SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?


To: Brendan W who wrote (1693)7/20/1999 1:06:00 AM
From: Michael Burry  Read Replies (1) | Respond to of 4656
 
If there's one thing I learned from Buffett, it's that not every investment winner is as universally loved as Coke. Kirby vacuum cleaner salesman are dirtbags. Door-to-door encyclopedia salesman are an intrusion. And a nice little monopolistic newspaper can be a hated institution.

I was turned off by the marketing strategy cuz it smelled bad. But I can't fault the financials too much. 93% of premiums are collected monthly and booked as they are collected. Meanwhile, they pay out a large percentage of any commission on the front end. So acquisition cash flow is negative, and continuing cash flow is positive. As it should be. Pyramid schemes and MMM campaigns don't have this quality. The loss ratio is just 33%. Compare that to HMOs struggling to pay the bills with 90% loss ratios.

Prepaid isn't perfect. I just saw an analogy to the jet timesharing in that it is a new industry. Earning great returns, and priced cheaply. With insiders mostly buying I took the plunge. Wish I'd bought earlier this month. Management holds big chunks, and is motivated. Yeah, there's going to be an internet angle too.

Mike