Premium Post: August monthly updates
Given almost every stock I’ve written about has reported earnings in the past few weeks, this month’s update post will focus on earnings updates. So tons of stuff to talk about! But, first, thank you so much for subscribing to the premium site!
Second, a quick housekeeping. This month’s housekeeping has two parts:
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Anyway, on to the update:
ARGO’s earnings were completely confirmatory for the thesis. The U.S. business is firing on all cylinders (“the best quarter our US operations has reported in history”) and continues to see pricing increases.
The stock market seems obsessed with the overall company’s combined ratio, which includes ARGO’s subpar international operations. I think that’s a huge mistake. I mentioned in the original write up that, at peer valuations, the U.S. business alone is worth close to double today’s share price. After this set of earnings, I’m even more convinced of that.
COOP reported an incredible quarter. As I write this, shares are trading for ~$18/share, nearly a double in four months since I posted the idea. The company still trades below book value and it’s got incredible business momentum; however, it’s no longer clearly undervalued versus some of the other opportunities out there.
KTB reported a fine quarter. Obviously the near term numbers are a little messy, but they guided to some continued distribution gains and continue to suggest the dividend will be turned back on once the environment has normalized. I suspect that will be early next year. While shares have had a nice run since posting, I think the cheap valuation and potential catalyst of a dividend reinstatement make the idea still very interesting.
It looks like WOR has been buying back shares- their proxy lists 54.6m shares outstanding as of July 31 while their 10-k listed 55.09m as of July 23. It’s not a crazy amount, but I doubt the market has any expectation of a buyback here.
Nothing surprising in WOW’s earnings. Some messiness with write offs driven by COVID job losses, largely offset by continues subscriber gains. The near term remains messy, but in 2021 the company should turn the corner and start generating clean earnings growth. Combined with capex dropping, free cash flow will explode higher. Shares remain much too cheap. (PS- the new CFO bought a few shares on the open market earlier this month; nothing huge but always nice to see!)