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Just for an update, yesterday UBS noted QBE had "turned the corner" whatever this means, and now up 3.5% today. Whether this is the start of a return to some strength in the SP remains to be seen.
QBE - QBE Insurance Group
- Thread starter markrmau
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No doubt a lot of cost cutting is going on and I feel things will improve a lot more in the sector, going forward. That big dividend, good yield at the present price, is good reason enough to hold the stock and let dividends roll in whilst waiting for a recovery.
Yep, I concur. I sold 1000 of my 2500 shares at 1825 which i bought for 1716 about a month ago and put it into Telstra @ 278. Looking forward to the nice dividends getting paid into my account next week
I will consider buying the 1000 shares back tomorrow if Telstra goes up and QBE goes down.
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I'm a basic chartist and the trend all of this year has been downward and that doesn't matter how many analysts make the stock a hold or a buy.
Yield at $16.71 (was $25.50+ in January last) is 7.7% but the earnings yield is just 8.6% - OK for a growth stock but QBE are but a harpooned tank.
Stocks of late that go on down, OST is another, are hard put to drag themselves out of the trend. Both QBE and OST will like WES, so choose your moment well when the falling knife strikes a log, not a passing bird.
I was looking at this yesterday thinking I might jump in for a small bounce - yield does look good, and has been sitting around 17-17.50 for a while so...will I, won't I?
Really though, apart from spike low in March 09 this has been trading above 16.30ish, since 04/05 so unless there is grim news on the horizon this looks like a value buy...any other comments from more informed analysts??
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Have a very small parcel which I continue to foolishly hold!!! Divs are ok but I think it may be time to flick it - the majority of my money is doing well in other stocks.
But jono the AUD is high and a fair chunk of QBEs money is in US dollars so surely as the dollar remains high QBE will continue to suffer? Looking at the chart it's slowing making it's way south and what make you think it will reverse any time soon? I see more sideways meandering for somtime. Currency issues, insurance payouts staying high as the weather continues to play havoc on mankind, etc
Thinking of selling out, using the money in other stuff and maybe (that is maybe) buy back later when it starts to show it's moving on up.
But jono the AUD is high and a fair chunk of QBEs money is in US dollars so surely as the dollar remains high QBE will continue to suffer? Looking at the chart it's slowing making it's way south and what make you think it will reverse any time soon? I see more sideways meandering for somtime. Currency issues, insurance payouts staying high as the weather continues to play havoc on mankind, etc
Thinking of selling out, using the money in other stuff and maybe (that is maybe) buy back later when it starts to show it's moving on up.
Sorry johenmo, I should make my position clear...I would be trading in using CFDs to make a quick profit on a presumed bounce from mid 16s back to 17ish, with a deposit of around $1500 can buy 2000 CFDs and make a quick $1k from a 50c bounce, which looks like it may play out, although I must say the gap down on Thursday with an open at 16.40 and low of 16.30 would have been a VERY nice but in point rather than my entry the previous day at 16.64!!! Wait and see where it goes Monday
It is always darkest before dawn
looking at tickers every day can be bad for you.I can tell you that QBE is a very good business and insurance business you got to think longer than the market.
Shall I plug a few chapters on insurance business and how they work and why now is probably the best time to buy QBE.
other may disagree including yourself but it food for thought
As promise here is a chapter on insurance business
apologies to those already knowing this business in details, for those less well known about this business, they may find some comfort owning insurance security in time of disaster
I only buy insurance company in time of disaster and turmoil,
Insurance business is unlike other business, it has advantages other over look
Insurance collect premium from you and I in a form of premium you pay each year think of your car insurance or landlord insurance etc...
This is a business where you collect before you provide a service, and the service you provide will be in a form of claims.
Until claims are made this money, they called float are kept in the business invest in bonds and stock to generate even more return.
That why it is important to have good management running insurance business. They can skillfully allocate this capital and generate above market return.
Warren Bufett make his Billion because of this insurance float..his insurance division provide him
interest free float where he can compound 15% return a year until a claim is paid out...
the more float you rack in the higher return you going to generate.....Most insurance companies Warren Buffett
acquire, from day one he will work on generate more float from this business for him to then invest in
the market for exceptional return...
I wont bore you too much but this is the example
GEICO in 1998 it has revenue of around 4 Billion, 10 years later in 2008 it has revenue
of 12 Billion and you can tell much more money Warren has in this period
Float on insurance balance sheet are liability but unlike other business liability in a form of debt
it cost other business to have debt in a form of interest..
insurance float are interest FREE, there is no requirement for insurance company to pay interest on
premium its customers pay until the day of claim...
Good insurance company with good management will know how to use these float efficiently and generate
awesome return from their share holders...you can look at QBE charts for the last decade to see what
it has done...
QBE has demonstrated that it can do this nicely over the past decades....QBE prove to you
that it can take this float and invest wisely and get very decent return...
