a husband and father, I can’t go overboard. I have to serve my employer as well, and for that matter, Realmoney.com.

Speaking of RealMoney.com for just a moment, this blog might not have come into existence were it not for the example of Barry Ritholtz, the encouragement of Cody Willard, the encouragement of various readers at RealMoney, and the neglectfulness of one of the editors there, who I made the offer to of a blog/newsletter, and after promising to get back to me, he did not get back to me. After three-plus years of writing there, I expected more. (Particularly since Jim Cramer was kind enough to recommend me to the editor in question. Anyone who thinks Cramer controls the editorial side of TSCM doesn’t know what he is talking about.)

Many, but not all of the things that I used to write in the Columnist Conversation are now getting written here as a result. I am internally debating as to where to put my comments. Here I might get some compensation for them, whereas at RealMoney I don’t get any compensation. I’m grateful to Cramer and RealMoney for the opportunity, but with work getting busier, it is easier for me to blog at night, rather than writing in the day.

Friends help in blogging. I particularly want to thank James Altucher, Roger Nusbaum, Jeffrey A. Miller, Bill Luby, and Abnormal Returns for the help in getting noticed. I also want to thank the editors at RealMoney who put up with me mentioning my blog several times in the first week of its existence.Business opportunities come as you blog. Newstex is indexing the content of my blog for its readers, and I get a percentage of the revenues. A fellow trying to start an individual health insurance company wants me to be his chief investment officer; first let him get assets to manage, and we can discuss it (It is a very interesting opportunity). Insurance Journal is using some of my insurance posts. I signed up early with Seeking Alpha and Technorati to increase my visibility. I’ve talked with some value investing blog aggregators, but nothing has come of it really.What I would love to be able to do would be to work from home. My commute is horrible, and I would like to spend more time with my family. I have about 20 takers if I started a newsletter, but that’s not enough to get off the ground. I would need at least 100 before I would start doing a newsletter.

Ability to reference free articles that RealMoney has syndicated to Yahoo!, etc., has been another source of exposure. All in all, I’m happy with the first two months, and am looking forward to yet more fun with my readers and collaborators. Do you have feedback for me on what I have been doing here? E-mail me, or just post a comment to this article. Above all, thanks for reading!

PS — If you like what I write, recommend me to other well-known bloggers. If you like how I invest, and you have a wealthy friend who might like to seed a low risk equity manager, recommend me to him. Thanks again.

Insurance Earnings So Far 1Q07 ? III

Posted on 26 April 200727 April 2007 by David Merkel

Here we go again:

Financial Guaranty

MBIA pulls out a positive surprise and ends the day up. I suspect that in the current environment where there is a lot of skepticism over structured finance, that it doesn’t take much of a positive surprise to give MBIA a lift. Too many shorts.

Title

Stewart misses badly, and doesn’t fall much. Part of it is due to a charge for title claims that is likely to be nonrecurring. STC has a good track record, little debt, and is trading below book already. How much can it get hurt?

Primary Casualty

Travelers beats and raises guidance and the price falls. Huh? They showed decent top line growth as well. Could that be a worry in a softer pricing environment? It could, but so far that’s not the way other stocks have responded. Philadelphia Consolidated misses and the stock falls, though the company maintains their earnings guidance. When you have a high multiple, investors expect more I guess.

Mortgage

After lackluster results from RDN and MTG, Triad Guaranty beats earnings and the stock jumps 5%. Amazing what good earnings will do when peers have missed. That said, I would be skeptical of future quarters in 2007.

The Bermudans

Transatlantic beat by a decent amount and the stock went nowhere. Perhaps the recent market moves after the reports of the earnings of peers have silently moved the bar above where the sell side left it. Arch Capital beats as well; we’ll have to see how it does tomorrow. I wouldn’t expect much of a move. The valuation on a book basis is significantly higher than that of peers. It takes more of a beat to significantly move the needle. Anybody done a good reserve analysis on ACGL?

Diversified

Old Republic (that venerable and stodgy firm; I like stodgy.) missed estimates. General insurance did well, while mortgage and title both lagged. Hartford beats and raises guidance. Good quarter all around, particularly in variable annuities. Makes me think that when the life companies start reporting next week, that asset- and mortality-sensitive ones should do well. We’ll see how HIG does tomorrow. I’ll be listening to the call. Who knows, maybe I’ll lob in a question.

Full disclosure: long HIG