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What does Spags have to do with El Nino? When $$$MR. MARKET$$$ was just a tad lad, instead of playing Little League, he used to go Spags on Saturday so his family could shop for things that were 80% off retail price. Spag's was, from 1934 to 2004, a discount department store on Route 9 in Shrewsbury, Massachusetts. Everything at Spags was on sale. The store was considered an early pioneer of discount retailing $$$MR. MARKET$$$ would have so much fun, he’d stay at Spags for 8 hours and lie on the floor. Someone would walk by and see him lying on the floor and would wonder if this kid was on sale also. The place was legendary. So much so that in an early scene in the movie "The Place Beyond The Pines", the character played by Ryan Gosling is wearing a Spag's t-shirt, inside out. Below the name is a picture of Anthony "Spag" Borgatti wearing his signature cowboy hat.
Turning to the weather….. Godzilla' El Nino May Be on the Way…this could be the biggest El Nino in 20 years.
A strong El Niño heats up the atmosphere and changes circulation patterns around the globe, especially the jet stream over the Pacific, which becomes stronger and dumps more frequent and intense storms over the western U.S., especially California. It also means more rain for the west coast of South America.
But the atmosphere is somewhat of a zero-sum game. More rain in North and South America comes at the expense of normally rainy Southern Asia and Australia, which become abnormally dry and experience droughts.
A strong El Niño also influences cyclone seasons around the planet. The warmer the East Pacific is, the more hurricanes it gets. The Atlantic Ocean sees fewer hurricanes, however, a result of increased upper level winds that prevent hurricanes from developing, which is why officials are predicting a calm 2015 hurricane season in the U.S.
Which brings us to the latest $$$MR. MARKET$$$ stock pick. What if you had a Florida insurance company that was collecting exorbitantly priced insurance premiums from its customers and growing its customer base aggressively? What if the only way this company loses money is if there is a devastating hurricane which isn’t going to come because of the Godzilla El Nino? What if stock price had recently dropped by 25% because of the company decided to issue more stock so that it could use this capital to sell even more insurance policies that it will never have to pay back. This stock could have been sold at Spags! Does that seem like a pretty good deal? You’re darn rootin tootin it is, and the guys at Spags will give you a box to put it in (there are no bags at Spags).
Yesterday I bought Heritage Insurance Holdings, Inc. (HRTG) at $18.90. I will sell it in 4 to 6 weeks at 21.83. Here’s why I like HRTG:
Like any great stock pick, it all starts with the chart:
This stock was up over 100% over the last 52 weeks. However, recently the stock price dropped from around 27 to 19. Was there a change in the way the company does business? Nope. Was there a change in the market that made it look less attractive? Nope. The only reason the stock price dropped so much was because the company issued more stock. All of the fundamentals that made this company profitable and, as a result, made the stock price rise have not changed one bit. They are just spreading the earnings around a little thinner. However the stock is going to want to keep going up. NOTHING HAS CHANGED IN THE COMPANY!
Here’s the best news….this stock is ON SALE! It’s profit margin is 24%. It’s operating margin is 39%. It’s return on assets is 12% and its return on equity is 32%. This stock is a money machine. What’s the best news? It’s ON SALE. It’s PE is only 6.75. That’s all. 6.75.
Heritage Insurance provides property and casualty insurance in Florida. The three-year-old company, has 150 employees and can brag about securing over $500 million in premiums and services over 215,000 personal residential policies.
Although the company is new, it is comprised over some very senior managers that averages 28 years of insurance industry experience. It has a unique customer service gimmick that brings in new customers and retains old ones. Its "claim response team" vans are like the Geek Squad. They go all over Florida to help insured folks with their claims. Of course in Florida, most of the claims are water losses, and HRTG saves on the payouts by drying out the houses themselves.
Just last week HRTG also announced that they were approved to write property and casualty insurance in the state by the North Carolina Department of Insurance. In addition to Florida, this is the second state in the U.S. where Heritage P&C is authorized as an admitted carrier.
