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This conference call with management seems to be steadying the ship...QBE has been rising all through the call.
QBE - QBE Insurance Group
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skc
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Bought some at $11.2 and closed at $11.6. Left another 2R on the table.
Although QBE is quickly becoming a perpetual downside risk... this is the 3rd time in 12 months that it has surprised the market.
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Hostage to the US Bond market low yeilds and high AU$ making things a little tight.
Should spring back when we start to get a bit of US inflation which can't be too far off.
Should spring back when we start to get a bit of US inflation which can't be too far off.
skc
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Not revenge. QBE owes me nothing. Just lessons learnt on what the daliy candle looked like from last time.
Sorry I am new to this but I thought inflation would be bad for QBE as they hold so many low yeilding US bonds.
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The duration of their portfolio is fairly low (~<1 year), as you'd expect for a general insurer. They'll be able to roll quickly into higher yield notes as rates rise.
skc
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The theory is that when inflation becomes too high, US cannot keep bond yields so low...
So their yeilds and earnings should then quickly rise there after thus improving profits... OK cheers.
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Reality is that deflation has been the theme over the last 4 or 5 years in The States and bond yeilds have been at record lows. Doesn't take too much imagination to be able to posit the theory of what might be the case in the counter scenario!
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There's a few pretty negative broker reports out today. ML, MS and Deutsche have all stucjk the boot in.
skc
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And rightly so... after disappointing the market 3 times, you don't deserve much benefit of the doubt anymore. Valuation should lag behind management guidance, rather than the other way round.
I find it quite amazing that, 2 years ago QBE was well loved by analyst while IAG is the problem child. It is now completely reversed.
Yep - about as amazing as night follows day and what will be even more amazing in the future is when day follows night.
I have the opposite view on this - look at the maturities, QBE stands to benefit from any increase in bond yields.
Bond bubble is also probably debatable when viewed as part of very long term history.
So_Cynical
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I'm in with the superfund at $11 
QBE is a superstar business with some short term difficulty's that is giving regular short/mid term trading opportunities and this time im taking that opportunity...have a look at the 2 year chart, 4 major lows all followed by substantial recovery's...i expect the same again.
~
QBE is a superstar business with some short term difficulty's that is giving regular short/mid term trading opportunities and this time im taking that opportunity...have a look at the 2 year chart, 4 major lows all followed by substantial recovery's...i expect the same again.~
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Interesting, I think I read something when I held QBE a while ago that they were moving to shorter term bonds is that your point? I guess if they get to hold until maturity without having to sell to pay out claims it could be considered to be a dollar cost averaging strategy as long as they can beat inflation. They do have a long history of maintaining margins albeit with a couple of hiccups recently.
It is all academic to me at the moment as there are a couple of small caps I have my eye on at the moment and I have a very limited amount of capital to invest. I would be very interested to read about historical bond yields however, the status quo of low bond yields and cheap equity prices for the next decade or two would suit me just fine as I intend to be a net buyer of equities.
I second the above, would be great to get some research into historical bond yields. Does anyone know the % of assets that QBE hold in bonds? The next course of action is of course seeing what a 1% rise in bonds would do to income for QBE. This would give an indication on how much QBE have to gain from any bond yield rises.
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