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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (29374)	12/21/2007 9:27:44 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78472

I disagree. If you have no clue what the heck they hold on the long side and whether they reserve enough on the liability side, you are open to the blowup. Maybe does not matter to you with your 300 positions, but matters to anyone who invests more than 1% of their wealth. So - I will repeat: if you don't know what insurer carries on their assets and if they reserve enough, you should not be investing in it. Except perhaps in BRK/WSC.

To: Paul Senior who wrote (29374)	12/22/2007 11:04:13 AM
From: SI Bob	Read Replies (3) \| Respond to of 78472

Regarding [t]NWLIA[/t] and the notion of trust: Well, whether or not you get unanimous agreement on your reasoning, it's difficult to argue with the fact that you're up well in excess of 100% on that position and aside from a downturn in recent months, it's a chart that's simply on a slow, reliable climb for a long time. You got respectable appreciation. Was the expectation that it might someday trade at full book value or a small premium over it why you initially bought it at .7bk? Or was it observing that book value kept increasing? Personally, I don't look at the balance sheet or price/book until pretty late in my DD cycle. I've noticed that in the UK, the balance sheet is king, but I have to like the P&L before I'll even take a peek and assume most Yanks do the same. NWLIA is definitely outside my sphere of competence, and it doesn't meet my less-conservative/more-risk approach of having to either like the dividend or the story. Hmmmm... The chart is quite similar to [t]SRE[/t], which pays a 2% dividend and has much higher average daily volume. I don't own it but traded it long and short several years ago. But if one's horizon is as long-haul as yours apparently is, it probably doesn't matter as much what the average volume is. It's pretty important to me, at least in my trading account, because I don't like to own enough of any company that I can move it myself as happened recently with [t]WPL[/t]. I put in what I thought was a limit sell order, not realizing it was actually a buy order, and it effectively being a market buy order took the price up 20 cents. Getting back to NWLIA, if it's trading at .8bk right now, but was 25% higher earlier in the year (just a few months ago, actually), did it get past book value? Do you think that's part of why it's pulled back? I'm mildly curious about this industry, and especially the notion of perpetually trading at less than book value. I'm more accustomed to looking at that situation and seeing it as either a buying opportunity or a red flag. Neither of which applies, IMO, in a historied company like NWLIA. That said, [t]BME[/t], which trades at .9bk, is in my long-haul portfolio. My broker and I disagree about the p/bk. He thinks it'll reach book and is currently undervalued. I think it'll always stay around .9bk but I trust management to grow the book value in the same way you do with NWLIA. Oh, but I have it mainly because of the 5.9% dividend. So I have to agree with you about it being okay to invest based on trusting management, and it's often the only way to go when you just don't have a lot of visibility into the numbers. But in my case, my trust (unless I really like the story) needs at least a 5% dividend. Oh, and just in case there are any readers who are into penny stocks, I should emphasize that trust shouldn't be given lightly. I've been burned in the past and sheeple are always in the process of being led to slaughter by misplacing their trust. It's only okay to trust a company if their past performance proves that you can.