Out Fox The $treet

Hartford is too cheap to accept a buyout with a limited premium. The consistent earnings profile and huge capital return plan position shareholders for solid returns going forward. The recommendation remains to own Hartford based on value. With an intra-day spike to near $51 on high volumes, The Hartford (NYSE: HIG ) is under accumulation based on rumors of a buyout offer. Back when Chubb Corporation (NYSE: CB ) accepted a buyout offer, Hartford was listed as a prime buyout target in the P&C space so this shouldn't be a big surprise. Read the full article on Seeking Alpha. Disclosure: Long HIG. Please read the disclaimer page for more details. 

Summary The Hartford reported Q4 earnings that beat analyst estimates, yet the market was unimpressed with the 2015 growth forecast. The insurance company has a large stock buyback program that is increasing value considering the stock trades at or below book value. Investors shouldn't attempt to over analyze the stock and instead use the high yields to guide the way.          As with any large insurance company approaching $19 billion in annual revenue, lots of analysis can go into the quarterly earnings of The Hartford (NYSE: HIG ) . The company offers property and casualty insurance for both commercial and personal lines along with group benefits and investments via mutual funds. Read the full article at Seeking Alpha.  Disclosure: Long HIG. Please review the disclaimer page for more details.   

After the close last night, Paulson & Co filed a 13D disclosing a presentation to the BOD and a letter sent to the CEO. The goal being for Hartford Financial (HIG) to begin the process of a spin-off of it's Property & Casualty business. Simply Paulson believes that Hartford has an industry low valuation due to the combination of both the P&C and Life business lines that competitors all spun-off long ago. He makes a compelling pitch that the ultra low valuation for the company is based on the thesis that analysts just don't follow or understand it due to the combined business lines. A Travelers (TRV) that focuses on P&C or a Lincoln Financial (LNC) that focuses on Life have higher multiples since the analysts follow either business line, but not both. Without doing all that research I could've told them that Hartford was incredibly cheap trading at close to 40% of book value. Paulson though has an army of analysts that did some incredible research. Ho...

Following on the report from Lincoln Financial (LNC) , Hartford Financial (HIG) reported solid earnings of $.69 that beat estimates by $.07. More importantly though Hartford reported the book value jumped to $47.25, up 17% on the year. Per Briefing.com : 4:18PM Hartford Financial beats by $0.07 ( HIG ) 19.12 -0.21 : Reports Q4 (Dec) earnings of $0.69 per share, $0.07 better than the Capital IQ Consensus Estimate of $0.62. 2011 was a difficult year for Hartford with record cat weather related losses. Yet the company still reported earnings of $1.94 for the year. More importantly the company was able to repurchase 3.2 million shares at $15.93 per share in Q4'11. It has already bought another 2.6 million shares in Q1'12 at $16.58 per share. Not only were these purchases at roughly 35% of book value, but so far they were done at prices lower than the current market price of $19. With a $400M authorization left, management should've bought all they could in Q4. Per...

Hartford Financial (HIG) reported earnings that beat estimates last week yet the stock still trades considerably below its book value around $46. Analysts even expect earnings for 2011 and 2012 in the $4 range giving them a sub 8 PE. So why does the stock still trade in the $20s and not the $50s? Beats me. Listen to the CEO, Liam McGee on the Kudlow Report on CNBC on Friday. The guy sounds very positive about the future and it clearly appears that the commercial real estate risk is behind them. Stock portfolio issues are part of the past and just about everybody dreamed up issue is overblown. Take a listen and decide for yourself. Disclosure: Long HIG in personal accounts including Covestor accounts. 

Leading insurance provider Hartford Financial (HIG) reported an 11% sequential increase in Book Value to $45.80 on a $.46 earnings beat of $1.43. Yes, that is correct a company that continues to report solid earnings quarter after quarter now trades at 50% of Book Value. Thats difficult to grasp. Companies shouldn't trade below book value if they are very profitable. Usually they trade at multiples of BV commensurate with profits and growth. Analysts expect HIG to make $3.6+ next year after all. HIG repaid TARP earlier this year. Very difficult to tell what is holding back investors. Heck even mega financial investor John Paulson invested back in August and that hasn't gotten the stock going. What is it going to take? No reason to sweat that as an opportunistic investor willing to wait out the market. HIG provides one of the better values in the market. Via Bloomberg : Chief Executive Officer  Liam McGee , hired in October 2009, returned Hartford to profit last year a...

At least that's the reasoning for an upgrade by Barclays of Hartford Financial (HIG) to a price target of $32. The stock current trades in the $23s and has a book value over $40 so that's not a huge stretch. Actually anything in the low $30s seems absurdly cheap. Interesting news though to see that big agents that sell life insurance policies are restarting business with HIG. Not sure what took so long as HIG has been financially solid for a while now. Info from Barclays: Investment Conclusion We are upgrading The Hartford to a 1-Overweight from a 2-Equal Weight and are increasing our price target by a dollar, to $32 from $31. There are two reasons for the upgrade. First, a survey of top-producing life insurance salespeople around the U.S. conducted in recent weeks by Barclays Capital Life Insurance Research -- a survey of agents who would be best positioned to write big policies for The Hartford -- found renewed interest by these agents in doing business with The Hartfor...

