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Non-Tech : Conseco Insurance (CNO)
CNO 41.80+2.4%12:35 PM EST
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To: M.A. Miller who wrote (457)12/5/1997 5:14:00 PM
From: dfloydr  Read Replies (1) of 4155
 
Hi M.A.M.:

I understand good will.

But since I got into investing in 1963 there have always been bubbles when good will gets more and more acceptable. It happened with the conglomerates, the REITs in 1972-73, and a lot of others since. In the end people forget what happened "last time" and that game goes to far - all to often a pile of good will is associated with a situation where people over-reached. What is too far? I do not know any clear benchmarks, but bigger is not usually better. Good will is not something your banker will lend against and not something your grocer will take in payment for beans and meat.

As to all the other smart execs who took stock? Well they were not smart enough to run their companies in such a way that they were not targets for CNC. In fact they were apparently the most appealing targets for CNC, ergo the least well managed companies in the industry. Ask around: over the years lots of "smart execs" took stock from Litton Industries, Ling Tempco Vaught, and a host of other fast growing companies that finally tripped up. My family sold to Litton. Dad insisted on cash when he saw their mountian of good will. They paid cash. That day their stock was $104.50 A year later it was $4.00. So while I respect the fact that taking stock is a pretty strong vote for CNC, it is no guarantee.

I would like to hear what some insurance industry analysts who have been around more than say fifteen years have to say about this situation.

Floyd Russell
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