To: Duker who wrote (52 ) 9/30/1999 6:16:00 AM From: Duker Read Replies (2) | Respond to
Hmmm. $40 divided by $25 15/16 equals 54.2% ... assuming you are taxed fully at 39.6% and the Commonwealth of MA takes its 5.95% ... that is a 29.5% return after tax (which is not my tax situation, as I have been a long-term owner of HMN).Possible, but unlikely. Mergers can be an engine for growth for some of companies ... especially inter-industry mergers ... and, as such, there should be a large field of candidates willing to take the plunge. I can hear the spin if a super-regional bank takes them over: "This was a perfect time for our foray into the insurance industry. Target prices were depressed and we were able to scoop up a tremendous franchise at a very fair price. This will be a powerful avenue for us to continue to diversify our revenue stream. Oh, please, let it be so fundamentally flawed. Woe is the insurance industry! We portfolio managers must sell our shares in the P&C companies, for they have been stripped of their most precious asset: Earnings Momentum. Without this precious characteristic, I fear that we will have to delve too deeply into the fundamentals of the individual companies and apply all too rational analysis to their potential future cash flows. Alas, the days of predictability, not to mention the trouncing of our most feared adversary, First Call Consensus, in this sector have passed. Far be it from me not to act. For now, my friend, it is time to be proactive and seize the moment. We must begin and complete our exodus from this wretched sector at once. For, if you are not a seller, you are a buyer; and none who shall buy will prosper in these, the darkest of days. In the end, I am consuming my share of HMN and BRKb here. As far as the catalyst that could drive HMN in the short-run (i.e., the sale of the company) ... I no longer consider this a factor. We are back at prices where one can buy in the absence of any shorter-term catalysts. At $30, we were buying a great little business at a very good price. Today, we are buying the same business at a great price. Part of me wants them to ixnay the deal so we can be afforded the opportunity to buy it at even lower prices -- in this most inhospitable environment. As for BRKb, I can add nothing, except that I am grateful for this opportunity and hope to be afforded similar ones in the near future.
