dealraker

Bought RTX yesterday. I had bought a pretty good amount of Siemens during that Covid drawdown, selling some long held KHC and K to do it. Today I bought an equal addtion to SIEGY. Biased as SIEGY is buiding a massive passenger rail plant next door to our industrial site here in Lexington, NC.

It is as it has always been for WTW. Willis was so-so as to performance, they acquired broker Hilb, Rogal, Hamilton which itself was a so-so, then Towers was at times pretty so-so. So it is as it will be - as Wells analysts say, "The same ole Willis."

Yes, Hess runs a far above average business to being average. Interest rates on the pension business wiped out 75% of the forecasted margin, TRANZACT is quite the upfront cash guzzler, Transformation Program a dud, but margin expansion always coming at some point in the future or so the man says. This is a fabulous business if and when it is run right.

LC, just the same ole thing for my old ass, it doesn't change . More coming in than going out, plus my nephew decided to go half with me on the 240 acres across the street given he and his kids will inherit what I have already (no children) which means I sold more than I needed earlier- got $ to outlay. Bought some Willis below $200 - already had some LHX below 190 East West below $55 More Norfolk Southern below $200 (I still own my 1/27th of my grandfather's holding which began 84 years ago- my grandmother died after my parents so it came from her) Nintendo $10 and something Still buying Fairfax which I have owned since the 1990's and I have now bought for the last couple of years about 30 times I had loaded up on Parker Hannifin (second largest ever investment behind Joe last year) at just over $300...but added again recently at about $400 Note: I invest, as all in my family do, to pass down a model to sustain for generations after me. I do not ever focus on beating Mr. Market.

So longterminvestor here's story for amusemement, nothing more and nothing less. So we grab hold of Brown in the mid 1990's and given all of us are in this locally very well-known investment club...well, we decide to present the idea to the club. This is about 1997 or so (my dates may be wrong but i have no access to the history now), so yea we've already gotten some serious outcome to our very large BRO holding. The club grabs it, we buy a 10% of the club postion. Not long till the stock has double. But.......one of the most outspoken members of the club had not been present when we bought the stock and the guy absolutely hated with a passion insurance stocks in general. Of course he had no concept that BRO was not an underwriter. This guy was interesting, he ran a relatively small but enormously profitable snack food business and the guy literally owned every stock (outside of insurance) we ever discussed in the club. When he died his estate included huge double digit millions in donations to various public entities, so yes he had done tremendously well investing and holding. But anyway he arrives at the club meeting one night and does this dominant targeted negative out-spewing of why owning BRO was one god-awful thing and that we should sell it and buy Cisco. Precisely what the club voted to do! A few years later, the date again unknown to me now (remember I'm 69 so wait till you are 69 and try to remember specific cycles/times/dates....because you probably won't unless you are Buffett's level of memory/facts), I presented to the club that we had almost doubled our money in Cisco (Cisco went from our split-adjusted $6 to $82, but we sold later at $12) while we would have made 10x in BRO. The club of course yawned. Why? Well we'd gone through an era where we had bought tech "cheap" and had 35% annual for 10 years until the club's portfolio crashed 80% plus in a few months. Thus we had gravited from "if it ain't 25% annual growth we aren't interested" to "low pe value investing straight out of the Ben Graham handbook". There we remain now some 20 years later. LOL. I just watch now, I despise their investing model as does nearly a third of us all from the same grandfather. But the young guys rule the roost. However, we have had more deaths (the club began in 1954) and some have had to leave for other age related reasons, and we have some even younger guys who are blasting ahead in their careers who want some more action rather than BMY at 10x earnings or whatnot. Life is great....and cycles come and go while some of us are quite happy with BRO!

I remember very well...it was 1994 and we'd done the AJG deal. I had all my family, my first cousins and brother-in-law come down to my lakehouse where I did an elaborate presentation on Poe and Brown, now Brown and Brown. I can visualize so well the barely controlled euphoria I was delivering to them all as to Hyatt's conference call when he said "Look, we can do 15% for so long that you can't fathom the outcome of it all." The lumber co had sold all but one location and funds were rip-roaring ready to go somewhere and I spoke my mind! SOLD! Wasn't long after my brother-in-law says, "Charlie, I just need an investment as we sold X and I have $800,000 to invest." I swear to you-know-who that ole dealraker said, "Steve, it is all going in to Brown and Brown." And so it was, the good ole days!

