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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era
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To: cfimx who wrote (968)11/11/1998 4:17:00 PM
From: Freedom Fighter  Read Replies (1) of 1722
 
Twister,

I look for a few things to identify possible candidates:

I like a low expense ratio relative to the industry.

I like underwriting profits on the insurance.

I like a high return on equity that I believe is sustainable.

I like to see signs that they have an investment group in charge of the float that can get above average returns on whatever assets they are investing in (preferably some stocks at least).

If I identify a candidate, I am willing to pay a price that is somewhat average for the type of company over the long haul based on P/B, PE, and Discounted Free Cash. My view is that I am getting an above average company at an average price. I will pay up a little in a low inflation and interest rate environment like we have at present. But not as much as the rates indicate is appropriate. As an example, if you can get an above average high ROE insurance business at 10x earnings...send it in!!!

Wayne Crimi
members.aol.com
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