Guru Mason Hawkins (Trades, Portfolio) has over 40 years of experience in the investment industry. Hawkins has similar investment philosophies to Benjamin Graham and Philip Fisher. Hawkins looks for businesses with good management, good people and companies that sell for deep discounts significantly less than their intrinsic value that provide a margin of safety.
Hawkins founded Southeastern Asset Management in 1975 and is the chairman and CEO for the company. Prior to founding Southeastern Asset Management, Hawkins graduated from the University of Florida in 1970 and later went on to attend the University of Georgia where he received his MBA in finance.
Southeastern currently owns 28 stocks with a total value of $11.046 billion.
In the first quarter of 2016, Hawkings significantly reduced his position in Everest Re Group Ltd. (RE, Financial).
Everest Re Group is a global leader in property and casualty reinsurance and insurance, offering innovative products, responsive service and unsurpassed financial strength. The company's business strategy is to sustain its leadership position within targeted reinsurance and insurance markets, provide effective management throughout the property and casualty underwriting cycle and thereby achieve an attractive return for its shareholders. Everest Re had gross written premiums in 2015 of $5.9 billion, with approximately 74% representing reinsurance and 26% representing insurance the majority of the company's business is issuing insurance to their clients across the globe.
Everest Re has a market cap of $8.26 billion, an enterprise value of 6.82 billion, a P/E ratio of 8.71 and a P/B ratio of 1.08.
Everest Re Group is mainly concerned with the following risk factors that are lie within their business taken from the company’s most recent 10K filing:
- "Through our Bermuda and international operations, we conduct business in a variety of foreign (non-U.S.) currencies, principally the Euro, the British pound, the Canadian dollar, and the Singapore dollar. Assets, liabilities, revenues and expenses denominated in foreign currencies are exposed to changes in currency exchange rates. Our reporting currency is the U.S. dollar, and exchange rate fluctuations, especially relative to the U.S. dollar, may materially impact our results and financial position. In 2015, we wrote approximately 27.2% of our coverages in non-U.S. currencies; as of December 31, 2015, we maintained approximately 12.1% of our investment portfolio in investments denominated in non-U.S. currencies. During 2015, 2014 and 2013, the impact on our quarterly pre-tax net income from exchange rate fluctuations ranged from a loss of $13.0 million to a gain of $47.1 million."
- "Our success has been, and will continue to be, dependent on our ability to retain the services of our Chairman, Joseph V. Taranto (age 66) and existing key executive officers and to attract and retain additional qualified personnel in the future. The loss of the services of any key executive officer or the inability to hire and retain other highly qualified personnel in the future could adversely affect our ability to conduct business."
Everest Re Group clearly labels exactly what Warren Buffett (Trades, Portfolio) says when he’s looking to invest in a company. One of Buffett's mental models that he uses on his investment checklist is that a company must have a vigilant leader in place before he will consider investing in the company. It is possible that Mason Hawkins (Trades, Portfolio) has decided to reduce his position in Everest Re due to the uncertainty of the company's management moving forward into the future.
Below is a Peter Lynch for Everest Re Group Ltd.
Despite the company having some warning signs, Hawkins did not sell out his entire position as he currently owns nearly 500,000 shares. The company does have a few good signs moving forward:
- The company is trading below its intrinsic value.
- The company’s earnings power is $372.02 according to GuruFocus compared to the current market price of $194.64, which is a good sign.
- According to GuruFocus, the company’s dividend yield is close to a three-year high at 2.18.
- The company has been in existence since 1973 and they have been able to sustain the variance and obstacles involved within their industry for more than four decades while expanding their operations globally.
Cheers to your investment success.