BRP as per Wells: Insurance Brokers BRP Group, Inc. (BRP) BRP: Bringing Down the Curtain on Earnings Season; Q2 EPS & Conference Call Round-Up Our Call BRP reported Q2 operating EPS of $0.27, in line with our estimate and consensus of $0.27 and the low end of their $0.27-0.29 guide. Organic was close to us and above their mid-teens guide. Adjusted EBITDA of $61.6m was above the $55-60m guide. The stock from here: BRP shares should trade flat tomorrow as the full-year guidance raise on organic and revenue is offset by BRP keeping their EBITDA guide the same. We were surprised they did not raise the EBITDA guide as they did point to tailwinds in the back half on the call as they fully lap the influx of hiring last year in the next quarter, so they are most likely being conservative and giving themselves some flexibility. Estimates and price target changes:Our 2023 EPS estimate goes up to $1.25 (from $1.18) to reflect higher organic and lower interest expense while 2024 and 2025 estimates are unchanged at $1.85 and $2.55, respectively, as slightly higher EBITDA is offset by lower partnership revenue. Our price target is unchanged at $29 on an equalweighted blended multiple analysis based on our 2024 estimates (see Exhibit 3). The good: BRP raised their full-year guidance for organic growth to the high-teens (from the mid-teens) primarily due to the outperformance YTD, and they said they are assuming mid-teens organic in the back half. They also raised their full-year revenue number to $1.18-$1.20B (from $1.17 to $1.19B previously). Insurance Advisory saw organic of 15%, accelerating from the 14% in Q1 and above our 10.5% estimate. Mainstreet also saw a sequential acceleration with organic of 20% vs 17% in Q1. The bad: The EBITDA margin in the quarter was 20.7%, falling below our 21.1% and the street's 21.2%. BRP raised all FY guidance items except EBITDA, keeping it unchanged at $255-$265M. With the newly revised revenue number, that would imply EBITDA margin of 21.8% at the midpoint (improving from 20.0% in 2022) vs 22.1% previously. Underwriting Capacity & Technology Solutions saw 43% organic, below 82% in Q1 with +45% in MGA of the Future, but a 2% decline in business away from the MGA. The ugly: Interest expense was $28M in the quarter, above our $27M estimate and above the $26.6M in the first quarter. They are still expecting their FY net interest expense to be around $105M - $110M assuming no change in current rates. They did pay down $15M of their revolver in the quarter after paying down $20M in the Q1 as they work towards delevering towards the top-end of their 3.5-4.5x target by year-end. Equity Analyst(s) Elyse Greenspan, CFA Equity Analyst | Wells Fargo Securities, LLC Hristian Getsov Associate Equity Analyst | Wells Fargo Securities, LLC Matthew Byrnes, CFA Associate Equity Analyst | Wells Fargo Securities, LLC Wes Carmichael, CFA Equity Analyst | Wells Fargo Securities, LLC Rating Overweight Ticker BRP Price Target/Prior: $29.00/NC Upside/(Downside) to Target 18.5% Price (08/09/2023) $24.47 52 Week Range $19.26 - 33.34 Shares Outstanding 116,801,494 Market Cap (MM) $2,858 Enterprise Value (MM) $3,843 Average Daily Volume 258,119 Average Daily Value (MM) $6 Dividend (NTM) $0.00 Dividend Yield 0.0% Net Debt (MM) - last reported $985 ROIC - Current year est. 0% 3 Yr EPS CAGR from current year (unless otherwise noted) 35% $ 2022A 2023E 2023E 2024E 2024E EPS Curr. Prior Curr. Prior Q1 (Mar) 0.50 A 0.42 A NC 0.60 E 0.62E Q2 (Jun) 0.23 A 0.27 A NC 0.45 E 0.43E Q3 (Sep) 0.18 A 0.32 E 0.27E 0.43 E 0.42E Q4 (Dec) 0.12 A 0.27 E 0.24E 0.38 E NC FY 1.03 A 1.25 E 1.18E 1.85 E NC P/E 23.8x 19.6x 13.2x ROIC - Current year est.: Represents return on equity (ROE)

Can't wait for the BRP discussion. I've owned all the brokers since 1994 but AJG is 10 times larger than any of the others in size with BRO second. I bought some BRP in the high teens on a downturn and recently addd in the $22-23 range. But I'm simply using Wells Fargo's analysis.

