dealraker

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

An interesting article: https://www.npr.org/2023/07/22/1186540332/how-climate-change-could-cause-a-home-insurance-meltdown

Willis had bought broker Hilb, Rogal, Hamilton (Hobbs) in 2008 or so, paid dearly, which itself was mostly a intermittent dog always selling semmingly cheap but not. The TW part is out of my understanding. The merger cancellation with AON was probably a good thing for AON.

Hard one to word and hard place to do the math and make sense of it. Waterfront lot and home bought and built 40 years ago by me, a licensed contractor. The lot, if the house wasn't on it, would sell for 15-18 times what I paid 40 years ago. With the house and structures separate from the lot...well the boat ramp, pier, seawall, extensive decks and such - all have been replaced - due to natural erosion and weathering--- I've gone backwards financially. Then add in the boats and it is backwards on steroids. Loved it from the beginning and loved it more as time passes. Then there's the cost and maintenance of the land across the street and we go exponential in the backwards mode. Overall, house and lot stuff total, worth about double to triple what I have in it. Umm....maybe double is closer. Lotta people do this stuff too. Crazy! And fun.

Angela asks, "Why are you again laughing so hard?" I respond, "Because 'again' I just read Greg's post!" 48 year ex-bond survivor here.

Yep.

In my dreams I buy a long-long-long tail insurance company with 5-8% annual premium growth that breaks even on premiums to claims and has an investments to equity ratio of 3 to 1. The investment portfolio is one stock always fairly valued that appreciates at about 10% and doesn't pay a dividend. Management adds share additions to the one stock investment portfolio from the gradually but endlessly increased float - from the profitless enterprise - all while hordes of analysts and investors chant in unison: It has no profits or cash flow It has no dividend (thus management doesn't "share") It has no return on equity

I'm pretty sure running on trails or other softer surfaces would have extended that part of my life but that may be untrue of course. I also was a tennis player, a mid level college player and tournament type so you know the story of what that does. I do lots of yoga every day and it is the foundation of my older life along with moderate weights and resistance strength maintenance. The guys who ran more than me earlier in life, who extended that well into their oder ages have all, and I mean all of them but one, had to stop. One guy ran well into his 80's though so it can occasionally be done by the human body.

I mostly mountain bike, luckily now we have 10 trails within 30 minutes drive so I generally ride a few times a week for about 1-2 hours. The time is down from earlier life but I had blood clots after an extended ride where I got somewhat dehydrated. Angela and I hike all over, we go to the NC or VA moutains for a couple night stay at least once a month. We've also hiked extensively on the coastal path in England on several trips there. We tend to hike about 5-8 miles a day, just day hiking and no backpacking.

I ran for about 32 years and miss it greatly. Mountain bike regularly and hike now. I have been the lead person in several trail building projects totaling about 50 miles. But nothing is as simple and stress relieving as running. Enjoy it all you can while you can. I had to stop because of feet, knee, and hip issues, none of which are a problem cycling and hiking.

Yep.

Some say I am about as fit as anyone ever my age at 69. If so, my view is that with age strength training is probably even more important than cardio. Of course I do both, but I do witness that those around me who do almost nothing but cardio seem very fragile. I have reduced the weights, but try to be regular. Still it is interesting that with age that the things I do regularly like cycling, mostly mountain biking, I am noticing little change. But things I do irregularly like wakeboarding, tennis, or pickleball...well my hand-eye coordination is far down as is my ability to recover from the physical stresses.

