Aug

Afternoon Actions

I sold Lithia Automotive in the late morning for the same reason as Group 1 Automotive. Mid-afternoon, I replaced the position with PartnerRe. As I commented at RealMoney:

		David Merkel
		Bought Some PartnerRe
		8/16/2007 3:35 PM EDT

Trades well below adjusted book.

Reserves are conservative even prior to the fact that they don’t discount their reserves.

Reasonable P/E multiple

Quality balance sheet

Quality management team.

Conservative asset policy

Not overexposed to southeastern property risks.

Position: long PRE

What I didn’t mention was how much not discounting their reserves is worth after-tax: nearly $20/share. Take out a few other items, and you get an adjusted book value of around $85 on a very strong and diversified reinsurer. I can live with that.

Full disclosure: long PRE

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One Response to Afternoon Actions

Josh Stern says:
17 August 2007 at 9:02 am
I like to see a little higher ROA%, but so many of these insurers, especialy reinsurers are so cheap and beaten up, that I have to think that the industry is just one acquisition away from serious relative performance.
I became a first time holder of CLF today. We’re going to fix some bridges. Rate cut has to help autos. Shipping is booming. Commercial real estate that uses steel is still okay. CLF is no RIO, but I like it’s positioning here.

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Afternoon Actions

One Response to Afternoon Actions

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