Last week, the southeastern United States experienced 267 tornadoes in 3 days in a total of 15 states. The devastation was extreme and sadly claimed 45 lives, in what is considered the worst tornado storm since 1884. The 1884 outbreak, known as the “Enigma Outbreak,” also took place from Mississippi to North Carolina and may have claimed as many as 1,200 lives. The populations in those states are significantly higher today than in 1884, so were it not for modern day meteorology to give advanced warning, the death tolls could have been much worse. The following will give you some idea of the devastation:
One company that should be kept very busy from this event will be Crawford & Company (CRD.B, Financial), which I bought for my clients as a deep value play. Crawford & Company is an independent claims manager for insurance companies and self-insured entities, with a network of more than 700 offices in 67 countries. Major service lines include workers' compensation claims administration and healthcare management services, property and casualty claims management, class action services and risk management information services.
For those new to my “Mycroft Research System” I welcome you to read the following as an introduction to my work. http://www.gurufocus.com/news/128672/analysis-of-the-new-york-times-nyt
One of the great things about using the GuruFocus Premium Service is that I can quickly identify which Gurus bought or sold Crawford & Company by simply punching in a quote. This saves me a lot of legwork and every once im a while, I find that I am first to the game, and that makes me feel even better. GuruFocus also has a great one-page view of Crawford http://www.gurufocus.com/StockBuy.php?symbol=CRD.B&rec=1 that gives me the most important data on any stock I am analyzing. For example, you know you have a real deep value play in hand when you verify your own results by using GuruFocus and find that your stock is selling for half its enterprise value, has a PE of 7.1 and has a return on equity of 54.7% and a price to sales of 0.30.
Here are my Mycroft Research System numbers for Crawford & Company:
As you can see from the table above, Crawford in 2009 had a negative Owner Earnings year, which caused the stock to tank. But you will also notice that this happened only once in the last 53 years under analysis. Every company has one of these events at least once in their corporate history, and such events create tremendous opportunity for the deep value investor. As you can see, the Cumulative Owner Earnings (COE) result (highlighted in yellow above) shows that Crawford generated $21.02 in owner earnings from 1969-2011 and that the stock was selling for less than one quarter of that number when I bought it for my clients ($4.89). Here is a COE chart to demonstrate what a consistent earner the company has been over the last 53 years.
Except for that “once in a 53 year event” that happened in 2009, the company was very solidly managed throughout its history, and there is also a very high probability that Crawford would not only survive, but should get back on track sooner or later. It also doesn’t hurt when you see that Jesse C. Crawford owns 51.8% of class B common. When you are a deep value investor you only need one piece of news to cause your stock to breakout, and we had that news show up due to the tornadoes.
The best time to buy a stock is when investor sentiment is very negative and other investors are nowhere to be found. Sometimes when you buy at “steal it” levels, your wait may be a long one, but for those who are patient, the rewards can be great. My Statistical Indicator Analysis (SIA) allows one to identify such points as can be shown by the chart below:
Once there is a break out due to a catalyst (as with what just happened with Crawford) where the stock not only shot up 12% in the last two days, but because of the additional unexpected claims that Crawford will need to process, their business is almost guaranteed to improve. This will bring in a lot of new buyers to the stock and then, once the price action starts moving up, other investor/traders like technical analysts will start showing up, as their trendlines will be broken to the upside. Once that happens, analyst’s will start upgrading the company, and then even more buyers will come flocking in. Just as Sir John Templeton used to buy at “the point of maximum pessimism,” my system allows the Deep Value Investor to jump in relatively near the bottom and then ride the breakout upward once it arrives.
In closing, here is the final Mycroft Research System analysis of Crawford & Company:
As you can see from the table above, anyone buying it after seeing this analysis would have gotten in at a 44% discount to my “steal it” price. I was definitely able to buy the stock for my clients at the point of maximum pessimism.
One company that should be kept very busy from this event will be Crawford & Company (CRD.B, Financial), which I bought for my clients as a deep value play. Crawford & Company is an independent claims manager for insurance companies and self-insured entities, with a network of more than 700 offices in 67 countries. Major service lines include workers' compensation claims administration and healthcare management services, property and casualty claims management, class action services and risk management information services.
For those new to my “Mycroft Research System” I welcome you to read the following as an introduction to my work. http://www.gurufocus.com/news/128672/analysis-of-the-new-york-times-nyt
One of the great things about using the GuruFocus Premium Service is that I can quickly identify which Gurus bought or sold Crawford & Company by simply punching in a quote. This saves me a lot of legwork and every once im a while, I find that I am first to the game, and that makes me feel even better. GuruFocus also has a great one-page view of Crawford http://www.gurufocus.com/StockBuy.php?symbol=CRD.B&rec=1 that gives me the most important data on any stock I am analyzing. For example, you know you have a real deep value play in hand when you verify your own results by using GuruFocus and find that your stock is selling for half its enterprise value, has a PE of 7.1 and has a return on equity of 54.7% and a price to sales of 0.30.
Here are my Mycroft Research System numbers for Crawford & Company:
As you can see from the table above, Crawford in 2009 had a negative Owner Earnings year, which caused the stock to tank. But you will also notice that this happened only once in the last 53 years under analysis. Every company has one of these events at least once in their corporate history, and such events create tremendous opportunity for the deep value investor. As you can see, the Cumulative Owner Earnings (COE) result (highlighted in yellow above) shows that Crawford generated $21.02 in owner earnings from 1969-2011 and that the stock was selling for less than one quarter of that number when I bought it for my clients ($4.89). Here is a COE chart to demonstrate what a consistent earner the company has been over the last 53 years.
Except for that “once in a 53 year event” that happened in 2009, the company was very solidly managed throughout its history, and there is also a very high probability that Crawford would not only survive, but should get back on track sooner or later. It also doesn’t hurt when you see that Jesse C. Crawford owns 51.8% of class B common. When you are a deep value investor you only need one piece of news to cause your stock to breakout, and we had that news show up due to the tornadoes. The best time to buy a stock is when investor sentiment is very negative and other investors are nowhere to be found. Sometimes when you buy at “steal it” levels, your wait may be a long one, but for those who are patient, the rewards can be great. My Statistical Indicator Analysis (SIA) allows one to identify such points as can be shown by the chart below:
Once there is a break out due to a catalyst (as with what just happened with Crawford) where the stock not only shot up 12% in the last two days, but because of the additional unexpected claims that Crawford will need to process, their business is almost guaranteed to improve. This will bring in a lot of new buyers to the stock and then, once the price action starts moving up, other investor/traders like technical analysts will start showing up, as their trendlines will be broken to the upside. Once that happens, analyst’s will start upgrading the company, and then even more buyers will come flocking in. Just as Sir John Templeton used to buy at “the point of maximum pessimism,” my system allows the Deep Value Investor to jump in relatively near the bottom and then ride the breakout upward once it arrives.
In closing, here is the final Mycroft Research System analysis of Crawford & Company:
As you can see from the table above, anyone buying it after seeing this analysis would have gotten in at a 44% discount to my “steal it” price. I was definitely able to buy the stock for my clients at the point of maximum pessimism.
