PIH
As I said I factored in policy growth, and I get $1.00-1.10 over the next 4 quarters starting q3 2018, But to me PIH should trade at a discount, because of the retention thing. A company like UVE is trading at 8.75 times analyst estimates. PIH is basically trading at a PE of 7, I don't see why it should trade at much more. I'm not saying the stock should go falling off a cliff and q2 may look real nice so you might get a pop to sell if your in it, of course I would use that .35-.40 quarter to get the heck out in the mid to high 7's maybe you get lucky and it hits the $8's.
The problem is UVE spent like 8-10 million (based on memory, could be wrong) more on reinsurance in 2018. FNHC actually saves 27 million. Keep in mind they are alot bigger than PIH, and they spent 10 million more, that is a 40%+ increase in costs. I think your making way too light of this, they got horrible terms, and why would I want to in any company in the insurance business that gets horrible terms.
I know they have grown policies big y/y. But this quarter they only grew them at 2% so I'm worried about growth slowing as well. in fairness they didn't grow policies much in q1 last year, but that is something to watch, because if growth stays at the same rate we will have earnings back to q1-q2 18 levels by q2 19 or so barring no weather.
And policy growth doesn't address the 10 million retention they will not earn 10 million from q3 18 to q2 19. so one big storm you can kiss profits good bye for those 4 quarters. To me that is a risky business. I own FNHC that is not that risky so they hit with their 20 million storm they still make a ton of profits over the same period where pih reports losses. I can't say enough how that is a factor and a huge one in my assessment why pih is far less attractive than others in the sector. Plus if they earn even $1.10 over those 4 quarters should they get much more than a 7 pe, a 7 pe times $1.10 is what $7.70. Not that much upside. Probably if you own it q2 earnings will give you a decent exit point in my opinion, but I wouldn't hold onto it after that. and that is a risk if a hurricane hits before than your in a world of hurt. All is just my opinion, and I could always be wrong though.
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