In the most recent 2nd quarter earnings announced earlier this month, HRTG has the following highlights:
· 37% increase in gross premiums written in Q2 2015 as compared to Q2 2014
· 114% increase in net premiums earned in Q2 2015 as compared to Q2 2014
· 30% increase in policy count compared to Q2 2014
· Net income of $25.4 million for Q2 2015, an increase of 166% as compared to Q2 2014
· Gross combined ratio of 71.1% for the quarter
In 2013, they made $34 million dollars in that year. Last year, they made $47 million. Can’t you see that if they made $25 million in last quarter alone, that their earnings are on pace to DOUBLE in 2015 to close to $100 million? The hurricane season is already more than half over and El Nino says it ain’t coming this year. Remember…..HRTG has a PE of 6.75. Are you KIDDING ME??
Heritage Property & Casualty Company was named Insurer of the Year by Insurance Insider. A leading global industry publication, Insurance Insider, awarded Heritage for its innovative and market-leading business practices noting the company's resolve to achieve greater stability through multi-year insurance cover. These guys know how to execute and they are going to execute their way to another winning stock pick by $$$MR. MARKET$$$. Remember, they are going to deploy their excellent strategy, already successful in Florida, into North Carolina.
The ANAL-ysts are calling for $3.00/share in 2015, but $$$MR. MARKET$$$ sees the company pulling in $3.33/share. Even at the ridiculously low PE of 6.75, that gets you $3.33 x 6.75 = $22.48 per share which is well past my sell target. I’d look for PE expansion to at least 10, rich would mean this stock should go into the 30’s.
Bruce Lucas, the Company's Chairman and CEO, said, "We are pleased to report another quarter of growth and above market average returns for our investors. …….we are continuing to execute our voluntary business strategy while keeping an eye on the profitable diversification of our business. Importantly, personal residential policies in force during the quarter posted the largest sequential increase since our inception and commercial residential voluntary premiums in force increased nearly $7 million since the end of the first quarter. The Company remains focused on continued growth in Florida while simultaneously expanding into multiple new markets and delivering on these opportunities."
$$$MR. MARKET$$$ and El Nino….perfect together. I’m going to hoist a Corona in honor of El Nino and the mega bucks I will make off of this stock pick.
I am HUGE!!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Turning to the weather….. Godzilla' El Nino May Be on the Way…this could be the biggest El Nino in 20 years.
A strong El Niño heats up the atmosphere and changes circulation patterns around the globe, especially the jet stream over the Pacific, which becomes stronger and dumps more frequent and intense storms over the western U.S., especially California. It also means more rain for the west coast of South America.
But the atmosphere is somewhat of a zero-sum game. More rain in North and South America comes at the expense of normally rainy Southern Asia and Australia, which become abnormally dry and experience droughts.
A strong El Niño also influences cyclone seasons around the planet. The warmer the East Pacific is, the more hurricanes it gets. The Atlantic Ocean sees fewer hurricanes, however, a result of increased upper level winds that prevent hurricanes from developing, which is why officials are predicting a calm 2015 hurricane season in the U.S.
Which brings us to the latest $$$MR. MARKET$$$ stock pick. What if you had a Florida insurance company that was collecting exorbitantly priced insurance premiums from its customers and growing its customer base aggressively? What if the only way this company loses money is if there is a devastating hurricane which isn’t going to come because of the Godzilla El Nino? What if stock price had recently dropped by 25% because of the company decided to issue more stock so that it could use this capital to sell even more insurance policies that it will never have to pay back. This stock could have been sold at Spags! Does that seem like a pretty good deal? You’re darn rootin tootin it is, and the guys at Spags will give you a box to put it in (there are no bags at Spags).