LOL...I basically went to sleep on Fairfax over the years. I'd bought pre "Prem's the Buffett of the North" media hype years and got much of the benefit of the rediculous over-valuation that came along with his designation, but then I didn't sell ---- and honestly in my life if there was ever a clear "sell" this was the case for Fairfax back then. But like Meta/Facebook too where I reluctantly bought more sub $100----well, I've slumbered down in my comfortable position out on the decks or reading nook and read COBF now for a long time and got brow-beat to hell by Parsad on Fairfax. So in small amounts I've bought Fairfax about 20 times in the last year and a half or so. I think only occasionally about the business or Prem nowadays, but when the logic screams at you and someone you admire is posting up endlessly to buy it or claim idiocy if you don't? Yea, go for it. Short of my early life reading COBF has likely been one of the most educational things for me in decades as far as investing. Spek's discussion of the financials is yet another benefit. I have enough $ coming in to make purchases every couple of weeks and East West, Cathay, and Hope all got funded again in the last couple of months. I'll update you Greg on the warehouse buy we are doing if it goes through. It it does it will literally shock you as to how cheaply we're getting it given the pressure on space locally. I haven't yet bought much of MSG...but am reading.

And it was just a few months ago I wrote Greg stating, "Well, I just made the largest investment I've ever made...into JOE." The price was $36.5 or so. Having read Cialdini's book INFLUENCE a few times I was at least aware that my own lamblasting of JOE through the years both in speech and in dictation had put me in the serious place of silly/stupid/ignorant bias and such. So I grabbed my head with my hands and twisted it around a little - then actually began some reading including annual reports and Greg's posts.

Like most, but not Greg (LOL!) and a couple others here on COBF, I have been visiting all the local businessmen informing all that getting "out" is the key to their very survival, the only way to avoid inevitable ruin. Sell now, buy back later? It seems to be less than understood by these types, the ones we are superior of - those lesser of knowledge who stay the course. I mention Ben Graham and such, but one guy enlightened me (actually I already knew but didn't spill) that the legendary buy/sell (based on all those enless stats in Intelligent Investor) guru of the past actually made half his gains with the one business he didn't sell. I slithered away into the alley to re-think my presentation with this one. The business I own a part of locally, the one of my brother-in-law and cousins (me no kids thus "they" get it too soon unfortunately)...well, we just bought another warehouse. The pressure on our warehouse collection? Well, it is getting pretty serious guys. So cramming down my throat that all is going to hell-in-a-handbasket is a tough sell to me too...as a businessman. So back and forth I sway, like branches in the breeze. As a stock investor, you know the part where I can sell and like online posters have been doing in excess since 2011...brag about my huge cash levels...that I am out or that I want out and I want out now. But as a local businessman? Hell, "in" seems more logical? New so-big-it-shocks-me plants from Simens, Nucor, Eggar, Norfolk is re-using the yard they had shut, Toyota Battery, Honda, ...all within a mile of our warehouses and 285 acres of creek-rail-road facing property? The land we were willing to sell but now we've decided to hold out because we hear some big time stuff be coming our way and the offers are from those we know who are always in-the-know. Just when I knew changewasgunnacome...it dawn't after all. Everybody is certain, it is black and white driven by endless facts and stats - on my side or the opponents one. 50 years and running, all gray to me- I am just not sure of a damn thing. You'all keep me posted.

In finance - the insatiable and endless need to be aware of all things at all times making sure not to experience hardship of any size or duration is without a doubt the definition of ongoing rookie thinking. In the long run I have watched many do this, the result is often that there is temporary satisfaction that some negative experience was avoided. Yet none doing this, at last from my watch, are the ones with the stuff hoped for in the long run. Writing well to me is almost always counter to investing well, again from what I've seen. Buffett sought help to write decently, countless hopefuls try to emulate - and the oddballs outpouring like the latest popular guy Bloomstran do get popular. But as usual he can't invest well, but does a fantastic job confusing those reading his letters looking for actual investment returns.

If you have little cash you'll be posting up stuff that proves (correctly) that about one investor in 100 gets it right going in and out of business (that's the stock market) at the right times. If you are 50% cash then of course you know the game well, there's probably a few million fear articles out there each week and tons of dudes making hay selling their wares of fear. Find 'em and post 'em online...you can feel the fear and elevated pulse rates of those reading the sellers who know very well what sells. And then...oh my lord...there are the Charlie's of the world (that's me) that really don't give a shit about any of it. And we are this way because we've fucked up trying to be something we aren't (business traders) too many times. Thus we just gave up playing musical chairs and decided to be in business at all times. Life is great...if you can stand it.