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Insurance Watch List: October 30, 2015
Performance Review
Below is the Insurance Watch List from November 6, 2012 and the subsequent performance. The stocks are listed in the order that they were on the watch list.
| Symbol | Name | 2012 | 2015 | % chg |
| TWGP | Tower Group Inc. | 17.68 | 2.5 | -85.86% |
| PKIN | Pekin Life Insurance Company | 10.8 | 12.4 | 14.81% |
| ASI | American Safety Insurance Holdings Ltd. | 17.22 | 30.25 | 75.67% |
| FRFHF | Fairfax Financial Holdings Limited | 372.45 | 496.5 | 33.31% |
| NSEC | National Security Group Inc. | 8.15 | 13.5 | 65.64% |
| GTS | Triple-S Management Corporation | 17.72 | 20.59 | 16.20% |
| THG | The Hanover Insurance Group Inc. | 35.61 | 84.25 | 136.59% |
| OB | OneBeacon Insurance Group, Ltd. | 13.01 | 14.39 | 10.61% |
| CRVL | CorVel Corporation | 42.74 | 33.2 | -22.32% |
| MHLD | Maiden Holdings, Ltd. | 8.54 | 15.55 | 82.08% |
| ERIE | Erie Indemnity Company | 66.3 | 87.46 | 31.92% |
| MIG | Meadowbrook Insurance Group Inc. | 5.72 | 8.65 | 51.22% |
| TDHOY | T&D Holdings, Inc. | 5.31 | 6.55 | 23.35% |
| WSH | Willis Group Holdings Public Limited Company | 34.87 | 44.61 | 27.93% |
The entire watch list gained an average of +32% which is 30% less than the iShares US Insurance ETF (IAK) in the same period of time. At the time, we had a strong interest in two stocks, The Hanover Insurance Group (THG) and Maiden Holdings (MHLD). Our general assessment of both stocks was fairly accurate as THG has the top performance at +136% and MHLD was the second in performance at +82.08%.
At the time, we thought that MHLD was undervalued compared to AmTrust Financial Services (AFSI). We did a side-by-side comparison of the fundamentals to justify our view on both stocks. Below is the comparative performance:
AFSI (in red) gained +181% compared to MHLD’s gain of ~82-85%. As far was we can tell, MHLD is tracking closely to the performance of AFSI but by a dramatically lower magnitude.
The third ranked stock, in terms of performance, was American Safety Insurance Holdings (ASI) with a gain of +75% which was acquired by Fairfax Financial Holdings (FRFHF), considered to be the Berkshire Hathaway of Canada.
Technical Overview
So far, it appears that the iShares US Insurance ETF (IAK) is about to put in a double top or break through to a brand new high since the low of 2009. The chart below has applied support levels based on the work of Charles H. Dow, co-founder of the Wall Street Journal. The ascending $39.86 level has been a support only once in late October 2011. Since that time, IAK has kept a considerable distance from the $39.86 “support” level. It would take a –23.84% decline to achieve the $39.86 level and a fall of –36.83% to get to the Dow Theory fair value level of $33.06.
Insurance Watch List
Below is the Insurance Watch List for October 30, 2015 and the analyst estimates for the respective stocks in the coming year.
Coppock Curve: October 2015
The market reversed a recent declining trend in October by increasing +8%. Despite the reversal of the trend, the Coppock indicator continued its downward path. The index fell 9.8 points and is only 32 points away from approaching negative territory. As always, we remind our readers that the Coppock Curve serves as a buy signal when they it turns upward after moving into negative territory. Continue reading
Wolverine World Wide
Posted in downside, Edson Gould, speed resistance line, SRL, Wolverine World Wide, WWW
Canadian Dividend Watch List: October 2015
Toronto Stock Exchange
The accompanying chart of the Toronto Stock Exchange from 1979 to the present includes the work of Edson Gould’s Speed Resistance Lines (SRL).
What stands out is the coincidence of previous peaks, indicated by uppercase letters of the alphabet, being followed by declines to the current conservative downside target (8,450.30), at the respective lowercase letters. The work of Gould isn’t a cure-all for what might happen in the stock market, however, it does provide a reasonable guideline to work from.
The coincidence of seven prior declines to the 8,450.30 level makes us wonder if the Toronto Stock Exchange has any chance to decline to the conservative downside target of 8,450.30, at (h). It may asking much to suggest that the Toronto Stock Exchange could fall another -39.44% but if it does for some unknown reason then it would be good to have your resources (cash) at the ready.