Yesterday I bought Heritage Insurance Holdings, Inc. (HRTG) at $18.90. I will sell it in 4 to 6 weeks at 21.83. Here’s why I like HRTG:
Like any great stock pick, it all starts with the chart:
This stock was up over 100% over the last 52 weeks. However, recently the stock price dropped from around 27 to 19. Was there a change in the way the company does business? Nope. Was there a change in the market that made it look less attractive? Nope. The only reason the stock price dropped so much was because the company issued more stock. All of the fundamentals that made this company profitable and, as a result, made the stock price rise have not changed one bit. They are just spreading the earnings around a little thinner. However the stock is going to want to keep going up. NOTHING HAS CHANGED IN THE COMPANY!
Here’s the best news….this stock is ON SALE! It’s profit margin is 24%. It’s operating margin is 39%. It’s return on assets is 12% and its return on equity is 32%. This stock is a money machine. What’s the best news? It’s ON SALE. It’s PE is only 6.75. That’s all. 6.75.
Heritage Insurance provides property and casualty insurance in Florida. The three-year-old company, has 150 employees and can brag about securing over $500 million in premiums and services over 215,000 personal residential policies.
Although the company is new, it is comprised over some very senior managers that averages 28 years of insurance industry experience. It has a unique customer service gimmick that brings in new customers and retains old ones. Its "claim response team" vans are like the Geek Squad. They go all over Florida to help insured folks with their claims. Of course in Florida, most of the claims are water losses, and HRTG saves on the payouts by drying out the houses themselves.
Just last week HRTG also announced that they were approved to write property and casualty insurance in the state by the North Carolina Department of Insurance. In addition to Florida, this is the second state in the U.S. where Heritage P&C is authorized as an admitted carrier.
In the most recent 2nd quarter earnings announced earlier this month, HRTG has the following highlights:
· 37% increase in gross premiums written in Q2 2015 as compared to Q2 2014
· 114% increase in net premiums earned in Q2 2015 as compared to Q2 2014
· 30% increase in policy count compared to Q2 2014
· Net income of $25.4 million for Q2 2015, an increase of 166% as compared to Q2 2014
· Gross combined ratio of 71.1% for the quarter
In 2013, they made $34 million dollars in that year. Last year, they made $47 million. Can’t you see that if they made $25 million in last quarter alone, that their earnings are on pace to DOUBLE in 2015 to close to $100 million? The hurricane season is already more than half over and El Nino says it ain’t coming this year. Remember…..HRTG has a PE of 6.75. Are you KIDDING ME??
Heritage Property & Casualty Company was named Insurer of the Year by Insurance Insider. A leading global industry publication, Insurance Insider, awarded Heritage for its innovative and market-leading business practices noting the company's resolve to achieve greater stability through multi-year insurance cover. These guys know how to execute and they are going to execute their way to another winning stock pick by $$$MR. MARKET$$$. Remember, they are going to deploy their excellent strategy, already successful in Florida, into North Carolina.
The ANAL-ysts are calling for $3.00/share in 2015, but $$$MR. MARKET$$$ sees the company pulling in $3.33/share. Even at the ridiculously low PE of 6.75, that gets you $3.33 x 6.75 = $22.48 per share which is well past my sell target. I’d look for PE expansion to at least 10, rich would mean this stock should go into the 30’s.
Bruce Lucas, the Company's Chairman and CEO, said, "We are pleased to report another quarter of growth and above market average returns for our investors. …….we are continuing to execute our voluntary business strategy while keeping an eye on the profitable diversification of our business. Importantly, personal residential policies in force during the quarter posted the largest sequential increase since our inception and commercial residential voluntary premiums in force increased nearly $7 million since the end of the first quarter. The Company remains focused on continued growth in Florida while simultaneously expanding into multiple new markets and delivering on these opportunities."
$$$MR. MARKET$$$ and El Nino….perfect together. I’m going to hoist a Corona in honor of El Nino and the mega bucks I will make off of this stock pick.
I am HUGE!!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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