Re: PNX
<<This stock was at ~1$ in Sept. 2011. My guess that would define the downside. >>
optimist.
if everything works out this could make some money, but downside is zero, and if interest rates had not dropped so much to permit the asset values to increase from end 2008, where would they be now? one should read the various disclosures in public documents about unusual transactions and contemplate the implications of those transactions.
it would also be interesting to examine the comp packages of the top 5 over the past 5-10 years, and compare that to (1) comp of managements at similar sized companies (go ahead, even count similar sized companies that made decent money for shareholders), and (2) total dividends paid to shareholders, or profits, or ....
IMHO you will conclude, as i have, that the company is run for the benefit of management, not shareholders. not as badly today as it was under previous managements, but that IMHO is largely because they are running out of shareholder money to award to management for the results they have produced for shareholders.
if you evaluate the stock price of PNX relative to book value, you are looking at a value trap of the worst kind. if you evaluate it on the basis of normalized earnings over a number of years in a fair manner, i think you will conclude the price is extremely high relative to underlying earnings, UNLESS they get their expenses in line. if you compare their average expense per policy to other life insurers i think you will want to check your numbers a couple of times because you will not be able to understand how their expenses could be so high as compared to the competition. and then if you compare what their expenses per policy would have been if they had a comp policy for the top 5 that was more like other companies of similar size and performance, i think you might say 'ahh, the difference is to a large degree excessive management salaries'. and then if you think to yourself, 'well, someone needs to take them over and strip out those excess expenses. should be easy enough to do.' i invite you to circle back to my conjecture that perhaps the company is being run for the benefit of management, not shareholders.
but if everything goes just right, one could make a little money here. personally i do not think it is a very attractive risk/reward proposition, which is what i think Mr. Clownbucks is saying. but i often find myself agreeing with Mr. Clownbucks.
all in my extremely humble opinion, please do your own DD, YMMV, etc. |
