Odyssey Re Q3 released, Book value at $59.72

[Grenville]

"Our book value per common share was $59.72 as of September 30, 2009, representing an increase of $14.35, or 31.6%, from our book value per common share of $45.37 as of December 31, 2008."

 

http://www.sec.gov/Archives/edgar/data/1137048/000095012309057694/o57685e10vq.htm

 

http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=6584368&format=PDF

 

 

 

 

[Mungerville]

$65 was a low ball bid as I said.  Not even close to fair value if you know what you are doing which those investment bankers clearly don't.  $65 is by definition a 50 cent to 70 cent dollar given who was buying.

[oldye]

That was always one of the risks with the holding ORH vs Fairfax.  I know you don't agree with it but if they offered shares instead of cash, it would of been perfectly fair.  I didn't hear anyone claim that the Advent buy out was unethical... 

[EdWatchesBoxing]

What can you say, Fairfax had good timing.

[returnonmycapital]

Float at the end of Q3 = approx. $81/sh. 

Cost of float this year = -2%. 

Cost of float over the last 5 years (including 2005 when CR was close to 120%) = 1%/yr on avg.

 

Book value at the end of Q3 = $60/sh.

Increase in book value this year = 31%

Increase in book value over the last 5 years = 21%/yr on avg.

 

Investments per share at the end of Q3 (netting out debt) = $143/sh.

Increase in investments per share this year so far = 17%.

Increase in investments per share over last 5 years = 15%/yr on avg.

 

Intrinsic value at the end of Q3 = around $140 per share.

 

Oh well...

[T-bone1]

returnonmycapital, I don't know where you get an intrinsic value of $140 per share. I think an argument can be made for 1.5 to 2 times book for a number of reasons, but $140 sounds way too high.

 

I also don't understand why anyone is upset or complaining about this buyout. I can understand that some people might have preferred an all stock transaction to make it tax efficient, but other than that; If you think ORH was too cheap at 1.1 times book, you can buy Fairfax for less than book today. Consider yourself lucky.

[txlaw]

 

I also don't understand why anyone is upset or complaining about this buyout. I can understand that some people might have preferred an all stock transaction to make it tax efficient, but other than that; If you think ORH was too cheap at 1.1 times book, you can buy Fairfax for less than book today. Consider yourself lucky.

 

I am sure there are lots of people who owned ORH who would not want to own FFH.  Fairfax is a much more complicated beast than Odyssey Re.  ORH was easier to understand, had a better combined ratio, and still reaped the benefits of HWIC's investment capabilities.

[returnonmycapital]

I should have added that ORH's float has grown by almost 10%/yr over the last 5 years.

 

My IV calculation goes a little like this: 

 

1. I assume ORH's future underwriting experience and investment results will approximate the past. 

2. Zero cost float, with some restrictions, is analogous to equity capital.  So, I add it to book value in determining IV.  That's one method.

3. Investments per share, net of prefs. and other debt-like obligations that come at some cost is another IV indicator, assuming the growth in investments per share was/is due to defensible investment management and zero cost growth from the underlying business (i.e. zero cost growth in float which produces more investments to defensibly manage).

 

This is the way WEB sized up his purchase of GenRe, as I recall.

 

[Grenville]

Just ran across this insider purchase of the ORH-A by Michael Wacek of 1000 shares at 24.9.

 

http://www.sec.gov/Archives/edgar/data/1137048/000123458409000014/xslF345X03/edgar.xml