I see estimated 2009 earnings at 5.62, over twice 2008 earnings. However, recent concerns about HIG's exposure to 2006-2008 mortgage-backed securities sparked a panic selloff recently. From a purely technical standpoint HIG is quite oversold, but remains ugly on the daily chart and seems to be headed for a test of 4.16. I'm looking at HIG for a swing trade to the long side at some point, but don't feel that I have enough information to time this one well. Input anyone?
I bought HIG in Nov at $5.10 for several Clients. I kept moving stops up (especially when they came out with ok earnings that drove it up in Dec) Moved stop to $12.00 and have been in cash ever since stopping out last month. I'm looking at HIG right now for my Clients once again. What are you thinking? $4, $5, ? I'm looking at buying Monday at around $7, and keeping the stops a little looser. Yes, I agree, HIG is highly oversold. Glad to see someone else looks at this symbol every day.
The Hartford is not a financially sound company. The selloff was not on fear, but fundamentals. Its loaded to the gils with worthless assets. All those CMBS are now completely and utterly worthless. You cant value them because its an illiquid market. Sure, you could daytrade it, but the bottom might fall out any day now when the CEO comes out to announce a bankruptcy filing. If you like the excitement of gambling, then sure trade it, but its nothing more then another roll of the dice at the craps table. Remember who runs this company, Juan Andrade, and he is from AIG. He made the same mistakes as they did soaking up worthless assets. As it stands on the balance sheet, The Hartford is insolvent. Life insurers fall on commercial mortgage concerns Hartford, Principal Financial most vulnerable to CMBS losses, analyst says By Alistair Barr, MarketWatch Last update: 4:24 p.m. EST Feb. 20, 2009Comments: 3SAN FRANCISCO (MarketWatch) -- Hartford Financial led a decline among life insurers Friday on concern about the sector's exposure to losses in the commercial mortgage and real estate markets. Shares of Hartford (HIG:hartford finl svcs group inc com News , chart , profile , more Last: 6.79-0.94-12.16% 4:02pm 02/20/2009 Delayed quote dataAdd to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: HIG 6.79, -0.94, -12.2%) , a leading variable annuity provider, dropped 12% to close at $6.79. This month, Moody's Investors Service downgraded more than 1,200 classes of commercial mortgage-backed securities issued after 2005. The market is under further pressure because investors are concerned that the government's huge economic stimulus package won't fuel a quick economic recovery, Andrew Kligerman, a life insurance analyst at UBS, said in a note to clients Friday. Triple-A rated, fixed-rate commercial mortgage-backed securities have dropped 4% in price this year, while AA and BBB rated CMBS are down 7% and 12%, respectively, Kligerman added. Hartford and Principal Financial Group (PFGrincipal financial group in com News , chart , profile , more Last: 10.52+0.01+0.10% 4:02pm 02/20/2009 Delayed quote dataAdd to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: PFG 10.52, +0.01, +0.1%) are the most exposed to commercial mortgage-backed securities issued in 2006 to 2008, the analyst noted. "Falling CMBS prices and ratings downgrades put pressure on life insurers' GAAP book values and risk-based capital ratios," the analyst wrote. "Life insurers with higher '06-'08 vintage and weaker-credit CMBS exposures are most vulnerable." A.M. Best, an influential insurance industry rating agency, downgraded MetLife (MET:metlife inc com News , chart , profile , more Last: 21.42-0.80-3.60% 4:00pm 02/20/2009 Delayed quote dataAdd to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: MET 21.42, -0.80, -3.6%) , Genworth Financial (GNW:genworth finl inc com cl a News , chart , profile , more Last: 1.47-0.12-7.55% 4:00pm 02/20/2009 Delayed quote dataAdd to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: GNW 1.47, -0.12, -7.5%) and Lincoln National (LNC:Lincoln National Corporation News , chart , profile , more Last: 11.44-0.23-1.97% 4:02pm 02/20/2009 Delayed quote dataAdd to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: LNC 11.44, -0.23, -2.0%) on Friday. A.M. Best said the life insurers' exposure to commercial mortgages and commercial real estate was a concern. "A.M. Best expects rising defaults in response to the deepening recession, and is most cautious on retail, hotel and office properties within close proximity to distressed housing markets and/or labor markets where unemployment is high," the agency said. MetLife shares fell 3.6% to $21.43, while Genworth dropped 7.6% to $1.47 and Lincoln declined 2% to close at $11.44. Principal Financial shares gained a penny to close at $10.52.
I want to add that shareholder's lawsuits usually only fetch pennies on the dollar, if at all anything. Dont depend on getting your money back from that.
Port, I read all that stuff already. MrStocker, thank you, that is info I did not have, and clarifies the depth of the selloff. LEAP, nice work from November lows; that's exactly what I did with DRYS from 3.48 in November. After reading MrStocker's link, I'll watch this one one carefully for more news and a retest of the 4.16 low before taking a longer term stand. (DRYS tested its low after serious solvency fears emerged.) However, for a day trade, we have Citi news this morning! HIG already up 6% pre-market. Might day trade this one after all.
Insurers own tons of bank debt and bank preferred. They are dropping like flys because they could take a huge haircut on that debt in the event of a nationalization.
Don't have a link per se. I thought it was pretty common knowledge that insurance companies are the largest holders of bank preferred stock, not to mention these hybrid securities. BAC preferred is priced to yield 30% right now. Either its the buy of the century or you're getting an idea of what will happen to the preferred in a nationalization. This would further impair the insurers balance sheets, which are already in horrible shape thanks to their comm'l re holdings and equity guarantees. Downgrades would follow - which would make them ineligible for participation in some of these Fed programs. The ramifications of nationalization (pre-packaged bankruptcy) are frightening, and explains why even idiots like Geithner don't want to do it.
I definately think this will bounce...bounce into the pink sheets when there is an official declaration of bankruptcy. The Hartford is already insolvent and bankrupt, they just need to make the announcement. When that time comes is anyone guess. I suppose it will meander in the low single digits with a panic selloff towards the end before the announcement is made...