Finished adding a full position (for me) in KINS today. Had to, because I'm pretty optimistic about the upcoming earnings report due out after the market closes on 8-12-15. Have an average price around $7.65 per share. Going on vacation next week and since this was Friday, it was my last chance to finish buying before earnings.
(Wish I'd been more nimble or had some low orders in place, on May 7th there was a flash crash in the stock down to $6.11. The stock was back above $7.00 before I even saw it. After it dropped so far in the blink of an eye, I wanted to buy below $7.00, but it never gave me the chance.)
Here's why I like KINS:
(1) Small cap - This little P&C insurance company has a market cap of only $56 million. The company operates in New York state in the USA. It's too small for the company to be fundamentally affected by most of the world's news flow. It doesn't really matter much to KINS if something bad happens in the Ukraine, China or Middle East.
(2) Low debt - KINS has no debt. The world is kind of a scary place these days. I like companies that are financially solid enough to survive a downturn, if one comes along. Low debt means the company is in a great position to hang in there when the going gets tough.
(3) Low PE and PEG. PE is only 10.45. 2015 Q1 direct written premiums were up 19.2% YoY. Net income was up 16.8% YoY. This was despite pretty bad weather in Q1 of 2015, when company had high claims due to frozen pipes and water damage.
(4) Decent & Growing Dividends - At today's (8-7-15) closing price of $7.64, the $0.05 quarterly dividend amounts to a 2.62% yield. Not really as much as I'd like. I prefer to see at least 3.00%. However, in Q3 of 2014 the company announced a 25% dividend increase from $0.04 per quarter to $0.05 per quarter. Since earnings have been strong in the past year, I suspect KINS will announce an increase to $0.06 in the 3rd Q of 2015. That would be a 20% increase and bring the yield up to 3.14%, which is acceptable. The dividend increase announcement could come as early as next Wednesday with the 2015 Q2 earnings report.
(5) Sustainable products - Tech kind of scares me. Today your company has the greatest electronic gadget or software ever. In 6 months it's old news and behind the competition's latest release. KINS is selling property & casualty insurance. Pretty likely they will still be selling it 6 months, 6 years and maybe even 6 decades from now. And it won't have to be 10 or 100 times better insurance for 1/10 of the price it was a few years back.
(6) Little government influence - Well OK, everything is affected by the colossus government, but I don't want to own target companies the politicians love to hate (and fine) like tobacco, asbestos, big banks, big oil, big coal, etc. Not wild about KINS operating in NY where the attorney general is just itching to make your company a scapegoat and level record setting fines, but the P&C insurance industry isn't a favorite target that I know of. KINS is too small too, to be of particular interest on the government's radar screen.
(7) Positive recent news - Earnings have been growing significantly the last 2 years from $0.20 in 2012, to $0.50 in 2013, to $0.72 in 2014. On 5-19-15, AM Best upgraded KINS' financial strength rating from B+ to B++. On 7-10-15, the company announced the signing of new reinsurance treaties, which should help earnings under most circumstances. Even though 2015 Q1 earnings were only $0.06 per share, the harsh weather impacted results. Management still talked quite positively about the future. Pipes certainly weren't freezing in Q2, so I expect much stronger results to be announced for Q2. TD Ameritrade shows expected earnings of $0.28 per share for both Q2 & Q3 of 2015.
So that's it. Despite not liking the general market here (kind of scary technical and fundamental situations in my opinion), I still think it's fairly likely KINS will release a good 2015 Q2 earnings report after the market closes next Wednesday, 8-12-15. There's a good chance of a 20% increase in the dividend then or soon after too. If Q2 turns out not to be that great, KINS is still a solid little company that pays a dividend and seems to have at least some reasonable growth prospects. I've got my full position in place. Still 3 trading days left for any other courageous souls to buy at least a partial position too.
Trading Notes: The past few days I saw a buy order in place for 10,000 shares at $7.60. None of it filled as far as I could tell, although at times it was the highest bid. Today (Friday, 8-7-15), there were 2,700 shares asking $7.64 virtually all day long. I bought half that many (1,350) shares in the last half hour of trade and the TD Ameritrade screen showed 1,400 shares asked at $7.64 just before the close.
Recent low was the 5-7-15 flash crash to $6.11. That was the only day since 2015 Q1 earnings it was below $7.05. Although I've been watching, the lowest I've actually seen the price since Q1 earnings were released was $7.10. Yes, I know, should have bought then. Hindsight is so wonderful - and useless.
Recent high was a spike up to $7.99 on 7-21-15, which was quickly rejected, too. Don't really expect KINS to do much of anything in the 3 days before earnings are released (it barely traded at all today), but you never know.
This is a small company. The stock doesn't trade at all for hours at a time. Always use limit orders. Don't place market orders. If you need deep liquidity, this isn't it - run the other way!
Disclosure: I have no inside information or special knowledge of the company. I could be wrong. Have been before (more than once!). I'm no expert. If you buy in and the stock goes down, I will be gone until September, so you will have to wait until then to scream at me. Won't do you or me any good anyway. I will feel bad enough as it is. If you buy in, good luck, hope we and KINS do fabulously!
