Saturday, December 15, 2007

What I don't want for Christmas

Old Republic International (stock: ORI) has got to be poster child for run away now. How many scary things can one company have? Description from Yahoo Finance: Old Republic International Corporation, through its subsidiaries, engages in insurance underwriting business primarily in the United States. It operates through three segments: General Insurance, Mortgage Guaranty, and Title Insurance. The General Insurance segment provides related risk management services that encompass various property and liability insurance coverages. It offers commercial automobile coverage protection, workers' compensation, and general liability for businesses in the trucking and general aviation, construction, forest products, and energy industries; and public entities, such as municipalities. This segment also offers directors and officer's liability, and errors and omission liability, as well as travel insurance. In addition, it provides coverage for hull and liability exposures, as well as additional areas, such as airport facilities and flying schools; and fidelity, surety, and credit exposures. The Mortgage Guaranty segment insures first mortgage loans, primarily on residential properties to mortgage bankers, brokers, commercial banks, and savings institutions. The Title Insurance segment provides title insurance, escrow closing, and construction disbursement services, as well as real estate information products and services pertaining to real estate transfers and loan transactions. Old Republic International offers its products primarily through independent insurance agents and brokers. In addition, the company offers small life and health business insurance through financial intermediaries, such as finance companies, automobile dealers, travel agents, and marketing channels. It also conducts its small life and health business, as well as offers travel insurance in Canada. The company was founded in 1887 and is based in Chicago, Illinois.Gosh, where to begin? Awww youse guyz is smart, you get it already. But wait, there's more! Who has this company in their portfolio? % of Shares Held by Institutional & Mutual Fund Owners: 80%. Fine institutional investors like; AXA JP MORGAN CHASE & COMPANY MAC-PER-WOLF COMPANY Barclays Global Investors UK Holdings Ltd PZENA INVESTMENT MANAGEMENT, LLC RENAISSANCE TECHNOLOGIES CORP VANGUARD GROUP, INC. (THE) CAPITAL RESEARCH AND MANAGEMENT COMPANY FIRST MANHATTAN COMPANY FRANKLIN RESOURCES, INC. But wait there's more! Franklin, Janus and Fidelity have mutual fund positions too.

For our stock picking friends who somehow keep forgetting to hit the tip jar, take a look at the Jan 12.50s.

P.S. For those of you wondering why California still has a certain appeal:


wagga said...

"insures FIRST mortgage loans, primarily on residential properties"

Rob Dawg said...

That might why so many houses may be going back to the bank on the courthouse steps. They might be insured so there's no incentive to stop the bleeding.

Might be that the banks know the minimum bid is too high but they need to prove it in order to collect on the insurance.

This whole industry is either imploding or a candidte for rescue.

Funny Circus Bears said...

I personaly would not make that trade, Robert.

Very thin volume, huge spread, high IV, low delta, TA headwind at that strike, etc. etc.

Maybe a long gamma position would work, but I would not be a straight put buyer.

But that's just me.

Jim the Realtor said...

Wow, that doesn't look good for Old Republic - could market forces clean out the title insurance business, leaving just the worthy ones (if any)? Or will the government bail them out too?

The trouble with bailouts - where do you start and stop?

They're all going to have their hand out soon - title companies, PMI companies, banks, hedgies, IBs, etc.

Rob Dawg said...

MY wording wasn't clear enough. By take a look I wasn't recommending. I'd be wary for the reasons you point out but when I see the HBs and investment banks and ACA and such taking much bigger haircuts there's something there. The Jans are 20¢ and the Aprils are 80¢ for the 12.50 puts. Looks like just an issue of when not if.

Thanks for the tip on your blog. My bigger fear is that lenders are going to integrate vertically. The govt solution might be to dissolve the long standing firewalls. Countrywide REOs only available through Countrywide lending anyone? Problems now are nothing like what we'll have if the property owner is the financer is the gaurantor is the escrow is the bank.

sk said...

Sorry mate, I was already short ORI.I went short a month ago as I moped about the fact that the fourth entry into shorting MTG wasn't working. ( I insist on forgetting that the previous 3 in'n'outs had worked. one is only as good as the last trade yanno ).

For those who don't follow this arcana, ORI bought a passive stake in MTG in early Nov.

Thanks for the (shorting) pump though.


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