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Rusty
12-26-2014, 01:20 PM
I'm really bummed out after my debit card was copied with the PIN number - costing me $2,000 - including my rent money.
So I thought - you know what - I'm going to have to make more money. And I thought - you know.. Why not show DMD how to make some money too.
But I want you to watch what I do. As such, I'm going to post when I buy, and when I sell. With the reasons of each ( in real time ) so you can see it yourself and follow along. I'm currently at 28 trades with an average rate of 15% flipped every six to eight weeks.

So - to make me happy, I'll try to make some of you guys happy - and maybe you can make some money later - either by using my picks, or by me teaching you how to play the market. But remember. TRADE AT YOUR OWN RISK!! I AM NOT RESPONSIBLE FOR ANY LOSSES !!!!

There - that's my disclaimer!

Ok, so last week, I bought stock in UVE (Universal Insurance Holdings Inc) at 20.42. I will sell it in 4 to 6 weeks at 23.58. Here’s why I like UVE:

http://finance.yahoo.com/q/bc?s=UVE+Basic+Chart&t=1y

This stock has the same kind of momentum as if you were teaching a dog how to run. This stock is up 58% in the last 12 months. The PE is only 10.3 !!!!
I love it!! This stock gives you a return of 5% per month and only trades for HALF the value of the rest of the stock market. How can you resist?

It also pays a 2% dividend. Yup! Last quarter too they raised that divident to $0.25 - so that forward dividend is close to 3% now. That's not bad... :)
So while you sit on the stock - if that's your thing - you make money on it.

Universal Insurance Holdings, Inc.has its subsidiaries, they work together to provide various insurance products for properties around Florida.
The coastline is worth $3 Trillion dollars! They also work through a network of independent agents in North and south Carolina, Georgia, Massachusetts, Hawaii, and Maryland

So yes - UVE is a company that steals money from people who are deadly afraid of hurricanes. that just are not going to happen. You all know that we are not going to see a hurricane for at least 6 months, so why not sell the stock before that plausibility and make a little money?

UVE's Company’s insurance company underwriters work closely with independent agents to market and underwrite business. With competitively priced products, convenient installment billing plans and proactive claims management, they regularly provide their customers with superior service. Universal Insurance, with its wholly owned subsidiaries, is a vertically integrated insurance holding company performing all aspects of insurance underwriting, distribution and claims.

Now here's the cool stuff. Florida is booming in real estate. And those financing companies demand that insurance be tied to all their projects.
Property Insurance is what makes Florida's whopping Three Trillion Dollar coastal development possible. Yup! Get it now?
The problem is that insuring property with massive protection is not cheap. So in saying this. UVE will be printing money for all revenue streams.
Scared Florida Residents are the bread and butter. UVE isn't into just hurricane risk. It's got a whole new territory.

UVE is expanding into other states. This means there's no upper limit for UVE.. :) They are pushing new ways to make money by offering incentives like Visa Gift cards, to their CSR's and agents for new policies. That's nothing new right? Incentives for sales agents? This means that Agents are driving sales like no tomorrow because they want those Visa Gift Cards in order to purchase their brand new American Eagle watches, while the bigger fish are buying Rolex.

In November. On the 10th to be specific. Their subsidiaries serviced approximately 560 thousand homeowners with insurance policies. How !! That's AmaZZZZZING!
In 2010 - there were like - 362,000 residential fires in the USA - causing $6.5B in damage. The Census I looked at showed 130 Million housing units in the US and 115 million households. So - running that math - it's like - ohhh 0.3% of houses that had a fire incident. Now looking at the new fire policies - The statistics are showing that chances of home fires have dropped 20% in 5 years, and guess what? hrmmmmm People are STILL buying more and more insurance!

Feb 7th 2013. Florida Office of Insurance Regulation - approved premium rate increases to 14.1%. haha! Florida Suckers!!!! :p
So here's a question. What happens if premiums go up. And Payouts go down? hrmmmm ??

Let's take a peak.

UVE Industry Average
Price/Earnings TTM 10.3 12.0
Rev Growth (3 Yr Avg) 7.9 5.2
Net Income Growth (3 Yr Avg) 16.8 6.5
Operating Margin % TTM 34.1 15.4
Net Margin % TTM 19.7 10.2
ROA TTM 7.1 2.6
ROE TTM 38.0 10.5
Debt/Equity 0.2 0.3

UVE is operating in a VERY positive market. Rates are increasing. Momentum is increasing. Re-insurance costs are decreasing.

UVE used to hold onto a large amount of risk in the event of a catastrophe loss.
But Look - No BileRush. No Hurricanes!! - The risk was there, but they won. UVE won! They put it all on black, stacked to the ceiling and they won.
They doubled up and now have a preference for precious metal insurance. They are awesome. This ain't no crap shoot. That's for sure. UVE kept winning so many times that they had to piss themselves as they kept hitting black, over and over again.

But then.. something changed. UVE hired the Deutche Bank to manage it's portfolio in 2014. The report states this :

"Working with the investment advisor, we transitioned the composition of our portfolio to a more traditional insurance company investment portfolio."

So they made a LOT of cash. And now - Cash makes up about 25% of its investments. Debt securities made up about 62%. Meanwhile, Universal Insurance Holdings has mega policies and sized up reinsurance. Now many of you are asking. What if ....

So here's the beauty. Their loss is one-tenth of their premium revenue. They cashed out of that casino and won big. Their chips are off the table. They won!
The casino is wanting to comp them now to get their money back. HAH!

Check their statement here...

