SNFCA - Security National Financial Corp.

[frugalchief]

SNFCA looks like it could be a beast.  Trading below BV - 65% to BV.  In the life insurance, cemetery & mortuary business, and mortgage loans.  Insider holdings are relatively good.  Cash holdings are 50% of market value.  Very large liquid asset base, could use some restructuring possibly for better performance.  Diversification and strong earning power from each line of business.

 

Anyone hold or have an opinion on SNFCA?

[kevin4u2]

SNFCA looks like it could be a beast.  Trading below BV - 65% to BV.  In the life insurance, cemetery & mortuary business, and mortgage loans.  Insider holdings are relatively good.  Cash holdings are 50% of market value.  Very large liquid asset base, could use some restructuring possibly for better performance.  Diversification and strong earning power from each line of business.

 

Anyone hold or have an opinion on SNFCA?

 

I took a quick look and quickly passed.  ROE has averaged 5% for the past 10 years.  That is not very good earnings power, nor a good business. 

 

The average highest yearly P/BV for the past 10 years has been 0.7, and historically the average low P/BV is 0.3.  I might be interested in the company at 0.3 P/BV in a rising interest rate environment.  The company is likely not going to make any money if interest rates stay low.  The current quote looks like a 10 year average valuation.  Nothing to get excited about. 

[Guest Schwab711]

I have not done a deep dive but I really like the business model from a theoretical point of view. The idea of using cemeteries as 'deposits' or float is really intriguing. Seems like an excellent method of avoiding more regulatory oversight.

 

ROE has surpassed 12% for the last 6 quarters and the cemeteries have a long runway. SNFCA is trading at ~0.75x P/B and ~6.2x P/E (TTM).

 

Potential issues could be: 1) yield on assets is high relative to portfolio composition, and 2) the mortgage loans are certainly higher on the risk spectrum. SNFCA would likely be affected and possibly severely affected by any local credit deterioration or rate hikes.