While it doesn't really matter to the stock going forward, its nice to see that Hedge Fund Legend John Paulson loaded up on Hartford Financial (HIG) last quarter. Paulson was famous for betting against the sub-prime sector at the height of the housing boom. His dealings with Goldman Sachs (GS) are what got them into trouble. Considering Paulson has already bought some 44M shares now worth nearly $900M it doesn't exactly portend the stock going up. Its not like he plans to buy more this quarter, but it is nice to see a financial expert back our opinion that HIG trading at 50% of book value is absurd. Otherwise it doesn't change our opinion one bit, but he possibly will bring to light the absurd valuation in this stock. Shares of Hartford Financial Services rose Tuesday after the New York-based hedge fund run by billionaire John Paulson revealed that it had increased its stake in the insurer. THE SPARK: On Tuesday, Paulson & Co. Inc. reported it held 44 million shares...

Coventry Health Care (CVH), Teradyne (TER), Foster Wheeler (FWLT) The market has become increasingly technically driven making investment decisions based on fundamentals virtually worthless. Too many investors feel the fundamentals could collapse with a double dip just as they did in 2008. As I wrote in a previous entry [Coventry Health Ups Guidance - Stock Limps Higher], even a company showing fundamental improvements is ignored by the market. CVH trades at a 7 PE multiple which in normal environments would be 2-3x higher. James Altucher published a piece in the Wall Street Journal highlighting 7 reasons why the SP500 could hit 1,500. Nearly a 40% gain from the current levels. He highlighted several reasons regarding the strength in corporate profits something that is historically important to stock prices. When the market stabilizes, profits will once again become important so its key to understand where the market could go based on current projections. Corporate Profits at Record H...

The stock for HIG is dropping after hours due to the usual confusion surrounding their earnings. The key is that adjusted earnings of $.92 beat estimates of $.76 and that core earnings were weak due to a DAC unlock charge and several one time charges. Nothing to fret about with the stock trading at $23 and the book value jumping to $41 in the Q. Look for a rebound tomorrow as sanity returns following a through review of the financials. A very profitable company should not trade below book value. The question should be the appropriate bv multiple hence we continue to hold this stock as a core investment. Adjusted core earnings* of $460 million, or $0.92 per diluted share, excluding impact of DAC unlock charge, elevated P&C catastrophe losses, P&C prior year reserve development and goodwill impairment all of which totaled $0.75 per share Net pre-tax unrealized losses declined 51% from March 31, 2010 to $1.5 bill...

Just minutes ago, Hartford Financial announced that they has repaid the US Treasury the $3.4B that HIG had borrowed during the crisis. With this out of the way, the stock price should now be free to breakout above the current range. Looking at the chart $28.50 has been strong resistance so any solid break and close above it would signal a higher range going forward. The Hartford paid $3.4 billion to the U.S. Treasury to repurchase the preferred stock, plus a final dividend payment of about $21.7 million. The Hartford funded the repurchase with proceeds from its recent equity and debt offerings, as well as from available resources. The U.S. Treasury continues to hold warrants to purchase approximately 52 million shares of The Hartford’s common stock at an initial exercise price of $9.79 per share. The company does not intend to repurchase the warrants from the U.S. Treasury.

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...

Hartford Financial Services (HIG) continues to report solid core earnings. The market seems to doubt the staying power of these earnings. Check out the book value for this $22 stock reported after the close with the Q4 earnings. Currently $38.92 or $47.56 if you exclude the AOCI. With core earnings approaching $4 in 2010 its perplexing to understand the multiple on this stock either based on earnings or book value. It won't last forever! Quarterly Results 4Q '09 4Q '08 Change Net income (loss) $557 $(806) NM Net income (loss) available to common shareholders per diluted share $1.19 $(2.71) NM Core earnings (losses) $689 $(208) NM Core earnings (losses) available to common shareholders per diluted share * $1.51 $(0.7...

Or at least that's the headlines and synopsis of the day regarding Hartford Financial (HIG). HIG has now easily surpassed estimates for the 3rd quarter in a row. The analysts estimates for Q4 were around $.80 and HIG now expects something in the range of $1.45 to $1.60 per share. Doubling of estimates is nearly similar to what they reported in the last 2 quarters and the earnings will be in the same range as last quarters $1.56. Hard to understand why the model was so low even with HIG management providing such hideous guidance in the $.70 range. Don't analysts get that HIG was being overly conservative. HIG has now posted over $5 in earnings for just 3 quarters and over the last 2 quarters is on a anual run rate of roughly $6. Book value is quickly approaching the $40 range. So you'd probably guess that HIG trades around $40-50 wouldn't you? If so, you'd be wrong by nearly a mile as HIG barely cracks $28 today. Sure they still have to pay back TARP funds, but at t...

