Sunday, January 31, 2010

Bought FNF

If you are a first timer, please read the following pieces first. It will provide you with important background information.
1. Why I created this blog?
2. How am I going to operate this blog?

I bought 500 shares of FNF at $12.99 on January 28, 2009. Since I moved my account from Scottrade to Wellstrade, I get 100 commission free trades annually.

I had a little history with FNF. I first bought 400 shares at $15.85 on December 12, 2007. And I sold all my FNF at $18.32 on February 5, 2009. During the holding period, I received $420 dividend. I paid about $14 for the two transactions. All in all, that is 21.96% annual return in 2008. Not too shabby. At the time of selling, I wrote to myself:

"FNF is the largest title insurance company. It acquired the third largest player Land America, which landed in the bankruptcy court in the 2008 financial storm, on the cheap cementing its top spot in this industry. Its management focuses on returning value to shareholder. You can see this through its series buying and selling businesses. It pays a healthy dividend. It maintains the highest margin in the industry through tight cost control. It is a great bargain if I can buy it at a big discount of its book value (about $12.72 per share). It was sold at $18 per share at a reasonable gain."

Fast forward to Sep 2009, its book value grew to $14.09. The company has not reported its 4th quarter results yet. But I will not be surprised if their book value is around $15 at the 4th quarter 2009. I am buying at about 15% discount at its book value. To finance its purchase Land America, FNF sold shares at $19. So how much does FNF worth now? I believe its intrinsic value is somewhere higher than its book value, maybe around $19.

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