IB Net Payout Yields Model

Hartford Financial to Repay TARP

After the close Hartford Financial (HIG) announces plans to repay TARP. They owe $3.4B so they've chosen to do a combination of equity and debt financing. Considering the equity portion is only $1.45B this appears bullish to us.

  • The offerings announced today will consist of $1.45 billion of common stock and $500 million of mandatory convertible preferred stock, represented by depositary shares. The debt offering related to the repurchase of the government's preferred stock will consist of $425 million of senior notes. In addition, the company will pre-fund the repurchase of its senior debt maturing in 2010 and 2011 through the issuance of an additional $675 million of senior notes.
Considering how cheap HIG is compared to book value and EPS, this move could finally unlock that value as shareholders have been hesitant to load up with TARP hanging over them.

HIG is one of the largest investments in our Growth and Opportunistic Portfolios and we'd use any weakness to add to positions.

Disclosure: Long HIG


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