MSMqi Spotlight #2 - May

Insurance company trading below tangible book with plenty of growth opportunities

Now that the index has two years under its belt, we are enjoying going through the 89 stocks in the Index to find multibgger potential “Spotlight” stocks to feature. These could be promising stocks that have yet to increase, stocks that have pulled back for the wrong reasons or even stocks that have risen, where their businesses have even strengthened.. 

We also realize this practice is beneficial to subscribers who use MS Cliff Notes Substack to sift through the index looking for ideas to connect with but may have time constraints. 

We issued our first Spotlight on April 3, 2024. While this nutraceutical stock is already up 7.6% since we chose it as a Spotlight and 70% since its addition to the index, we think it has much further to go, as we should soon start to see operating leverage kick in. You can review that note here.

On to Spotlight #2. We normally do not love insurance companies, but the valuation, management commentary, and market expansion potential are worth exploring. With that in mind, as you will see, we have some short-term uncertainty moving into their Q1 first quarter report due to a recent asset sale. However, we think that, in the long term, the story is pretty interesting. 

Here's what we have so far. Even though the stock is up 170% since being added to the index, the value proposition is still intriguing: 

• Profitable

• 13% below tangible book

• Similar players have been acquired for over 3x the tangible book

• Large cash infusion from asset sale will increase the number of policies that can be written

• Under-penetrated market presence