Another day I tell you why when disaster struck, nothing but bad news throw at insurance way,
It is probably the best time to buy insurance company...it has a very nice silver lining once you
understand the business.
Just like Uncle Warren said when he under-write insurance policy when massive disaster struck.
"We are willing to look foolish as long as we don't feel we have acted foolishly"
Learn to ignore the noises and think independently, buy for your own reasons not someone else.. I find most people covering more than 15 stocks they are expert at selling but has very little details knowledge of the business.
Remember if you are an expert and can generate compound annual return at around 15% or more there is no need for you to do sell anything but
invest in the market
apologies to those already knowing this business in details, for those less well known about this business, they may find some comfort owning insurance security in time of disaster
I only buy insurance company in time of disaster and turmoil,
Insurance business is unlike other business, it has advantages other over look
Insurance collect premium from you and I in a form of premium you pay each year think of your car insurance or landlord insurance etc...
This is a business where you collect before you provide a service, and the service you provide will be in a form of claims.
Until claims are made this money, they called float are kept in the business invest in bonds and stock to generate even more return.
That why it is important to have good management running insurance business. They can skillfully allocate this capital and generate above market return.
Warren Bufett make his Billion because of this insurance float..his insurance division provide him
interest free float where he can compound 15% return a year until a claim is paid out...
the more float you rack in the higher return you going to generate.....Most insurance companies Warren Buffett
acquire, from day one he will work on generate more float from this business for him to then invest in
the market for exceptional return...
I wont bore you too much but this is the example
GEICO in 1998 it has revenue of around 4 Billion, 10 years later in 2008 it has revenue
of 12 Billion and you can tell much more money Warren has in this period
Float on insurance balance sheet are liability but unlike other business liability in a form of debt
it cost other business to have debt in a form of interest..
insurance float are interest FREE, there is no requirement for insurance company to pay interest on
premium its customers pay until the day of claim...
Good insurance company with good management will know how to use these float efficiently and generate
awesome return from their share holders...you can look at QBE charts for the last decade to see what
it has done...
QBE has demonstrated that it can do this nicely over the past decades....QBE prove to you
that it can take this float and invest wisely and get very decent return...
Another day I tell you why when disaster struck, nothing but bad news throw at insurance way,
It is probably the best time to buy insurance company...it has a very nice silver lining once you
understand the business.
Just like Uncle Warren said when he under-write insurance policy when massive disaster struck.
"We are willing to look foolish as long as we don't feel we have acted foolishly"
Learn to ignore the noises and think independently, buy for your own reasons not someone else.. I find most people covering more than 15 stocks they are expert at selling but has very little details knowledge of the business.
Remember if you are an expert and can generate compound annual return at around 15% or more there is no need for you to do sell anything but
invest in the market
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I had QBE and sold it.
Mad a nice loss on it too
Paid 21 and sold out at 17.50.
Reinvested the money in FGE and MCE 5 months ago and have made up the loss.
Yes It might come good but how long do you want to wait and are there better places to put your money?
With the high Aussie dollar against the US dollar I don't think it is going to change very quickly.
Mad a nice loss on it too
Paid 21 and sold out at 17.50.
Reinvested the money in FGE and MCE 5 months ago and have made up the loss.
Yes It might come good but how long do you want to wait and are there better places to put your money?
With the high Aussie dollar against the US dollar I don't think it is going to change very quickly.
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As promise here is a chapter on insurance business
apologies to those already knowing this business in details, for those less well known about this business, they may find some comfort owning insurance security in time of disaster
I only buy insurance company in time of disaster and turmoil,
Insurance business is unlike other business, it has advantages other over look
Insurance collect premium from you and I in a form of premium you pay each year think of your car insurance or landlord insurance etc...
This is a business where you collect before you provide a service, and the service you provide will be in a form of claims.
Until claims are made this money, they called float are kept in the business invest in bonds and stock to generate even more return.
That why it is important to have good management running insurance business. They can skillfully allocate this capital and generate above market return.
Warren Bufett make his Billion because of this insurance float..his insurance division provide him
interest free float where he can compound 15% return a year until a claim is paid out...
the more float you rack in the higher return you going to generate.....Most insurance companies Warren Buffett
acquire, from day one he will work on generate more float from this business for him to then invest in
the market for exceptional return...
I wont bore you too much but this is the example
GEICO in 1998 it has revenue of around 4 Billion, 10 years later in 2008 it has revenue
of 12 Billion and you can tell much more money Warren has in this period
Float on insurance balance sheet are liability but unlike other business liability in a form of debt
it cost other business to have debt in a form of interest..
insurance float are interest FREE, there is no requirement for insurance company to pay interest on
premium its customers pay until the day of claim...
Good insurance company with good management will know how to use these float efficiently and generate
awesome return from their share holders...you can look at QBE charts for the last decade to see what
it has done...
