Just walked in from work and saw the end of Dirks interview on CNBC. He made a point which to me shows his misleading people.
He said Aflac is growing at 15% and Conseco has no growth. That's true that CNC has little internally generated growth right now. But CNC is growing faster than 15% overall growth because it's more predictable and cheaper for CNC to buy companies and reduce out the overhead, than to just sell more policies. CNC could have just tried to sell more policies two years ago. But it was cheaper and better for CNC to acquire 9 companies, reduce out all the sg&a, and you end up with well over 15% growth, just as if they had just sold a ton of policies. And selling policies is not profitable in the first year anyway. Plus it's more profitable to sell fewer policies with higher margins that to sell more variable policies with practically no margins, which is why CNC is completely re-pricing its universal life and long term care policies from some of the acquired companies.
Now that CNC has acquired many companies it gets tougher to just "buy" growth. That is why CNC is really focusing on marketing strategies, brand awareness, giving stock options to big producers and simplifying and profitizing the product line. But Dirks statement was so misleading. CNC is doing what the banks have done for years, and what Wcom is doing in the telecom area. Banks have very little internal sales growth, their acquiring growth and consolidating operations. Dirks statement proved to me his misleading agenda. CNC would admit little internal growth the last 18 months. They simply found it better to acquire. Hence the high goodwill which is a non-cash item.
Also, for the guy who said some CNC holders were being defensive. What do you expect when misinformation is all over the place on this board. But I would be more than happy to stay away. I just provided facts. Is that defensive? Everything I've said is from the annual report, or from news stories, or analyst conferences. If you think I'm wasting your time on this board, I'll be glad to stay away.
Doesn't Dirks seem a little too eager to push this issue. My lands, appearing on CNBD. He's doing everything he can to push the stock down. I think he's being a lot more defensive in pushing his agenda if you ask me.
If he's right, the rating agencies will be all over CNC's Pride issue. But the fact is it's not an issue which is why it will sell well with a fairly high rating from the agencies. |
