So I’m looking at this firm, called PLFE. Trying to decide if this is a “net net” and worthy of a buy. Interested in hearing if this counts. Normally I think net nets are stocks trading below (roughly) [Current liquid assets-Total Liabilities]. This firm has an investment portfolio of 3,781M, and total Liabilities of 3,210 M so the difference between portfolio and liabilities is 571 M, but the firm’s market capitalization is only 247 M.
I know this company and have met with management sometime past. They are good people. PLFE is a subscale player trying to expand into a competitive field. The shares trade below net-net because the market doesn’t believe they are going to be successful. I’m not an insurance analyst, so I don’t have a good feel for whether they will be successful or not, but my hunch is no, because they are swimming against the current.
Appreciate the response, it’ll be interesting to figure out whether the business risk is worth the very low valuation.
do they have any off balance sheet liabilities?
Nope, they have no off-balance sheet arrangements.
you really can’t use net-net (current assets less current liabilities being greater than market value) properly on insurance companies. their liabilities are based on actuarial assumptions which can increase substantially depending on their reserving policies. I would watch out for the guarantees on the VA and other policies they have outstanding. Also, US Gaap does not require full mark 2 market on assets backing liabilities so if you get a fair value of these things, things might be materially different than what you think. i have not looked into the financials any further than the balance sheet as i am writing.
FrankArabia Wrote: ------------------------------------------------------- > you really can’t use net-net (current assets less > current liabilities being greater than market > value) properly on insurance companies. their > liabilities are based on actuarial assumptions > which can increase substantially depending on > their reserving policies. > > I would watch out for the guarantees on the VA and > other policies they have outstanding. > > Also, US Gaap does not require full mark 2 market > on assets backing liabilities so if you get a fair > value of these things, things might be materially > different than what you think. > > i have not looked into the financials any further > than the balance sheet as i am writing. Yes, that’s right, you have to have a pretty sharp pencil and get into the actuarial stuff in detail before you would commit to a long. I doubt you could do that accurately without having a detailed conversation with the company’s Chief Actuary, and they may or may not tell you what you need to know.
Thanks for the info all. That doesn’t sound fun!
Truth be told, a lot of insurance companies (mostly life oriented) have no idea how much they’re really really making. P&C side is a lot better due to short tail risk. good luck Palantir. That hot babe from BNN is watching you.