NasdaqNM: SMAN @ $5.75 - Standard Management Corp - profitable, undervalued life insurance company, marketcap of $40m.
The current ultra low rate environment and economic situation should be very beneficial for almost all financial type of stocks. MAXF is a good example - its industry position as a fixed income specialty brokerage and money market specialist is primed for the current situation. However life insurance firms should also be able to exploit the current situation. The fact that interest rates are ultra low at the moment should enable them to re-finance parts or all of their credit exposure for longer term - additionally to lock in at the current rate range for quite some time.. If you look at the insurance group almost all firms are in good shape recently, posting increasing profits and cash flow.
Now a rising tide should lift all the boats but you needn't turn to the marginal (profitable) firms in the industry. There are some smallcap gems to be found with stellar fundamentals also. The best one I came up with is Standard Management Corp - NasdaqNM: SMAN @ $6. They have everything in their cards to post $0.30 per quarter earnings going forward. This indiana life insurance firm focues on annuities and concentrates on mid to high net worth individuals. They are based in Indiana but acquired 2 international presences years ago - in Bermuda and in Luxembourg. If you want to bring up their last 2 years of press releases, go to www.bigcharts.com
Valuation is also pristine and way below the industry standards (PE 20, PSR 1.7, PCF 9) in almost any cirteriae : Marketcap $45m, Assets under Management > $1.4bn, PE of 8 (if my guesstimate of $1.20 annually going forward materializes then its PE ratio would get down to 5), PSR 0.60, PCF 3.25, Operating Margin 8%, CAGR 15% annually, Debt/Equity 0.25
Look at the fine print, especially at the retirement of 2 series of convertibles. This reduced the upcoming dilution from common shareholders. Instead of 10.5 million shares fully diluted you just have now 7.4 mio. shares out. If you know a tad about GAAP accounting for insurance firms then you will know that increased premium intake not hits the "revenue" column immediately. Premium intake grew 75% this quarter and their marketing success should trickle down to the "revenues" and "Earnings" columns over time. Their debt was upgraded recently from B to B++ by AM Best. Another interesting part of their strategy is the fact that they pushed fee based products which are unregulated over traditional regular types of insurance products. Due to this, 53% of their premium intake was from fee based products.
Fundamentally, I believe they have the potential for up to a 5 bagger over 2 years..
rgrds
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