After the close, Hartford Financial (HIG) reported a big jump in book value to $37.90 when they reported Q3 earnings . This wasn't all that surprising considering the rebound in the markets, but confirmation helps pound it home to people still negative on the stock. Considering its only trading at $27 in the after hours action it appears that some people are still dense. Book Value Per Share Jumps 18% From End of Second Quarter to $37.90 Also, HIG reported core earnings of $1.56 which handily beat the estimate of $1.11 and they raised 2009 estimates. They did report a net loss on charges and at that point the reporting for HIG gets very confusing and beyond the need of further research. The key is that HIG will survive and prosper and book value is likely to soon bounce back over $40. Earnings will likely be estimated at over $4 and mabye as high as $5 next year. So either way you slice the valuation based on BV or EPS, HIG easily hits the $50+ range. Until then we'll avoid str...

This just further highlights why you have to be careful when following analyst calls. UBS today resumed coverage of the insurance group with Buy ratings on 2 of our Growth Portfolio stocks in Hartford Financial (HIG) and Phoenix Companies (PNX). The HIG call is just mind boggling as the target goes from $13 to $35. Basically by following UBS, investors missed over a 100% gain already. Yikes! And Hartford shares jumped $1.41, or 5.4 percent, to $27.66 as Kligerman raised the insurer to "Buy" from "Neutral" and hiked his price target to $35 from $13. He said the company has the means to "absorb adverse equity markets, higher capital requirements and investment losses." The company has a new chief executive, Liam McGee, who is "coming into a good situation," he said. "We think HIGs near-term roadmap seems clear and extremely positive in terms of top-line life and P&C initiatives, as well as risk mitigation and capital management," the...

Hartford Financial ( HIG ) is now the top position in our Growth portfolio and Terex ( TEX ) is a long term holding. Both companies closed today at highs not seen since the market blewup late last year. Being that they both broke thru closing highers from the last couple of weeks, they are likely to surge even higher. HIG : with 2010 estimates now approaching $4, HIG is likely to surpass a 10 PE sooner rather then later. I'd place at least a $50 target on this stock as the SP500 stays above the 1,000 level. So the closing price above $28.5 is still only a 7 PE. TEX : this construction company is more difficult to value with some analysts placing the trough sales not until 2011. TEX once traded close to $100 so it seems unlikely that a price just jumping above $20 would be anywhere near a top. The way China and India have returned to growth and the demand for housing in Brazil is seems overly pessimistic that demand won't pick up much sooner then expected. MTW has also broken ou...

The current consensus estimates for the Q2 report to be reported by Hartford Insurance (HIG) after the close today is for $1.16. This estimate is pretty much in line with what HIG guided for after the Q1 report. Currently trading only above $15 today suggests that the market gives little value to those estimates. At a run rate above $4, HIG has a PE of just 4. Also with a book value above $40, HIG has two valuation metrics that suggest a much, much higher price. Why isn't it trading higher? Mainly because the market in general expects HIG to warn yet again. They've had a tough year or so and the market is typically slow to change opinions usually requiring a company to prove it first. Take Canseco (CNO) today. They are up 50% based on what appears to be in line results for them. After that, they still only trade at a PE of 3. With the huge rebound in the stock market, it's puzzling why Hartford is being so ignored. So much of their troubles came from investments tied to the...

Hartford's (HIG) stock is just soaring up 15% today on a combination of the breakout in the stock market in general and the news from an analyst that it's book value likely increased by 40% in Q2 due to a increase in investments that were unrealized loses. Anybody following HIG should know that around S&P500 900 is where they run into issues of investment losses going from unrealized to potentially realized. If the market bounces back, HIG then wouldn't have the losses to report and instead a $10 stock would have a book value of $40-50. Thats an incredible valuation difference and why HIG might be the biggest gainer in the S&P500 in Q3 if the market continues on a path towards and above 1,000. HIG clearly faces hurdles with potential declines in business, but based on the news from E*Trade (ETFC) last night it doesn't appear that customers are that concerned about doing business with a company in financial trouble, but has a solid business platform. Analysts ex...

Made a few purchases in our accounts today when the market was testing 890 which I think will be the low at least for now. Terremark Worldwide (TMRK) is a new stock we've started following based on the $20M purchase of shares by VMWare (VMW). VMW is a very respected technology company and its impressive that they made an investment in TMRK. Its also important to note that the stock currently trades below that purchase price of $5. That purchase price was somewhat above the stock price at the time of the announcement as well. VMW wanted into this stock so we've followed. TMRK also reported nice Q1 results which surprised me to see that basically a hosting (ok, managed IT infrastructure services) company actually had a solid report. Actually reporting earnings which is impressive for a sector that typically only focuses on EBITDA. EBITDA can only take you so far. The other thing that impressed us was that TMRK provides the 'infrastructure' services for both usa.gov and ...