European Reliance General Insurance reported their first half results for 2017 last week and the numbers ended up being pretty good. Overall, they increased assets from 387 million euros when they reported their full year 2016 results to 401 million euros for the first half of 2017. Book value increased from 95 million euros to 100 million euros. Most of this increase came from financial assets that are available for sale. Moving on to the income statement gross written premiums increased year over year from 81 million euros to 89 million euros. Net income increased from 3.9 million euros to 4.5 million euros bring per share profit from .1443 to .1666 a 15% increase. The P/E ratio for the company is still low at 6.31.
In general, I’m increasingly starting to like Greek stocks as the days go on, with the US market at all-time highs Greece still remains the cheapest market in the world that I have looked through at least. Investing in Greece for me feels like what it would have been for Ben Graham investing during the Great Depression. Unemployment has been falling in Greece and it now stands at 19%, the government also expects a surplus as well as 1.7% GDP growth. While I still think Greece has a long way to go they are clearly on the right path and I hope to reap the benefit of buying great companies located there for crazy cheap prices.
Besides low P/E companies Greece also has a lot of asset plays that I hope to write about as soon as I can. One of which is Public Power Corporation of Greece. Right now, it trades at .1x book value. They also have 90% of the Greek market and based on IMF reform they are required to sell off pieces of their business until they have less then 50% market shares. It also trades at a wild .1x price to sales. It’s very hard for me to believe that their book value is worth less than 10% as stated on their balance sheet, but considering the new regulations imposed by the IMF as well as the fact that it is run by the Greek government I still have a lot of research to do on the company to make sure as much value that I think is there is really there.
Another company that I own Emerson Radio reported that the owner of 50% of their shares, Grande Holdings which has a rather checked history, has sold 60% of itself and that there will be new management. Wealth Warrior Global being the acquirer of shares. They also recently purchased 3 million at a total of $2 million in September from a fund called BLP. This goes along with their share repurchase program, and such this was a good sign in my view. Reading their 10Q’s since the repurchase program was announced you’ll notice that they passive with their purchases, the stock isn’t the most liquid but only purchasing a total of 25k shares in 5 months seemed a little ridiculous to me. After purchasing the shares, they then announced that the program would purchase $10 million worth of shares instead of the original $5 million. This is a position that I will be selling out of soon because I want to deploy the capital elsewhere perhaps in Greece or Singapore where I have also seen bargains.
Lastly Truett Hurst reports 4th quarter and full year results tomorrow in the morning so I will be keeping my eye on that, they have an activist on the board now as well as another firm with a 30% stake in the company that said that they would partake in a more active role in the company. Considering the company purchased shares years ago at a price about 50% higher than the current price and getting out a 30% position when the company has an otherwise illiquid stock seems to be something the firm doesn’t have in mind.
Finally, I’d like to add: after reading Ray Dalio’s book Principles after reading the book I’ve started digging more and more into his work and I got that same feeling reading Bridgewater material as I did when I first read about value investing. The ideas that Dalio has in regard to macroeconomics are clear and make complete sense to me and as a result over the last 2 weeks I’ve put in a bunch of time trying to learn Bridgewater’s theories, the long-term debt cycle being my favorite. Even though I consider myself a value investor I plan on writing more about macroeconomics. I think this adds another tool to an investors toolbox, sometimes because value investors shun the macro picture they make unforced errors with investments that if they were reading the macro data of an industry or country etc. they may have not invested in whatever security they invested in in the first place. One of these examples that I’m currently writing right now is Buffett’s mistake in investing in Ireland banks in 2008, this is a case study that I have yet to see anyone really write about which I find interesting because this is one a few mistakes that Buffett has made that make really no sense. But then again, I’m saying this in hindsight.