+1 here on Spek/LHX.

We been subbed for so long we don't recognize it 'cause we's too busy doing the grievance.

Academic is ok. And correct! LOL.

Grrrrr....NSC....it was not here on COBF but other places where I complained with a vengeance about management buying back stock progressively more agressively at higher prices. The precise bunch always replied in the moment of gleeful euphoria. These always went like: "Dealraker, the price is higher than the buybacks you mention so your thesis is..." It was the same bunch lecturing me 5 years ago the Brookfield Property was a 7 bagger in ten years from a price near $30. Somebody give the all these MF'ers some experience in life plus a tad of patience please so anything at all they do or write actually makes some tiny bit of logical sense. Wife says, "Dude, you need to get some serious exercise today," as she reads my posts.

Yes but evidently the pay down of debt is relatively rapid for BRP so they say. I too bought WTW several times recently to add to what I have had.

As to insurance brokers, as Spec mentioned sometime earlier it would likely be a worthwhile experience to look at BRP Group. I had bought a little BRP in a plunge that I had no understanding of, but have bought significantly more at $22.50 and I added today. The more I read the more I like it.

You pick 'em Greg...I'll buy!

My wild guess is that both stocks and bonds in general are not good buys or holds currently, but bonds may have the edge. Probably the first time in a long while someone like me would chirp a bit with such a subject as this- but it seems likely. A few weeks ago I nearly liquidated by small retirement account except for a couple of stocks. I also sold a bunch of smaller holdings in the taxable account, stocks that to me have little to no advantage over peers in any way. Of course when the Brookfield bunch nudged ever so slightly higher, as I mentioned earlier, I sold all of them which to me is simply a good riddance. First time in my life I've sold in such a manner, but raising funds for a land purchase changed my theme.

I felt I may expose my neighbor- single as her husband died young not long ago- who I adore. Writing isn't my comfort zone.

So my guess is that if we - for the most part - start getting better news on inflation and "growth" then Mr. Market at some point not far away will pause and proceed downwards (more significantly). His chant? "Dudes, I predicted this upside crap already. What else you got? I don't think it is that great." At least that's what I've experienced in life.

Over time it would be superb to have the board discussion assist as to investing outcomes.

Wells on AON--- again my Wells opinion as to when/what to invest in as far as the brokers is very high. I think they are superb at this. AON shares traded down reflective of a fourth straight quarter of organic revenue growth underperforming the peer group. The company's 2023 outlook was unchanged, and they expect the lower M&A volume to continue to serve as a headwind in H2. The stock from here: AON shares should underperform the broader insurance brokerage sector until they are able to close the gap from an organic revenue growth perspective. The company's guidance was mostly unchanged (minus modest updates around FX and cap-ex) and while they are expecting mid-single-digit or greater organic revenue growth for the year they said that the lower M&A/SPAC deal volume should continue to have an impact on its organic growth in H2. Estimates and price target changes: We are lowering our 2023 EPS estimate to $14.25 (from $14.40), our 2024 EPS estimate is now $16.45 (from $16.60), and 2025 is now $18.50 (from $18.60). Our estimates reflect the Q2 shortfall, combined with slightly lower revenue and margin estimates. Our price target falls to $317 (from $318) to reflect the lower EPS estimates. M&A slowdown should serve as a headwind in H2: AON will lap when the downturn in M&A activity started in Q3, they think that the pressure should continue in H2 as the external outlook remains soft. In Q4 22 AON disclosed that capital markets activity offset its organic growth in Commercial Risk by 5%. MMC reported 9% organic growth within Marsh in Q1 vs. 5% at AON Commercial Risk and even if AON has more exposure to M&A activity we are not sure that explains the whole delta between the two. Employee attrition below 2019 levels: AON said that they feel well about attrition (2023 attrition is below 2019 levels), engagement levels at highest they have ever been. The company's outlook remains for mid-single-digit organic revenue growth, as compared to high-single digit at MMC (although MMC includes fiduciary investment income within its organic revenue), and we are now looking for 5.9% organic growth for the full year as compared to 7% at MMC (excluding fiduciary investment income). Free cash flow guidance unchanged: Cap-ex is now expected to be $220-250 million in 2023, up from $200-225 million. Free cash flow was down 7% in H1 and AON thinks it can still see double-digit growth for the full-year as cash flow growth tends to be heavier in H2. When asked about buybacks, AON said that they do not forecast buyback by quarter but that in any year share repurchase is typically the highest use of cash from both debt and operating cash flow. See Exhibit 1 for AON's guidance.