“We use reinsurance to reduce our exposure to catastrophic and non-catastrophic losses through a combination of quota share, catastrophe and other forms of reinsurance. Below is a description of our 2014-2015 reinsurance program. We believe that the overall terms of the 2014-2015 reinsurance program are more favorable than the 2013-2014 reinsurance program. We realized cost reductions in part due to market conditions and our preparation and efforts to manage risk exposure. We also are retaining a greater percentage of gross written premiums with wind risk than we did under our 2013-2014 reinsurance program. While we believe the changes to the current reinsurance program are beneficial, there can be no assurance that our actual results of operations or financial condition will be positively affected. The Insurance Entities remain responsible for insured losses notwithstanding the failure of any reinsurer to make payments otherwise due to the Insurance Entities. A major catastrophic event, multiple catastrophes, or the insolvency of one of the larger participants in the reinsurance program could have a material adverse effect on the Insurance Entities' solvency and our results of operations, financial condition and liquidity.”

Universal Insurance Holdings has prospered and evolved into something big. If Hurricanes hit in 2010-20143 - they would have had huge payouts. But they didn't. Nope! They won! They beat the odds - and now they are making more money than ever. Their assets Quintripled. Yup! UVE traded from a low of $4 in 2010 to over $20 in 2014.

Why is the stock going up so much? It’s always about the earnings.

End of October, UVE net income reported : $21.3 million, or $0.61 per diluted share,
Increase of : $6.9 million, for Q3 2014,
Net Income $14.4 million, or $0.40 per diluted share, for the same period in 2013.


"Our record third quarter results highlight the successful execution of our strategy to grow our business, increase profitability and deliver value to our shareholders," said Sean P. Downes, the Company's Chairman, President and Chief Executive Officer. "Consistent with our strategy, we continued to maintain disciplined underwriting standards along with a focus on writing high quality, rate adequate, organically grown business. From a growth perspective, earlier this year we decided to reduce our quota share reinsurance which resulted in us retaining a greater portion of our business. In addition, this quarter we have seen an increase in policy count in each and every state in which we are currently writing business. We also continue to diversify our portfolio via geographic expansion and have recently been approved to write business in the state of Indiana. We believe the underlying organic growth drivers of our business remain strong and expect to build on our strong momentum in the fourth quarter."

Third-Quarter 2014 & Recent Highlights
Earned premiums grew by $25.4 million to $94.3 million.
Total revenues increased by $25.1 million to $103.5 million.
Net income and diluted EPS grew by $6.9 million and $0.21, respectively, compared to Q3 2013.
Completed $10 million share repurchase program announced on June 17, 2014.
Paid dividends of $0.10 per share.
The Indiana Department of Insurance issued a Certificate of Authority in October 2014 to UPCIC, a wholly-owned subsidiary of Universal Insurance Holdings, Inc., approving UPCIC as a licensed insurance entity in the state of Indiana.

Third-Quarter 2014 Results

Net income for the third quarter of 2014 of $21.3 million This is awesomonium! ( increase in net earned premiums, policy fees and income generated from the UVE's Investment portfolio)
Earned premiums, total revenues, net income and diluted EPS are all higher than any other quarter in the Company's history.

Diluted EPS of $0.61 benefitted from lower outstanding shares as a result of the cumulative share repurchases made by the Company.
Yuppers - they are buying more of themselves. They are all into themselves. mmmmmm UVEburger... Nomnomnom!


First nine months of 2014. Check this out baby.
Company's net income increased by $8.6 million, or 19.92% WHAAA!!
Net premiums earned increased by $30.3 million to $231.5 million for the first 9 months of 2014 !!!! zOMG!!

Share Repurchases
Third quarter of 2014,: UVE repurchased 719,937 shares of its common stock at an average purchase price of $13.16 per share.
( They want their nom's back. they want em! You can't have em!!! But you can have a few. If you buy TODAY! HAH! )

Sept 25th 2014 - UVE completed its $10 million share repurchase program ( announced on June 17, 2014,)
They bought a total of 758,361 shares of common stock in the open market at an average price of $13.15 per share.

The Company noted that the completion of its share repurchase program underscores its confident outlook, solid financial position and commitment to effectively deploying capital when it sees clear value. The Board of Directors and management team expect to continue to consider ways to enhance shareholder value, both through strategic growth initiatives and capital returns to shareholders.

Cash Dividends

On August 26, 2014, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock which was paid on October 1, 2014, to shareholders of record on September 23, 2014.

So we know - yup - earnings were awesome. So how the heck can we know they will continue to go up up up and awayyyyyyyyyyy ??

Well fellow Diamonds. You see these analyst folks - they are all like - Yo Homies. These UVE brothers are gonna earn $1.98 per share in 2015 and have some revenue of $465 Million. Now - remember this boys and girls. UVE beat the analysts "supposed" forcast by oh ummm.. 50%... OOOH SNAP !!!
What a bunch if idiots. Seriouslt. UVE has already booked $1.55 a share - and they will easily - and I mean EASILY earn $2.48 per share in 2014.

I know that UVE will have have $515 million in revenues in 2015 which will yield $2.85 per share of profit.
Multiply this by its PE 10.3,
Share price comes out to $28.02 which is way beyond my sell target.
In Engrish - this means UVE will go up by 2 dollars every three months based on EPS until next year. This stock will be $30 in no time!
UVE's management knows what the fack they are doing. And this stock is UNDERPRICED. Muhahahaha -
But I'm not greedy. I'm only going for 15% in 6 - 8 weeks.

And remember this guys. If you see a hurricane transfer into a wet fart. Just think of how happy those people in Florida will be with paying all those awesome insurance premiums while I watch my stock go up, up up and awayyyyyy.


~Rusty