Author Topic: ELF.TO - E-L Financial Corp. Ltd.  (Read 54972 times)

SafetyinNumbers

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #80 on: March 07, 2018, 06:39:05 AM »
ELF reported a tremendous quarter yesterday afternoon.

NAV discount is close to 38% vs the historical closer to 33% (admittedly my discount calculation is based on quarterly numbers since 2009 and annual before that so not that scientific).

Decent upside if it just gets back to its historical discount. There is a real argument with the ROE being above 10% at Empire Life, that the discount should close significantly. The investment income alone is getting to be pretty big at ELF exclusive of Empire Life earnings.

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-december-31-2017-financial-results-676023213.html
Top 5 positions: ELF GCM.NT/GCM.WT.B TII.V PIF AZP.PR.A


wisowis

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #81 on: May 16, 2018, 06:35:05 PM »
They reported last week and net equity value was basically flat quarter over quarter ($1324 per share), shares trading at a ~39% discount.

Don't see any discussion on the quality of their equity portfolio - these are their large US equity holdings, correct? https://whalewisdom.com/filer/empire-life-investments-inc#tabholdings_tab_link

SafetyinNumbers

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #82 on: May 17, 2018, 03:07:46 AM »
They reported last week and net equity value was basically flat quarter over quarter ($1324 per share), shares trading at a ~39% discount.

Don't see any discussion on the quality of their equity portfolio - these are their large US equity holdings, correct? https://whalewisdom.com/filer/empire-life-investments-inc#tabholdings_tab_link

Not necessarily as Empire Life is a subsidiary of E-L and they manage assets on behalf of clients as well. My understanding is looking at the portfolios of UNC and EVT might give a better indication of what they own at the hold co level.
Top 5 positions: ELF GCM.NT/GCM.WT.B TII.V PIF AZP.PR.A

SafetyinNumbers

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Top 5 positions: ELF GCM.NT/GCM.WT.B TII.V PIF AZP.PR.A

StubbleJumper

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #84 on: June 25, 2018, 06:47:58 AM »
New article on Seeking Alpha

https://seekingalpha.com/article/4183685-e-l-financial-38-percent-discount-growing-book-value-potential-catalyst?app=1



Not much new in the article.  In essence, you buy ELF with the notion that it'll grow BV by 7 or 8 percent, and then you hope that the valuation gap will narrow considerably to give you a very profitable exit opportunity.  If that valuation gap narrows quickly enough, life is grand!

I'm a little surprised that the Jackman family hasn't just taken this thing private.  Borrow some money, buy back the outstanding shares and be done with the minority holders.  Same with Economic and United -- offer a 15% or 20% premium, buy out the minority holders, collapse the funds and redeploy the capital.  Maybe they'll eventually do it.


SJ

bizaro86

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #85 on: June 25, 2018, 09:24:09 AM »
E-L isn't a very complicated opportunity, but seems like a pretty likely case of high single digits return plus upside optionality. Lots of market exposure though, so that's a risk.

I agree that since they definitely don't need capital,  there isn't any reason for this to be public.

Spos

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #86 on: June 25, 2018, 11:36:57 AM »
But what is the incentive for the Jackman family to privatize?  They are in this for the long haul and they can continue to buy shares at a big discount (and ELF can continue to buy discounted EVT and UNC shares).

Maybe if the sell Empire Life, but this reminds me of Loews, where the Tisch family's ownership of L has been increasing forever through L's buybacks.

StubbleJumper

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #87 on: June 25, 2018, 05:11:38 PM »
But what is the incentive for the Jackman family to privatize?  They are in this for the long haul and they can continue to buy shares at a big discount (and ELF can continue to buy discounted EVT and UNC shares).

Maybe if the sell Empire Life, but this reminds me of Loews, where the Tisch family's ownership of L has been increasing forever through L's buybacks.



Well, I would say that you are probably right.  There must not be much incentive to take ELF, Economic or United private because the Jackman family could have done it on any number of occasions, but has not chosen to do so. 

I guess my mental model would be that the Jackmans borrow ~$1B to buy the ~1m shares of ELF that they currently do not own.  ELF then borrows ~$750m to buy the 6m shares of United that it currently doesn't own.  ELF then collapses United to get full access to the company's $1.7b of assets, which it uses to repay the ~$750m loan.  Of the remaining ~$1B of assets, about $500m could then be dividended to the Jackmans to reduce the $1B that they borrowed to buy ELF (the other $500m remains in ELF to keep capital levels at a stable level).  A similar exercise could then be done with Economic, which would probable allow ELF to access another ~$100m of capital to dividend to the Jackmans, resulting in the ~$1B loan being reduced to ~$400m.  That last ~$400m could probably be repaid through an ELF dividend of excess capital.

Bing, bang, boom.  Full ownership of ELF.  No more minority holders, and much of the buyout is financed by the considerable price discount of United and Economic, while the buyout of ELF is probably done at a market premium that is still a discount to book.

But, as you said, the Jackmans seem to be very patient.


SJ

bizaro86

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #88 on: June 25, 2018, 08:00:20 PM »
From their perspective, if you know you can do something at any time, there maybe isn't a huge incentive to do it now, especially if you aren't planning on spending the money anyway. If you're just going to invest it, why not do so inside ELF as your pseudo-family-office.

rb

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Re: ELF.TO - E-L Financial Corp. Ltd.
« Reply #89 on: June 25, 2018, 10:24:29 PM »
Here's the thing that seems to be missing which may prevent the whole go private.

If they want to go private they'll have to do a tender. Why would the other shareholders tender their shares out for cheap? It makes no sense. The only way for the shareholders to do that is if they are so desperate and beaten down that they gave up any hope. My guess is if the go private doen't happen is because they don't consider that the shareholders are depressed enough so the beatings shall continue.