Good News in Insurance

2009-01-05 18:24:06

Despite the dark cloud hanging over much of the economy, there is some good news to be had. Analyst J. Paul Newsome of Sandler O'Neil + Partners, L.P. talked to us a little bit about where the good news lies in the Insurance space:

"The good news has been relatively benign claim frequency and severity. Benign claims inflation has meant that the reserves have proven to be adequate for just about every company. So the liability side has been largely good news from a solvency perspective in the sense that the reserves look to be very solid really across the board."

For the complete Insurance report, including an overview of the space as a whole and stock picks, click here.

Top Picks in Life Insurance

2009-01-05 17:54:56

As our focus this week is on Insurance, our top picks from our roundtable discussion on Life Insurance. This sector was hard hit by the financial turbulence of 2008, but the analyst we spoke to did have a few picks in this space:

• "Aflac (AFL) is our top pick. It's a very solid, protection-focused company. You get a very reliable EPS stream that is not market sensitive, and from a credit perspective they do relatively well. I think I said before that no insurance company is perfect but their more risky exposure is concentrated exposure to bank and financial debt from Europe and Japan."
• "My top pick is Assurant (AIZ). It's a specialty insurance company as well. It's got four or five niche oriented businesses, and no equity sensitivity in their earnings stream either. They've benefited in one of their businesses from the housing crisis. It doesn't seem like anybody in the insurance business should benefit from a crisis, but their specialty property business has tripled in size in about three years owing to higher mortgage delinquencies and default rates."
• "Reinsurance Group of America (RGA). It's a pure play life reinsurance company. It's not quite as cheap as it was maybe a month or two ago when they raised some equity, but their equity raise was much more about a proactive opportunity to take advantage of some new business opportunities here as a bunch of the primary life insurers are looking for opportunities and ways to relieve capital strain, unlock capital."

For the complete Insurance report, including the complete roundtable discussion and overview of the Insurance space, click here.

Off the Record: Gold & Precious Metals

2008-12-22 18:19:52

This week our Off the Record picks come from our special focus on Gold & Precious Metals. We spoke with analysts and CEOs in this space who gave us their anonymous picks in this space:

1. Goldcorp (GG) - "They've got a very good track record of building out projects, drilling them out and growing them geologically. We think they've done a very good job in that regard."
2. Kinross Gold (KGC)- "As a major we like Kinross Gold. They have a great growth profile in terms of major new projects coming on stream this year and over the next two or three years. And they're very well capitalized and we just like their growth profile and their cost structure."
3. Yamana Gold (AUY)- "I would say it's Yamana Gold. Their consolidation plan has been absolutely extraordinary and they're positioned well in the market today."

For the complete Gold & Precious Metals report, including a complete examination of this space, and where it's headed in 2009 in addition to more stock picks, click here.

"The Global Economy is Better Off Without the US"

2008-12-22 18:05:44

In our special focus on Gold & Precious metals, we spoke with analyst Peter Schiff of Euro Pacific Capital. While Mr. Schiff is a gold analyst, he talked to us a little bit about the current economic crisis in broader terms and what it's going to mean for the world at large. According to Mr. Schiff, "the global economy...is going to be better off without having to support the US economy." He claims that whole idea of countries lending resources to the US and supplying the US with resources was predicated on the idea that the health of global economy depends on the strength of the American consumer. According to Mr. Schiff, the current financial crisis is going to prove this to be a fallacy- which will lead to a boom in global markets, that begins- unfortunately- with inflation in the US and around the world. Schiff sees this outcome as inevitable, and that the US is going to have to "learn what it means to save and produce and save and it's going to be a very difficult transition." that will be fought tooth and nail by the government. When asked about whether the shift to the new administration was going to help the US economy, Mr. Schiff had this to say:

Mr. Schiff: No. They've just made it worse. As far as I can tell, Barack Obama is committed to a course of total economic destruction. He doesn't realize that. He doesn't understand what the problem is, and he doesn't know what the solution is. He thinks that this collapse is the problem. However, this is the consequence of the problem; this is the tough medicine working. The problem is the bubble economy that we lived under for many, many years and any attempts to try to re-inflate it are not only destined to fail, but they're going to make the situation much worse.

For the complete Gold and Precious Metals issue, including a complete overview of this sector and how its performing in this turbulent climate, as well as stock picks, click here.

Top Picks from The Mexico Fund

2008-12-17 18:39:16

For our top picks this week, we're looking somewhere many investors overlook: our neighbor to the south, Mexico. This week here at TWST we did an interview with Juis Luis Gomez Pimienta, as well as other portfolio managers involved in managing The Mexico Fund. They recommended the following companies, all of which are core holdings in The Mexico Fund:

1. Grupo Televisa (TV)- "[Grupo Televisa is] the most important Spanish-speaking media company in the world and we believe that even in this tough environment, this company, with relatively low leverage and steady cash flow, represents a good opportunity. If you compare the portfolio on July 4 to the portfolio on October 16, you'll see that the cash position was significantly increased — to around 17% of its assets versus 3% to 5% for the last five years."
2. America Movil (AMX)- "It is the most important Latin American wireless company with an important operation in Mexico, Argentina and several others in Latin America."
3. Kimberly-Clark de Mexico- "A subsidiary of the Kimberly-Clark (KMB) in the US, represents 2.6% of the Fund's portfolio. We are now looking at companies with strong balance sheets, with steady cash flows and low leverages; that's the focus of the portfolio right now."

For the complete investing strategies report, including a full interview with the managers of the Mexico Fund, as well as portfolio managers from a variety of different specializations, click here.