The fickle market It is interesting to compare KFS now with where it was in 1997.
1997 current
book value $5.95 $15.74
revenue per share $5.70 $39.00 est.
investment portfolio per share $9.87 $56.83 @ mar. 31
earnings per share $0.73 $ 2.70 est.
stock price per share $27.00 $19.35
Kingsway has a very good track record and it has been treated very poorly by the market. It seems one year of weak earnings (1999 ) will be forever remembered. Kingsway has stated repeatedly that they will adhere to a strict underwriting policy of being profitable on the insurance side. By far the greater amount of their earnings are generated by investment income. Their portfolio is invested quite conservatively and with a 5% return will produce before tax earnings of $2.80 per share. A 97% combined ratio produces before tax earnings of $1.14 per share. Rising interest rates are favourable for Kingsway since they have a short term bias in their portfolio. Given that their are no hidden surprises good earnings are virtually assured. Markets have a quirky way of changing their orientation all of a sudden. They first offer you a terrific bargain that no body wants to talk about, move strongly upward for no apparent reason, and speak superlatively when the price is no longer a bargain. Algoma Steel was trading at less than $2.00 without a word from anyone. Everyone was speaking about as it soared past $35.00. I will continue to be patient. I think this one is overdue. Any comments?