Some New Companies I've Found

[Shawn]

Ok here's the repost.

 

Here are some securities I've been researching - I have not read their annual reports yet, I have just recently found them. These are securities I narrowed it down to:

 

Symetra Financial Holdings (SYA)

- it's an American insurance company

- 0.46x P/B , 9x P/E

- 1.65B is the price (market cap) , Equity is 3.6 billion

- steady earnings with no deficits as far back as 2005

- huge book value growth representing something like 1200% growth in 5 years

- good Returns on Equity (definitely enticing at half of book)

- dividend yield of 2.1% (interesting)

- minimal debt (close to half a billion in long term debt)

- I think the investment portfolio is/was run by value investors I don't know yet

- what pulled me in ? White Mountain insurance & General RE each own 14% (20% consolidated for WTM), what made me look a bit closer is that WTM has warrants in Symetra that are exercisable at $11.49 (the stock is currently at $14 as of Friday). And they expire August 2014. WTM currently owns 17 million shares and has warrants to buy another 9 million shares and there are 138 million shares outstanding - I think WTM is going to acquire Symetra (and no I'm not betting on this idea but rather the fundamentals and pricing of the company)

 

 

Homex Development Corp (HXM)

- Mexican home builder

- 0.2x p/b , price is $255M

- $271M cash , 1.7B in working capital, 3.9B in total assets, must investigate debt levels

- strong steady profit growth

- tremendous revenue growth

- high ROE

- what makes me curious is housing in Mexico (won't really change my opinion though), & the debt levels

 

 

Banco Macro/Macro Bank

- Argentina Bank

- 2x P/E, 0.7x P/B

- 20% profit margins

- avg. ROE is roughly 22% over 10 year period

- never lost money in a decade, good revenue growth

- $1 B in cash, price is 864M, Equity is 1.2 billion

- managed to grow at a very satisfactory pace over a 5 year period

 

Silver Standard Resources (SSRI)

- Silver mining company

- 0.6x P/B , 9x P/E

- earnings are poor IMO

- less than stellar ROE

- balance sheet looks good

- $650M is the price , Net worth is $1B

- Now I rarely if ever touch mining (only time I ever invested was with Inmet and that was pure luck it had the outcome it had), and although long term I wouldn't hold it - in the short term it might prove successful... but I ehh I'm not sure....

 

As you can see I've been looking outside North America *shrugs* there's some attractive companies internationally...

 

If anybody has additional information on them please share your thoughts, criticisms would be greatly appreciated as well.

[constructive]

Symetra Financial Holdings (SYA)

- it's an American insurance company

- 0.46x P/B , 9x P/E

- 1.65B is the price (market cap) , Equity is 3.6 billion

- steady earnings with no deficits as far back as 2005

- huge book value growth representing something like 1200% growth in 5 years

- good Returns on Equity (definitely enticing at half of book)

- dividend yield of 2.1% (interesting)

- minimal debt (close to half a billion in long term debt)

- I think the investment portfolio is/was run by value investors I don't know yet

- what pulled me in ? White Mountain insurance & General RE each own 14% (20% consolidated for WTM), what made me look a bit closer is that WTM has warrants in Symetra that are exercisable at $11.49 (the stock is currently at $14 as of Friday). And they expire August 2014. WTM currently owns 17 million shares and has warrants to buy another 9 million shares and there are 138 million shares outstanding - I think WTM is going to acquire Symetra (and no I'm not betting on this idea but rather the fundamentals and pricing of the company)

 

I own shares of SYA. Here is a good thread on them: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sya-symetra-financial/ The corporate presentations also provide good background: http://investors.symetra.com/phoenix.zhtml?c=213723&p=irol-presentations

 

Recheck your source, because they haven't grown book value 1200% in the last 5 years.

 

SYA's ROE has been unsatisfactory the last few years (although still adequate to support the valuation in my opinion). ROEs are generally depressed in the current low interest rate environment (especially life/health insurers). They have put up decent results compared to other insurers, but their valuation is much lower.

 

You may be right that WTM wants to buy more. SYA also has a 10M share repurchase plan. In my opinion they should be prioritizing buybacks above growth and dividends, but that's not the case.

[constructive]

Argentine banks look good on paper but there are many problems. ROE is much less impressive once you realize they have 10 to 15% (underreported) inflation over the last few years. The government has tight currency controls and radically increased capital requirements, to stop the banks from paying dividends. Worst of all Argentina has a long history of sovereign default and confiscatory nationalizations.

 

http://seekingalpha.com/article/477871-argentina-on-the-brink-what-is-the-real-investment-risk

[no_free_lunch]

Did some basic research on the mexican homebuilder.  It doesn't look good.  Some of their competitors are going into bankruptcy proceedings.  Rumors they will too.  Much of the housing was low,low income build out in boonies.  It's debatable whether there book is understated or not.  The housing boom was brought on by government involvement and looks to be collapsing.  There are always going to be issues when you are dealing with cheap stocks but I have to put this one in the too complicated category.

[PlanMaestro]

Did some basic research on the mexican homebuilder.  It doesn't look good.  Some of their competitors are going into bankruptcy proceedings.  Rumors they will too.  Much of the housing was low,low income build out in boonies.  It's debatable whether there book is understated or not.  The housing boom was brought on by government involvement and looks to be collapsing.  There are always going to be issues when you are dealing with cheap stocks but I have to put this one in the too complicated category.

 

And there are off-balance sheet issues and Infonavit stopped payments. Careful with those receivables.

 

Thread: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/hxm-homex-development-(adr)/msg117777/#msg117777