Author Topic: FMMH Legislation  (Read 7416 times)

Bronco

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FMMH Legislation
« on: April 14, 2010, 08:52:11 AM »
2 points -

1) What is everyone's opinion on this pending legislation (basically making it more difficult for BH to take over FMMH)?  Personally, I am morally outraged.

2) What are people's thoughts on FMMH as a trade?  Biglari seems intent on still buying it.  To be honest, I am not sure why, it is reasonably priced but not overly cheap.  Based, based on Biglari's intent, it seems that the reward outweighs the risk (IMO).

Just trying to generate some conversation...

Also, I wonder what Harry Long thinks about the above.  Any commentary from him lately?


Ballinvarosig Investors

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Re: FMMH Legislation
« Reply #1 on: April 15, 2010, 07:00:03 AM »
2 points -

1) What is everyone's opinion on this pending legislation (basically making it more difficult for BH to take over FMMH)?  Personally, I am morally outraged.

2) What are people's thoughts on FMMH as a trade?  Biglari seems intent on still buying it.  To be honest, I am not sure why, it is reasonably priced but not overly cheap.  Based, based on Biglari's intent, it seems that the reward outweighs the risk (IMO).

Just trying to generate some conversation...

Also, I wonder what Harry Long thinks about the above.  Any commentary from him lately?
For my at least, FMMH is a win-win situation.

Current share price: $22.40
Book value per share: $26.30
Biglari buy-out offer: $24.50

The best case scenario is that the proposed legislation will fail which will allow Biglari to acquire the company. Since book value has increased a couple of dollars since the SNS offer and the fact that the offer was overwhelmingly rejected, Biglari will have to up his offer a couple of dollars if he truly wants FMMH (I seriously doubt he's going to the effort that he's going to now with the intention of holding out a few bucks).

Worse case scenario is that the legislation is enacted and Biglari is prevented from buying out the company. However, in this case we're still left with a very solid insurance company that is still extraordinarily cheap considering its history of solid underwriting performance with excellent growth prospects that are being completely ignored in the stock price (stock is already trading at a PE of about 9). I'm bullish enough to have recently topped up a little at the $22 mark, even though I already had a position for awhile now.

Chanticleer go into FMMH in much more detail here http://www.chanticleeradvisors.com/files/757505/A%20Find%20in%20Fremont%20-%20An%20Update.pdf

kh812000

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Re: FMMH Legislation
« Reply #2 on: April 18, 2010, 03:00:19 PM »
Its quite disappointing that there is still political corruption in the US government.  The primary reason for the legislation was "to prevent jobs from leaving Michigan".  however this bill if it were to pass would be potentially even more damaging to the very jobs in Michigan that it seeks to protect.  How ironic.

I dont necessarily see what Biglari sees in FMMH but it certainly appears that BH will remain steadfast in acquiring the company...
 

Zorrofan

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Re: FMMH Legislation
« Reply #3 on: April 18, 2010, 04:11:22 PM »
Wouldn't a law preventing the takeover of a company, or in this case a specific company, violate SEC Regulations? I guess I am asking, in a rather shocked voice, is this really legal??

cheers
Zorro

kh812000

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