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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (43971)	9/17/2011 3:24:38 AM
From: Spekulatius	of 78686

re DL.AS - I decided to sell (at a loss) to reduce portfolio risk. I am taking a 20% loss on my position. I had some doubts before but grew really suspicious after reading through AV (Delta Lloyds former owner and they still hold ~35% of their shares). States reason for the majority sell was to reduce risk (not regulatory trouble like Einhorn claimed) - Delta Lloyd has about 4B Euro in "equity exposure", which is more than their stated book. This means that in addition to the expected spread widening (which also reduces stated book) their book value must have taken an additional hit from falling equity prices. Their equity exposure is partly hedged as I understand, but partly means it's not all hedged and hedging is expensive in volatile markets. I wonder if Einhorn is buying more. It might be a super bargain at this point but I decided to move on and reduce my risk potential for permanent impairments. I might actually go long AV again (I did so last year), since I believe they are fairly safe for an European life insurer (they boosted their capital levels through sales of DL.AS and other divisions quite a bit). So far however, I rather stick with industrials.

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