ELF.TO - E-L Financial Corp. Ltd.

[no_free_lunch]

Dies anyone have thoughts on the underlying business and how or if it might be affected by covid?  I was reading up on Markel and saw they are bracing for a spike in expense claims.

[bizaro86]

Dies anyone have thoughts on the underlying business and how or if it might be affected by covid?  I was reading up on Markel and saw they are bracing for a spike in expense claims.

 

The underlying business is mostly a life insurer. I doubt its affected much, because most covid deaths have been the elderly, who tend to have little or no life insurance. Reduced mobility probably reduces car accidents and things that kill young people with big policies. I think low interest rates are the biggest macro issue here.

[SafetyinNumbers]

Anyone get their cash yet on the tender?

[StubbleJumper]

Anyone get their cash yet on the tender?

 

 

No, it usually takes a few business days and sometimes as long as a week.  It will be interesting to see whether they can get the money out the door this week before the Christmas shut-down.  I wouldn't be shocked to not see the money before next Tuesday (the 29th).

 

 

SJ

[SafetyinNumbers]

Anyone get their cash yet on the tender?

 

 

No, it usually takes a few business days and sometimes as long as a week.  It will be interesting to see whether they can get the money out the door this week before the Christmas shut-down.  I wouldn't be shocked to not see the money before next Tuesday (the 29th).

 

 

SJ

 

It has been a few business days, hence the question.

[StubbleJumper]

Anyone get their cash yet on the tender?

 

 

No, it usually takes a few business days and sometimes as long as a week.  It will be interesting to see whether they can get the money out the door this week before the Christmas shut-down.  I wouldn't be shocked to not see the money before next Tuesday (the 29th).

 

 

SJ

 

It has been a few business days, hence the question.

 

 

Yes, the press release said Dec 22, but I guess we'll see whether the institutions function like a well-oiled machine right before Christmas.  If they are more than one day late, that might become Dec 29...

 

 

SJ

[Simba]

Nicely played to all longs.  :)

 

Watched from the sidelines. Beautiful price at $750.

[Scunny Bunny]

Help required! Apart from Dominion & Anglo Invest (1,459,193) Canadian & Foreign (535,614) & Burgundy Asset Management = EVT.TO (386,206) = 64.2% of ELF.TO what are the other "Jackman" entities (and shares held) which own stock and can be effectively taken out of the float.  (If you could quote the source, that would be appreciated too). There are clearly some long term holders who would rival my ambition to be the last share standing... Thanks in anticipation. 

[SafetyinNumbers]

Help required! Apart from Dominion & Anglo Invest (1,459,193) Canadian & Foreign (535,614) & Burgundy Asset Management = EVT.TO (386,206) = 64.2% of ELF.TO what are the other "Jackman" entities (and shares held) which own stock and can be effectively taken out of the float.  (If you could quote the source, that would be appreciated too). There are clearly some long term holders who would rival my ambition to be the last share standing... Thanks in anticipation.

 

One of them is Ecando. You can see EVT owns it in its annual report and the disclosure says that it’s invested primarily in ELF. Dominion and Anglo also owns some of Ecando in the annual report available from 2002.

 

Wouldn’t be surprised if Canadian & Foreign Securites owned some too.

 

I asked the company if they would improve the disclosure around the ELF ownership indirectly in itself and it sounded like they may have already decided to do that but we’ll see what they do. I think that would help clarify some of the other Jackman controlled entities that own ELF.

 

The NAV would be a decent amount higher if we were still on Canadian GAAP and I think it’s a more accurate representation of NAV.

[Scunny Bunny]

Hah - I forgot Ecando. Thanks for the assistance.

[StubbleJumper]

The money from the tender showed up in my accounts this morning.  The company said Dec 22, and it turned out to be Dec 24, so I guess that's not so bad.

 

SJ

[SafetyinNumbers]

The money from the tender showed up in my accounts this morning.  The company said Dec 22, and it turned out to be Dec 24, so I guess that's not so bad.

 

SJ

 

Thanks Stubble. I'm still waiting for TD.

[Scunny Bunny]

Went back and found a filing from 2016. Best estimate now is that Jackman associates now own 78.6% of the 3,798,834 shares (including the 92,754 circularity of EVT.TO which the company adjusts out). So the "free-float" is about 811,000 shares but many held by long termers too. The two buybacks got rid of 310,833 shares and were accretive to the tune of ~$280MILLION =  >$73 a share). Hope they go again in 2021 if the discounts persist. 

[SafetyinNumbers]

Went back and found a filing from 2016. Best estimate now is that Jackman associates now own 78.6% of the 3,798,834 shares (including the 92,754 circularity of EVT.TO which the company adjusts out). So the "free-float" is about 811,000 shares but many held by long termers too. The two buybacks got rid of 310,833 shares and were accretive to the tune of ~$280MILLION =  >$73 a share). Hope they go again in 2021 if the discounts persist.

 

That’s how much they control but doesn’t ELF own ~700-750k shares in itself through its ownership position in other holdcos?

[no_free_lunch]

Special dividend, ncib maxed, Dutch tender, all in the last year.  I have every reason to believe this will continue.  It is also a good use of cash to buy your stock at 45% of NAV when bonds are paying 1%.

[Scunny Bunny]

Main "self ownership" is via EVT.TO (386,206 shares) of which ELF directly owns 24% and via Ecando (variously owned by EVT & private cos) which owns ~77k I believe. Would also assume guys like QV Investors, Tweedy Browne & Royce are pretty immovable (may be wrong of course). 