U.S. Dividend Watch List: October 23, 2015
Top Five Watch List Performance Review
In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from October 24, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.
| Symbol | Name | 2013 Price | 2014 Price | % change |
| SUSQ | Susquehanna Bancshares | 9.18 | 14.20 | 54.7% |
| IBM | IBM | 162.08 | 144.68 | -10.7% |
| FNFG | First Niagara Financial Group | 7.30 | 10.64 | 45.8% |
| MCD | McDonald's Corp. | 91.67 | 112.59 | 22.8% |
| SCL | Stepan | 43.47 | 52.59 | 21.0% |
| Average | 26.7% | |||
| DJI | Dow Jones Industrial | 16,805.41 | 17,646.70 | 5.0% |
| SPX | S&P 500 | 1,964.58 | 2,075.15 | 5.6% |
Prior Year Review
Susquehanna Bancshares (SUSQ) and First Niagara Financial (FNFG) were the clear winners from this watch list. We were lucky enough to own some Susquehanna in some of our personal accounts and benefitted from the take over. Regarding the two companies, we said the following:
Susquehanna Bancshares (SUSQ) and First Niagara Financial (FNFG) are the two that appeared on our top five companies. Susquehanna missed their earning estimate by $0.02 while First Niagara fell on unexplained write-down. Both companies are trading at deep discount to its tangible book value but that is subject to change based on the recent quarterly earning. Despite that, we do own shares (in some of our personal account) of Susquehanna Bancshares which was acquired at roughly 13% above the current price. The large discount to book value provided a good margin of safety and a stronger balance sheet after dividend cut several years back were the primary reason to be long.
Next up we'll turn our focus to McDonald's (MCD). Many of us can agree that the company can be classified as 'blue-chip' stock. However, the company has lost their way and many of us (myself included) infrequently dine there. To get a quick burger, we choose alternatives. The point is, competition is heavy in the fast food space and bad news always seems to circle McDonald's. One year ago, these were the headlines that put McDonald's on our watch list.
- McDonald's Corporation's Earnings Just Keep Plummeting In Its No Good, Very Bad 2014
- McDonald's In Crisis, Dividend Growth At Risk
- Why McDonald's Corporation Can't Keep Up With Chipotle Mexican Grill
Despite the negative news, McDonald's rose +22.8% excluding the 3.53% dividend yield the company was paying. In addition, the board approved a 5% dividend hike. Assuming you purchased the stock a year ago, your yield on cost would be 3.7%. The point is, to achieve higher expected returns, one has to make an investment in the face of negative news. No one could have predicted then that the company would change their strategy and start serving breakfast all day. Even so, there is no telling that the company can execute on that strategy.
U.S. Dividend Watch List: October 23,2015
It was another good week for the market as the S&P 500 increased +2% which erased the losses for the year. As a by-product, the number of companies on our watch list has declined. There are 39 companies on our watch list this week but we've filtered them down to 18. Continue reading
U.S. Dividend Watch List: October 16, 2015
It was a good week for the bull as the market gained +0.9%. With earnings season right upon us, we are expecting this October to be a volatile month so be on the look out for the 28 companies below. Continue reading
Coppock Curve: September 2015
The market continued its down draft in September. Long-term investors should be very excited to see the market pull back. Our Coppock indicator is approaching a level we haven’t seen since 2008. As a reminder, the Coppock Curve serves as a buy signal when they it turns upward after moving into negative territory.
Gold Stock Indicator: October 9, 2015
It was a tale of two markets with the price of gold increasing less than 1% while gold stocks increased +11.87%.
Illumina Downside Targets
The stock of Illumina Inc. (ILMN) is experiencing some major moves to the downside since peaking in July 2015. After the high of $242, Illumina has declined -39%. As a component of the Nasdaq 100 index, we think that ILMN is worth watching to see if it achieves any of the downside targets that are outlined by Edson Gould’s Speed Resistance Lines (SRL).
Transaction Alert
On October 6, 2015, we executed the following transaction(s):
Gold Stock Indicator: October 2, 2015
Since August 13, 2015, the price of gold has increased by +2.15% while the Philadelphia Gold and Silver Stock Index has declined –2.13%.
The price of gold could be considered to be on a tear given the fact that it isn’t falling, at the moment.
