fwiw blankmind, et. al.,I'm doubling up today on my losing exploratory position in ESREF. On the surface, the financial ratios look all right, and there's still good insider buying.
However, that was all so true last year also - before ESREF announced losses. There are several dangerous aspects to ESREF: 1) They apparently are/were in a new type of medical insurance for European countries -- a business they did not understand (and neither did or do I - ouch), and an arena where maybe no one else has tread before either. With good reason - there's no evidence it's a viable or profitable segmentation. 2)Worse - that business, as well as other reinsurance businesses they are in, are long tailed. Which, as you know, (but I'll repeat) for ESREF apparently means they get their premiums (money) now but they don't know when they'll see a claim, how many claims they will see, when their exposure will end, or how much their exposure is. That has bitten them in the past. (As can happen to insurers who are in the long tail stuff (except maybe Berkshire -g-)) So, in spite of ESREF trying to shore up their reserves, these losses might not be done with yet, and could harm ESREF even more.
One thing though that I find interesting, if not somewhat reassuring, is that there are (according to Yahoo) several 'value' funds and institutions who are in this stock. I don't know when they've bought (or if they are still in), but it's likely, I will guess, that I am buying today at a price below which some of them have bought their shares. It's my 'we're in it together' and 'misery loves company' approach to investing. -g-
Paul Senior |
