Saturday, November 15, 2014

IEHC Q2 Update

Price $ 4.910
Market Cap 11.31 M
P/E TTM 9.0 x
Div yield 0.0 %
P/BV 1.04
ROE11.5 %
ROIC 15.6 %
IEHC reported Q2 earnings that I felt was quite reasonable. The company EPS for the 6 months this fiscal year is $0.35 versus $0.44. Revenues fell slightly (3%) but the bigger reason for the earnings drop is that margins fell from 63% to 61%. But last year earnings petered out in the second half and year-end EPS was $0.63. I expect earnings this year will be at least as good. So this is a long-term growth stock that is trading at 8x forward earnings. Apparently, other shareholders didn't agree with me and sold off the stock after the earnings. The stock dropped 10% on the news and I used this opportunity to double my position.

In other news, I closed my KCLI and ITIC positions. KCLI has run up a bit and it is a cigar butt that probably has one or two inferior puffs left. But I think I can better deploy my capital elsewhere. And I sold ITIC because I felt my original thesis was a mistake. The company had great margins in 2013 due to unusually low claims, and not surprisingly, this is not looking to be the case in 2014.


  1. Since I commented here before, I will just mention that I sold out of ITIC after the half year results. The company consumed cash over the period, which is a strong sell signal for me.My original thesis as also incorrect, but at least it was a loss with some useful lessons attached.

  2. Thanks for letting me know! Looks like we both made the same mistake but losing 10% isn't so bad is it?