2660 limit was easily reached in the opening frenzies of retail dumping (my limit was removed). For the whole day, it faded up better than the ASX200. Because this is a play and directionally unconfirmed short, I move my stops forward to breakeven plus a little more to cover any commissions.
Technically there are a few problems. Besides those that I have stated before, the 100dma has just crossed the newly formed (since Oct 2007) 200dma, and all 13+22ema and their channels and all other dmas are sloping down. ElderRay bull power is 0 while bear power is -135, and this gap DOWN is a bearish breakout from the triangular wedge formed since 16th January entered from the top (means it usually breaks downwards), with target as the widest channel from the beginning at around 405 points and therefore a reasonable target would be 2400+. Note : not within a single day, and we're talking probabilities here (that's why we trade), and NOT certainties.
If it reaches, I'll decide on releasing. If it doesn't, breakeven.
I still procrastinate on (1)(b), with no other reason except that I've devoted a little more time back to the US markets. However, reading through the 2006 ANN and 2007 1/2 ANN is very interesting : I find no reason QBE is exposed to insuring any of the toxic stuff their US counterparts (FGIC, ABK, MBI, etc) are exposed to. All external searches for such clues are also absent : consistency with what they are stating : no CDO/CDS/MBS direct exposure. 9% of investment portfolio with the "top rated" (I really want to know who these banks are -- suspect) USA banks. A nearly equivalent amount in their acquisitions of US Winterthur + Praetorian. Very conservative in their investments : cash markets (very good choice) and fixed interest (again a good choice). Only thing hurting them is the exchange rate, but for that I have a thesis -- they are hurting right now but the USDX is bottomed.
I don't have a good fundamental reason to go chasing and shorting them. Except for a few notables.
1) UBS 6th November substantial shareholder reduction from 7.02% to 5.57% at 11,298,107 shares traded DOWN. The ASIC filing with ASX on 3rd January 2008 is messy as, but Aspect huntley has put together the numbers for said date. Sold into strength, QBE drops for a week 2 days later.
2) AXA 9th November substantial shareholder reduction from 7.53% to 6.22% at 5,467,401 shares traded DOWN. ASIC filing with ASX still absent. Numbers from Aspect Huntley. Sold into strength, QBE still fades down for a week thereafter
3) UBS rating of QBE to buy on 23rd November to "buy". Pump.
http://www.tradingmarkets.com/.site/news/Stock News/850933/
4) UBS (currently still unfiled, so unknown even to Aspect) substantial shareholder reduction 28th December 2007. Sold into strength. QBE drops to current levels 2 days later.
Why? I don't really know. Could be anything : forced sale by UBS, or speculative knowledge of astro stuff (these are too speculative. No facts)
So far substantial shareholders (name, shares, % of QBE):
AXA Group 55,060,293 6.22
Capital Group Companies Inc 48,268,558 5.89
(barclays somewhere below, at around 5.1%)
Aspects Qualitative Analysis (recently dated -- just 1 month):
_________
Business Description
QBE is a leading provider of general insurance and reinsurance services in Australia, the Pacific, Asia, the Americas and Europe. QBE has operations in 45 countries and has made almost 100 successful acquisitions since 1982. QBE is one of the best managed and profitable insurance groups in the global general insurance and reinsurance industry.
Company Strategy and Prospects
(Last Update: 18 January, 2008)
The QBE strategic objective is to remain a highly respected and successful general insurance and reinsurance Group by earning underwriting profits in each insurance division and above benchmark investment returns. The objectives are to grow shareholder wealth over the long term while maintaining a sound solvency position and a low risk profile. Extensive risk management is in place to protect all stakeholders.
QBE reported a 56% increase in NPAT to $921m for the six months to June 30, 2007 with solid growth in both gross written and net earned premiums which increased by 15.3% and 18.8% respectively. This reflected the benefit of past acquisitions and organic growth and despite a 3% decline in average premiums and weakness in $US. Gross written premium rose to $6.52bn net earned premium increased to $4.75bn. Group combined operating ratio fell from 87.9% to 86.2% driving a strong underwriting profit. Investment income rose by 70% to $564m with the net yield rising from 4.2% to 6.0%. The insurance margin improved from 18.7% to 22.2%. The probability of adequacy of outstanding claims ratio was 95.8% leaving management little option but to release more profit to shareholders. Operating cash flow increased from $322m to $785m reflecting premium growth and a relatively benign claims environment.Interim dividend increased by 43% from 40 to 57 per share 60% franked.
Using average exchange rates GWP is expected to grow by 25% to $13bn in FY07 and by 10% in FY08 to over $14bn. Management upgraded insurance margin guidance from 17.5% to 18.5% to 18.5% to 20.0%. QBE has sufficient capital to finance acquisitions of up to $1.5bn of additional net written premium. More acquisitions will have to be undertaken otherwise surplus capital will have to be returned to shareholders.
___________
Right now, with the current EPS at $1.03 for 1/2 year, the target to attain the same 39.97% YoYoYoYoYoYoYoYoYoY increase in EPS is $2.232 for this coming 2007 ANN. Value investors will HOLD at such levels and above.
In order to attain the same EPS gain that QBE obtained between 2005 and 2006 (2005EPS=$1.344, 2006EPS=$1.785, thus % EPS increase = 32.81%), their 2007 ANN has to be EPS = $2.371 .
Psychologically I have to think about what an EPS equal, lesser, or more than $2.37 would mean. For now. That's where (1)(b) comes in.
For now, I sleep.