QBE has demonstrated that it can do this nicely over the past decades....QBE prove to you
that it can take this float and invest wisely and get very decent return...
Another day I tell you why when disaster struck, nothing but bad news throw at insurance way,
It is probably the best time to buy insurance company...it has a very nice silver lining once you
understand the business.
Just like Uncle Warren said when he under-write insurance policy when massive disaster struck.
"We are willing to look foolish as long as we don't feel we have acted foolishly"
Learn to ignore the noises and think independently, buy for your own reasons not someone else.. I find most people covering more than 15 stocks they are expert at selling but has very little details knowledge of the business.
Remember if you are an expert and can generate compound annual return at around 15% or more there is no need for you to do sell anything but
invest in the market
The problem is that QBE gets very small returns on that money it invests.
If it had a more aggressive investment strategy I would be prepared to agree with you.
doctorj
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Just to round out ROE's commentary - Two factors influence the investment returns of an insurer - the first being their investment strategy and the second being the length of time they have the money. The first is obvious, so I'll leave it there. The second is less so - there are two primary factors that drive this, the type of product they sell and their combined ratio.
On the type of product - if the insurer is writing predominately property lines (motor, home and contents etc), they are at risk for a year more or less. This is called short tail business. The impact is that the insurer only has the money for a short time to earn a return. Products with a longer tail (liability, etc) will mean the company has the money for longer.
The second is their combined ratio - the proportion of every dollar of premium spent on claims and policy administration (and other costs). The higher it is, the less time the company will have to invest each dollar of premium earned.
So, if you're a motor insurer with a combined ratio of 97-100%, you could have the best investment strategy in the world and it's not going to help your shareholders that much. This isn't all that uncommon at all. In fact, in some markets, it's common for an insurer to have a combined ratio above 100% and scrape a small profit on their investment return alone...
On the type of product - if the insurer is writing predominately property lines (motor, home and contents etc), they are at risk for a year more or less. This is called short tail business. The impact is that the insurer only has the money for a short time to earn a return. Products with a longer tail (liability, etc) will mean the company has the money for longer.
The second is their combined ratio - the proportion of every dollar of premium spent on claims and policy administration (and other costs). The higher it is, the less time the company will have to invest each dollar of premium earned.
So, if you're a motor insurer with a combined ratio of 97-100%, you could have the best investment strategy in the world and it's not going to help your shareholders that much. This isn't all that uncommon at all. In fact, in some markets, it's common for an insurer to have a combined ratio above 100% and scrape a small profit on their investment return alone...
Dependent on time frame I always buy good business when it get knocked off
the planet.
When yield are high and return on investment are good and stock price gone gangbuster it doesnt attract me ..so I come in when things
are dire and everyone thing it's a **** business.
did this with CCP, FLT and CAB
doing the same for QBE...
and I always do my homework to make sure I understand enough to make
an informed decision...
people can play with the numbers and predict its future price or how much it worth I understand the business then all I have to do is take a ball park figure
and the rest is history....
I found QBE be among the best of the best in insurance
Dependent on time frame I always buy good business when it get knocked off
the planet.
When yield are high and return on investment are good and stock price gone gangbuster it doesnt attract me ..so I come in when things
are dire and everyone thing it's a **** business.
did this with CCP, FLT and CAB
doing the same for QBE...
and I always do my homework to make sure I understand enough to make
an informed decision...
people can play with the numbers and predict its future price or how much it worth I understand the business then all I have to do is take a ball park figure
and the rest is history....
I found QBE be among the best of the best in insurance
Have to agree with you there ROE, the best time to buy a good business is in the middle of bad news.
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That is okay in theory but there may be better businesses to invest in than QBE at the moment and that is my contention.
QBE return on equity had been declining for some years now so that has also to be a concern.
No arguement from me. QBE is one I keep on my watch list but have never bought.
Good thinking but what I am saying isn't in no way make judgement on your investment philosophy but Return on Equity isn't everything in my world.
Small business tend to generate high return on equity but as you get bigger and bigger it harder to generate similar high return.....
what I look for is adequate return on equity but not necessary absolutely the best... but then a whole raft of other factors come into play one of them is
Business model I'm more concern about than return on equity...as you can have high return on equity business but it could be here one day gone the next because there is no moat and when competition hit the scene you could be in trouble adding to that the dynamic of technology, business without a decent moat can get in trouble fast...
You can learn a lot from American business where they have a much bigger market and much more listed stock, lot of them come and go.
Good example Circuit City, then come Best Buy..Circuit City gone bankrupt
our darling TRS, I reckon its model is under threat from multiple players
eating into its profit .. you can read it on hotcopper thread I post it there sometimes...
Julia
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Exactly right. Can't see the point in committing funds to a business whose SP is not increasing, when there are plenty of companies which are producing good capital growth.
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