Myth465

The CEO has been in Insurance since 1986. Flip through some of the early presentations. The track record is there but with different companies. http://www.lancashiregroup.com/lre_group/investor_relations/results_presentations/presentations/2006/ When you write at combined ratios of >60 and cats take you to >90 then you mint money in good and bad years. Most people write at 95% in good years and get praise. I do see your point, Insurers are one bad storm / attack away from Bankrupt, but I think the same can be said about BRK and FFH. Didnt BRK exit the terrorism business after 9/11.

I will use pinks, dont want to pay the fee for foreign stocks.

After flipping through the prior presentations I finally figured out what you mean by this. Good stuff.

Viking thats a bout the only thing I find consistently cheap. Every insurer is cheap, but you can buy world class insurers under book value.

Im probably not too far ahead of you so take this with a grain of salt. Ships are commodities. They just went through a massive overbuilding phase. Now everyone is waiting to see how it plays out. All ships - containers, dry bulk, tankers, barges, tugs, ect. Were overbuilt and the order book is now much higher than current demand. Single hull ships have to be scrapped and people are slow steaming ships or using ships for storage. These measures are helping out but rates for most ships are in the tank and will never support the prices used to justify the ships bought at the peak. BV is probably too high for most carriers unless they did not buy many ships in the last few years. I am looking for shippers who bought limited amounts of ships and have cash. They can take advantage of the downturn and buy ships on the cheap. I like TNP, and am looking at DHT. I also want some added safety and want a protected industry. I liked OSP (bought out by parent OSG) and KSP because they operate in the Jones Act. US laws prevent movements from US Port to US Ports from using non US Jones Act ships. Its hard to find a ship built, crewed, and owned by a US company so these carriers have a few added barriers to entry.

Here is a very good counter article by Stiglitz. The US Treasury has been charged by Congress to assess whether China is a “currency manipulator.” ...[T]he very concept of “currency manipulation” itself is flawed: all governments take actions that directly or indirectly affect the exchange rate. Reckless budget deficits can lead to a weak currency; so can low interest rates. Until the recent crisis in Greece, the US benefited from a weak dollar/euro exchange rate. Should Europeans have accused the US of “manipulating” the exchange rate to expand exports at its expense? http://economistsview.typepad.com/economistsview/2010/04/stiglitz-no-time-for-a-trade-war.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomistsView+%28Economist%27s+View+%28EconomistsView%29%29&utm_content=Google+Reader

Thanks very good listen. I have been following shipping for about a year looking for big value. OSG was fairly cheap, but is not currently. My favorite play right now is KSP. They just cut their dividend and that has pissed off investors. I think its cheap just dont have the cash to buy currently.

I think its a huge skill. One has to be trained or crazy to go against the crowd. Its just not a very natural thing to do. When the sky is failing everyone wants to hide under a bridge vs play outside.

Not too many people are upbeat about gas when they have oil assets. Exxon did make a big gas purchase though. Whats your thoughts Zorro

Now I am slightly interested. I have a few nieces and can leave it with them or transfer it to my kids and split the difference at some point. Seems like a no brainier because I hope to help out a few kids in the family with education. What broker are you using.

I was a baby in the 80s but from what i have heard is people simply thought the yield would go up. No one was thinking reversion to the mean. I plan to start laddering them at 10% and as said above will hold till maturity. The only bonds I have been interested in was International Coal Group convertibles which were paying like 9% and were selling for 80 cents on the dollar. They rallied before I could buy and last I checked were above par. I was still learning about bonds and found the bond market to be very opaque.

I would say he got a good deal based on production growth and cash flow. I am not sure why Arena sold though.

They pick the sweat spots of insurance. After the hurricanes they went into offshore when pricing went up and mainly insured the drillships and semi's these dont really get hurt by a hurricane. They dont plan on getting bigger. Hence the huge dividends and buybacks. They just want to make money, dont want to be the next AIG. If the pricing is good they write insurance if not they return capital.

Here is some additional detail. I wonder why Arena sold out. The deal is part of a strategic change SandRidge CEO Tom Ward decided to make in late 2008, according to the report. Back then, Ward concluded that natural gas prices would stay low for years, so he decided to begin looking for oil assets, the report noted. Ward will be CEO of the combined company, and Arena's current management and board will have no role in the merged company, the report said.

I believe he said he was wrong about regulation. He said that his model had a fundamental flaw.

