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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (55007)5/16/2015 11:04:09 AM
From: E_K_S1 Recommendation

Recommended By
Mattyice

  Read Replies (2) of 78646
 
Re: Security National Financial Corp. (SNFCA) - peeled off 20% of high priced shares at $6.41/share

I sold a few of my high priced shares before their earnings announcement to book a 13% gain and bring my average cost down to $4.79/share.
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The company reported Q1 earnings during the day Friday and they showed excellent revenue growth. $0.14/share or a 9 PE w/ YoY revenue growth of 19%. The big increase in revenues was from their Mortgage unit from an increase in refinancing and new loan origination's (+ 68% YoY). This growth can not be sustained but is encouraging to see contributions from this line of business again.

SNFCA is a micro/small cap ($85mln) that has three operating divisions: % by Revenue 1) mortgage 63%, Life Insurance 22% & Cemetery 5%. The company is selling around BV of $6.20/share. At a 9 PE is is still a good value at/below $6.00/share.

Since the company is small, any one division can move the needle w/ better than expected revenue growth. Their hidden Gem could be the development of multifamily rental income real estate at Dry Creek at East Village in Sandy City Utah.

Security National Real Estate Services - SNRE (operates under their Mortgage/Finance company utilizing capital assets from their Life Insurance company) is the managing division for these real estate projects.

From their press release:

Dry Creek at East Village Awarded Quality Development Project of the Year for Sandy City, Utah -

The Company continues to acquire new real estate properties as well as looks to develop future projects on its current land holdings. As it does so, the Company anticipates continued improvements to the yields of its invested assets.
If the company can convert some of their land assets into income producing multifamily rental units, that will generate steady FCF may/will help stabilize revenue growth and add future value to the company.

I will continue to hold my shares and may add to my position at/or below $6.00/share. The company also has a history of paying a 5% stock dividend every December.

This value proposition provides a compelling low risk bet on company owned real estate development (first income s/d be coming online Q2 2015) while continued revenue contribution from 3 different division. My position is still quite small a less than 0.05% portfolio position.

(FWIW- It beats some of those fee hungry REIT managers that have no shareholder interest; at least SNFCA managers all own shares in the company and benefit from the company's growth and profitability.)

EKS
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