Super posts longterminvestor. I've hoped to interact or read such online now for about 30 years without success until now. I'm nowhere near as capable as to writing as you are and fail miserably trying to do it. But your posts while detailed are quite clear as to general thinking and a big plus.

Spek I ate lunch today with a guy who is in the business and very good at it as an owner. His basic response to this is, "I'd think there's tremendous interest from somebody to gain access/ownership to their underperforming units given how desparate the industry is for acquisitive profitable growth."

As far as economics, forecasting, and blunt plain simple common sense Greg has stomped the competiton to smitherines here now for some time. I'm polar opposite of someone like many here who is always certain, I'm "Mr. Everything's Gray" so I'm more of a reader and observer. But the in-your-face obvious winners/losers is in-your-face shouting at you. Greg 100; competition 0. Equities and inflation? The real question is "How old are you and how often are you mandated to keep score?" If I could describe online forums in a short paragraph I'd surely mention that all are intense/obsessive short term competition from those claiming a long term focus. So when inflation swings ahead of equities, or when equities simply aren't popular and are the dominant part of the portfolio, then the obsession with finite score keeping is going to drive unsure-of-themselves stock holding investors who read forums into insanity. Businesses, especially pretty good businesses, are over time much more predictable than is inflation or the market itself. A few of us just stay with business and read the rising and falling emotions. Isn't long until you can't even remember how many cycles of such you've lived through.

Wells on AJG: Our Call AJG reported Q2 EPS of $1.90 beating both our estimate of $1.83 and consensus of $1.86. The company beat us in Brokerage ($0.06 per share) and Risk Management ($0.01) with better organic growth in both and a better margin in Brokerage. Estimates and price target changes: Our 2023, 2024, and 2025 EPS estimates are now $8.85, $10.40, and $11.75, respectively (from $8.85, $10.35, and $11.75). Our estimates reflect better organic growth, counter-balanced by some modest changes to our margin and Corporate earnings. Our price target goes up to $237 (from $233), using a 22.5x multiple on our cash EPS plus $3 per share for our clean coal DCF. Stock call: AJG shares should trade up on the better-than-expected Q2 and strong outlook for the back half of the year and for 2024 in our view. The results stand out especially in light of mixed results this week from BRO and WTW. Gallagher had an optimistic outlook on its organic growth for this year (and said that next year looks a lot like 2023), is improving its margins, and has a strong M&A pipeline. We reaffirm our Overweight rating and AJG remains our top pick among insurance brokers. The good: Gallagher saw organic growth in both businesses that came in above expectations set at its June investor day, driven by a strong June. AJG expects Brokerage organic growth to be at the high-end of its 8-9% target for the FY and said that it thinks 2024 is shaping up to look a lot like 2023. Gallagher is also now looking for 30-40 basis points of margin improvement for FY 23 (70-90 bps ex Buck) in Brokerage, up from the prior 20-30 basis points (60-80 bps ex Buck). The bad: Benefits organic growth was 5% adjusted for the large life sale last year, slowing from 7% in Q1. In the Q2, Gallagher issued 851,000 shares to finance transactions and the average share count of 219 million was higher than our 217.5 million. Buck continues to hinder margins as expected, but this should flip after we annualize the deal in Q1 2024. AJG thinks it can take Buck's margin from the low-to-mid teens into the low-20s, which could serve as a boost to AJG's margins in 2024.