Holding gas through the cycle only makes sense if you think you can survive it. Gas is coming off a 6 year bull market and we have a glut of it now. Not only do we have a glut of it but everyone including SandRidge is drilling for more. I think this is a good hedge, and seems like a decent price. It is buying high though and selling low.

Interesting video and article. Neil Ferguson's part is very interesting. http://www.cnn.com/2010/WORLD/asiapcf/04/04/us.china.treasury/?hpt=Sbin

Very interesting move, I wonder what Prem thinks.

A lot of Californians are moving to Austin. It feels like the piece of Cali that broke off and got lost in Texas.Thanks for all the info Eric.

TX this makes up a significant amount of my portfolio. Between it and FFH Leaps all other holdings are dwarfed. I think its best to hold though. Per the conference call they will be telling the story to get the stock price up. We have the annual meeting and they will probably attend a few investment conferences as well. I am guessing they give some sort of guidance and announce future contracts as they come. At the last shareholders meeting they gave margin info, and I am hoping they will do more over the next few months. I see this hitting $8 to $10 by year end barring serious bad news.

Yes very thinly traded. I hold about 300 shares and will be buying more soon. I want to make sure the dividend paid hits my account. I am not sure how to add significantly more because it is very thinly traded, should be fine though for those of us with less than $100k in capital.

Looks really good, actually goes into the right amount of detail. Tells you just enough but doesnt go crazy on the accounting side.

The call was interesting. Management believes the stock is undervalued and analyst were trying to figure out how to value the company. ATSG is now by far my largest holding, but we will not really have a great idea of what the numbers look like until Q2 under the new agreement. Even then they will continue to go up as more plans are modified. Here is an earlier presentation given by ATSG. Which was referenced on the call. Management believes you have all the numbers to work out cash flow and it looks like everything is there. You can take Q4 numbers for all the other units and annualize them and model out the numbers from the new agreement. Either way ATSG will be generating tons of excess cash starting in 2011. http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6651535-4935-67730&type=sect&dcn=0001193125-09-128378 Here is my quick and dirty attempt at valuation. Total Fleet 36 Monthly Income Annual Income DHL Fleet 13 $2,574,000 $30,888,000 - Only 767 includes 12% discount referenced on the call $250k per plane Non DHL Fleet 23 $4,554,000 $54,648,000 - Only 767 no Discount included $250k per plane Total CF From CAM 767 Leases, Doesn’t Include other Segments $85,536,000 Multiple on this Lease Based Cash Flow x8, Low Costs and Repeatable $598,752,000 Assumes All Costs and Debt Service are Covered by Other Segments and Planes. This is a simply valuation based on leasing the 36 767s that they own. They have other assets, acmi agreement, and other segments which are profitable. This is purely based on CAM leasing 767s and everything else breaking even / covering maintenance capex. I think ATSG still has legs and is worth at least $500 million if not more and this is on an extremely conservative basis. Q2 release will be the one to watch. 2011 should be great also once all the capex spending is behind us. ------ If we take 2009 EBITDA and subtract out a maintenance capex of $30 million we get = $125.8 if we assume that this number will go up and that the growth will carry the debt and put a multiply of 8 on the number we get a market value of = $1.06 billion vs a market cap of $250 million. Now we do have taxes of 40% assuming no additional growth payable in 3 years which decreases this number, but its a start and shows ATSG is still fairly cheap.

I have learned quite a bit by holding and watching FFH, BRK, CNA, and Lancashire. The annual reports are also really good intros to the market. I posted Lancashire's yesterday on the board. Basically thier are 3 ways to make money insurance. Writing at a loss / break even and making money on float - FFH thus far. The Hedge Fund Model. Writing at a profit and managing a very conservative investment portfolio - LRE - Lancashire. The Insurance Company Model. Both, writing for profit and managing float. - BRK and HALL - The blended model. The key to insurance in my opinion is Management. I am an Accountant and earnings are typically whatever you want to be. In insurance they literally are whatever you want them to be. Its based on assumptions and models and there is plenty of room for Management to fudge / massage the numbers. I glance at the underwriting results and look for prior year development because that gives you an idea on how conservative they are. I dont really look for growth because you can very easily grow an insurance business unprofitable at any time.

Im loving it. These are all ick / ew stocks. Low risks based on FFH capital base, but outsize returns should they work out. It looks like Brick and SFK Pulp will the others look like maybes still.