WTM...

[Alekbaylee]

Y'all,

 

Is anyone looking at WTM (White Mountains Insurance). They reported few days ago. Granted, they incurred some loss (similar to MKL), but the stock is selling at a significant discount to book value as of December 31, 2008 ($353).

 

http://ca.news.finance.yahoo.com/s/06022009/31/link-f-prnewswire-white-mountains-reports-adjusted-book-value-share-353.html

 

I don't own any share, but I'm tempted to buy a small position at this price or around.

 

Would appreciate any insight/comment, specially if you know the company.

 

Alek

 

 

[Packer16]

This one has an interesting pedigree and is selling at 60% of book.  It appears their life Re subsidiary has some guaranteed annuities that Prem spoke of that killed the life insurance firms.  It looks like there investment strategy has devolved into cash, asset backed securities and private equity and a more defensive strategy?  I appears to have strayed from the Byrne influenced firm but Bruce Berkowitz is still on the board.  Anyone have any other thoughts/observations?

 

Packer

[lethean46]

Hi

 

I rarely post here but have followed this board for a long time.

 

I used to own WTM having first bought it around 1999 or 2000?  I forget exactly.  I held the stock a long time.  Want to say I bought at about $100 and sold at about $500 (after a significant pullback).  That is just meant to establish the time frame.  Read the annual reports and listened to the conference calls.

 

I can't write knowledgeably about WTM except to say ... that the side car fiasco finished me so far as having confidence in them.  It was very unexpected and an unknown (undisclosed?) risk.    I can't even explain what the side car business involved now.  But it was very disappointing that WTM got involved at all.  They should have been above that sort of thing.

 

I think you might be able to find a conference call in which Jack discusses what happened re the side car business.  The date will be out of the normal quarterly/annual sequence.  He recruited his friends to privately invest in it and his wife might have been the biggest private investor (100s of $Ms).  They all lost 100% of their money invested in it.  At the time of the conference call, Jack said that his wife was unaware of the loss.  He also said that the whole affair was a lousy way to end a career.  Apologized, etc. 

 

I couldn't abide owning WTM any longer knowing that management had strayed so badly off course ... reaching for "extra return" basically.  It wasn't necessary and was greedy.    As I write, some details are coming back.  Still, it would be better if someone else here explained what the side car business entailed.  (WTM took on more risk than they otherwise could have - without sidecar.)

 

Confidence in management is real important to me, particularly at an insurance company such as WTM.  Doesn't matter to me that the named guy who was responsible for the idea is gone (I think).  Jack and the others approved it and were very active participants. 

 

It's a black mark on WTM, IMO.  I suggest that you try to research that period of time at WTM.  Listen to the relevent conference call and then read the subsequent annual report.  They were very forthright - after the fact. 

 

Hope that bit of history is useful.

 

Lethean