Dinar, management has lowered its margin goal accoding to the conference call - that margin was already the lowest of the peers. The stock sells for about 13.3 times what Welll Fargo predicts for 2024 earnings so that's not expensive. Wells Fargo, which I follow as to the brokers, does an excellent job with this sector and has for years and years. They have a "same ole Willis" view and that opinion is seemingly endless. Wells below: Our Call WTW shares sold off today reflective of the company lowering its 2024 EPS guidance and posting a weak margin in the Q2. While investors were expecting a guide down, they expected it for pension not also the company lowering its margin goal. The stock from here: We believe the shares should trade in a tight range until we see a clearer picture of WTW's path to 2024 targets. WTW should see good organic growth and margin improvement in the back half, however we believe investors won't step in until they start to see more consistent execution with both margins and free cash flow. The 2024 guidance implies around 120-220bps of margin improvement vs our 2023 estimate, and we believe WTW needs to show that it can improve its margins. Estimates and PT changes: We are lowering our 2023 EPS to $13.85 (from $14.20) to reflect a higher tax rate and weaker margins, while 2024 and 2025 go to $16.00 (from $17.30) and $18.40 (vs $20.00) to reflect lower pension income, weaker margins and a higher tax rate. Our price target goes down to $224 (from $243) based off a 14.0x P/ E against our 2024 EPS estimate, about a 34% discount to peers given the volatility in margin and free cash flow versus peers. Cash, cash and cash: The guided 12% FCF margin for 2023 is estimated to be the worst among peers, where the average is 21% (see Exhibit 4). Tranzact was a 200bps headwind on FCF conversion in 2022 and the business is not expected to breakeven on FCF until a "couple" of years. Away from Tranzact WTW expects an additional 200 bps of FCF yield from transformation program spend going away, and improved margins. Working capital improvements could then help expand its FCF conversion even higher. R&B hiring more, which is impacting margins: WTW pointed to more hiring in R&B, albeit with lower open positions relative to 2022, as they focus on their specialization strategy. The company attributed the margin guide down to this investment in talent. While hiring to drive revenue growth is a positive, we believe it is hard for investors to have conviction that Willis can show margin improvement until ts starts showing consistent quarterly improvement. Is this the last guide down?: Numbers now seem more realistic, with the caveat that we still are not convinced savings from the savings program are falling to the bottom line and WTW will need those savings to hit its now lower margin target for 2024. If the new numbers are the numbers, the stock is cheap versus peers at 13.3x our 2024 EPS estimate. With that being said, we would need to see traction on margins and FCF for us to want to step in. Equity Analyst(s) Elyse Greenspan, CFA Equity Analyst | Wells Fargo Securities, LLC Hristian Getsov Associate Equity Analyst | Wells Fargo Securities, LLC Matthew Byrnes, CFA Associate Equity Analyst | Wells Fargo Securities, LLC Wes Carmichael, CFA Equity Analyst | Wells Fargo Securities, LLC Rating Equal Weight Ticker WTW Price Target/Prior: $224.00/$243.00 Upside/(Downside) to Target 5.5% Price (07/27/2023) $212.25 52 Week Range $197.30 - 258.93 Shares Outstanding 106,413,057 Market Cap (MM) $22,586 Enterprise Value (MM) $26,554 Average Daily Volume 1,787,073 Average Daily Value (MM) $379 Dividend (NTM) $3.34 Dividend Yield 1.6% Net Debt (MM) - last reported $3,968 ROIC - Current year est. 13% 3 Yr EPS CAGR from current year (unless otherwise noted) 11% $ 2022A 2023E 2023E 2024E 2024E EPS Curr. Prior Curr. Prior Q1 (Mar) 2.66 A 2.84 A NC 3.32 E 3.60E Q2 (Jun) 2.32 A 2.05 A 2.20E 2.37 E 2.89E Q3 (Sep) 2.20 A 2.13 E 2.19E 2.50 E 2.76E Q4 (Dec) 6.33 A 6.92 E 7.01E 7.87 E 8.10E FY 13.41 A 13.85 E 14.20E 16.00 E 17.30E P/E 15.8x 15.3x 13.3x ROIC - Current year est.: Represents return on equity (ROE)EPS: Adjusted EPS Source: Company Data, Wells Fargo Securities estimates, and Refinitiv. NA = Not Available, Volatility = Historical trading volatility