[SafetyinNumbers]

Main "self ownership" is via EVT.TO (386,206 shares) of which ELF directly owns 24% and via Ecando (variously owned by EVT & private cos) which owns ~77k I believe. Would also assume guys like QV Investors, Tweedy Browne & Royce are pretty immovable (may be wrong of course).

 

I don't think that's most of it. They also own 15.6% of the common shares in Dominion & Anglo according to the 2003 Director's circular that were filed on SEDAR. Dominion & Anglo also owns some Ecando and a big chunk of Canadian & Foreign Securities.

 

Back in 2010 under Canadian GAAP, they calculated basic EPS (defined below) by netting out the indirect ownerships as indicated above but they stopped in 2011 under IFRS.

 

"Basic EPS is determined as net income (loss) less dividends paid on preferred shares, divided by the number of adjusted common shares outstanding for the period. “Adjusted Common Shares” is determined based on the total common and Series A Preference shares less the Company’s proportionate interest in its own common shares held indirectly."

 

Common shares outstanding were 4.019m (which they were until the buybacks started earlier this year) but the calculation for basic shares outstanding came to 3.311m. That, I think, means at the time about 708k shares were owned by ELF indirectly in itself and that has only grown because D&A and C&F (C&F went over 10% in 2015) have continued to add to their positions for the past decade and ELF has added to its position in EVT and EVT has added to its position in ELF (slightly!).

 

I attached some of the relevant support if anyone is interested.

 

All of this doesn't really matter for the float but I think the shares ELF owns indirectly in ELF understate NAV by up to 750k shares * the NAV discount which is probably north of $800/share at this point. That works out to ~$160/share before taxes.

 

For purposes of the free float, I think 3.708m shares outstanding is the correct number. I believe they only deduct the reciprocal shares for EVT for the purposes of calculating net income per share. On that basis, I think the free float is 763k shares netting the 2.946m shares (per the SIB filing) that Mr. Jackman controls out.

DominionAnglo_Annual_2002.pdf

DominionAnglo_Circ_2003.pdf

ELF2010_AR.pdf

[Scunny Bunny]

Thanks for this. What I was trying to ascertain is the real free float of non-Jackman interests & I think we are on the same page, rather than a Bollore/Muddy Waters exercise of exclusions!  (I did miss the D&A "round robin"). Appreciated

[SafetyinNumbers]

The money from the tender showed up in my accounts this morning.  The company said Dec 22, and it turned out to be Dec 24, so I guess that's not so bad.

 

SJ

 

Thanks Stubble. I'm still waiting for TD.

 

TD only gave me $18/share which was the paid up capital amount and I am very confused. My account looks a lot smaller losing $732/share.

 

Merry Christmas!

 

 

[StubbleJumper]

The money from the tender showed up in my accounts this morning.  The company said Dec 22, and it turned out to be Dec 24, so I guess that's not so bad.

 

SJ

 

Thanks Stubble. I'm still waiting for TD.

 

TD only gave me $18/share which was the paid up capital amount and I am very confused. My account looks a lot smaller losing $732/share.

 

Merry Christmas!

 

 

Yeah, the brokerages are all short-staffed to handle the surge in demand and it's Christmas.  They'll get it figured out next week and they'll issue the $732 dividend too (my payment was also broken down into two, $18+732=750).  One thing for certain is that you don't exactly want to try to phone in to inquire about something like this or you'll be stuck on hold for an hour or two.

 

Have a good holiday,

 

 

SJ

[SafetyinNumbers]

New article on ELF

 

https://seekingalpha.com/article/4396849-make-e-l-financial-your-personal-family-office

[no_free_lunch]

Thank you Safety!

 

From the article:

 

It's not an exact science but I would *estimate* net equity value to increase from 5.7B in Q3 to ~6.1B or ~6% at FYE which would translate to ~1,644 of book value per share at the December 31, 2020 FYE based on the reduced share count from Q4's issuer bid and the general appreciation of equity securities in the broader markets.

 

I think this still understates it as it doesn't take into account circular ownership structure.  ELF is likely trading around 45% of NAV.  I can see a strong discount in something like SEC.to where management ignores the discount but in ELF's case management is awake.  Given the capital allocation this year is taking it is crazy for this type of discount to persist.  I continue to hold and I like it despite the sluggish share performance.

 

[no_free_lunch]

ELF released results, NAV is now at $1684 vs share price at $825 today.  Still trading at over 50% NAV discount.

 

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-december-31-2020-financial-results-826436365.html

 

 

ELF is renewing their NCIB.  It is set at 5% of outstanding shares.  They also announced that they maxed out last years NCIB, also representing 5% of the shares.

 

https://leaderpost.com/globe-newswire/e-l-financial-corporation-limited-announces-renewal-of-normal-course-issuer-bid

 

It seems madness for this to continue to trade so cheap given that management is actively soaking up shares.

[MattR]

Checked all their financials and didn't found anything that would be a red flag. It still trades in a huge NAV discount. Does anyone has a reason why it is that cheap?

[clutch]

Checked all their financials and didn't found anything that would be a red flag. It still trades in a huge NAV discount. Does anyone has a reason why it is that cheap?

 

It's always been this cheap for many years now, so I don't see if that will suddenly change.