Property Insurance Stocks Catch a Bid on News of Irma Weakening

I went ahead and bought some more UVE — in spite of saying earlier that I wouldn’t. The situation with Irma is fluid, with some forecasters suggesting she might weaken to a Cat 2, aka Nothing Burger, by landfall. With so much fake news circulating, I felt it was my job to profit from it.

This is reliable insight, via Dr. Masters at Wunderground.

It is uncommon for a major hurricane that suffers such a large hit to its strength and organization to make a quick recovery and re-intensify back to its former strength. I’m not expecting Irma to regain Category 5 status, particularly since part of its circulation is now over Cuba, and the core of the hurricane will come very close to the Cuban coast on Friday night and Saturday. Conditions are otherwise favorable for intensification through Sunday, with light wind shear less than 10 knots and very warm ocean waters near 30°C (86°F.) Irma is likely to be a large and very dangerous Category 3 or 4 hurricane with 115 – 140 mph winds when it makes landfall in the Florida Keys between 1 am and 7 am Sunday morning.

Couple this reversal of fortune for yours truly with the gains enjoyed in PGTI (bought more today, much lower) and the comeback in FIZZ, and I think it’s fair to say “The Fly” is back, cock-strong, better than ever.

Here is UVE’s intra-day chart.

Here is why I am buying both PGTI and UVE.

1. PGTI will benefit not matter what. The scare these storms are producing will enable them to increase sales after the storm. Should it do a lot of damage, they’ll make a King’s ransom.

2. UVE is down ~30% this week, a business that is normal stable and replete with free cash flow. With Irma shifting NNW, it will not make direct landfall in Miami. This doesn’t mean Miami won’t be damaged with winds and flooding. However, it might not be as bad as previously feared.

11am advisory shifts track westward, bringing #IRMA close t Tampa Bay but also weakening it. #IrmaHurricane2017 @FOX13News pic.twitter.com/AgINQDJtMn

— Chris Cato FOX 13 (@chriscato) September 8, 2017

Ultimately, the latter is a high risk trade, totally dependent upon Mother Nature not wreaking maximum havoc.

It isn’t easy being me. I am forced to wear many hats, deal with all sorts of vagrants who ask me for financial advise. But I persevere, for the benefit of mankind. You should be indelibly grateful.

For the week that is ending today, I took a hammer and crushed the skull of Mr. SPY — scooped out his brains — and used the skull to ash my cigar. The Exodus Quant system netted +0.24% on a median basis, compared to the -0.33% for the SPY. This is the 4th week in a row that I’ve hammered it, and I think 13 out of 17 overall.

I will not give away the system picks — because people pay for that. You freeloader types should join the league of gentlemen and cavort with us inside the Pelican Room. Now that I am actively trading, things are heating up again.

I will note that the system shifted towards risk aversion, upping my exposure to both GLD and TLT to 10%, or 20% overall. With my 20% cash position intact, and another 20% in GLD/TLT, I think it’s fair to say, Exodus believes a storm is coming (fuck it, pun intended).

That was an easy one for me. First order of business, I old OAS for a ~30 cent loss. I really don’t have conviction in the oil trade, so it’s gone. My FAZ is getting hammered, because bankers are banking. All of the finnies are running higher into Irma, with Jose upping his power levels to 150mph just behind her.

Does it make sense?

No, especially with the yield curve flat as fuck.

Trust me when I tell you, banks are going lower.

But, in the meantime, there are trades. Like yesterday, I bought AEL — an Iowan life insurance play that was getting mauled because of a hurricane in Florida. That was an easy one.

Now today I have a choice, do I double down in UVE — hoping that Mother Nature spares Florida and saves the insurance industry too?

Or, do I double down in PGTI, hoping for widespread destruction, mayhem, fire in the streets?

As you probably know by now, reading me for years, I chose the latter.

I bought more PGTI — because the world will be a better place with hurricane proof windows. Protect your loved ones — buy better windows. I’d love to be a fucking window salesman in Florida after the storm. I’d make a killing, scaring people to death, handing out safe window pamphlets to kids.

I will leave my UVE intact and hope for the best. Should the storm miss the big cities in Florida, UVE will soar by 20%. If the storm is as bad as people think it’ll be, I expect UVE to go lower.

UPDATE: Since this post was published, the Gods have granted me a small respite, an oasis of fresh water in a vast desert landscape. FIZZ has rebounded a bit, placing my losses a little less than $2. Amen.

Up until last week, I was perfectly happy, jogging on without a care in the world. My investments were automated, using the Exodus quant system I put in place, and I didn’t have to deal with the chicanery of every day investing.

But I had to change that — because a crack head always goes back to the glass, if given enough time and leisure. I said to myself ‘you’re not a crack head Fly. You’re just gonna take one quick pull from that glass and that’ll be it.’

Next thing you know, I’m rooting for hurricanes to both destroy and miss Florida, long faggot water stocks, hoping for people to be parched running away from the storm, and trying to profit from a sudden demand for hurricane resistant windows.

Capitalism at its finest.

Last night, FIZZ reported earnings and beat them, upping guidance in the process. The fucked faces over at Maxim Group were so kind and bold enough to up their price target on the stock to $40 from $33, citing a wanton disregard for fundamental valuation. They’re calling for a 60% drop in the stock and I hate them for it.

FIZZ is down 7 bucks on the news, officially placing me in the red by almost $5.

Here’s me visiting my neighbor this morning, who happens to be short FIZZ.

Me having a chat with $FIZZ short this morning pic.twitter.com/fGCiW5IVMG

— The_Real_Fly (@The_Real_Fly) September 8, 2017

On the insurance front, things are looking bleak. This morning a Bloomberg analyst discussed the risks to the insurance industry in Florida. This is definitely worth your time, especially if you’re like me — LONG INSURANCE STOCKS INTO THE TEETH OF A CAT 5 DEACON OF DEATH.

So, what the fuck is my problem anyway?

I got my UVE and FIZZ barreling down into hell. My oil play, OAS, careening lower, whilst my window (PGTI) play barely higher, FAZ being FAZ, and of course my life insurance stock (AEL) flat to slightly higher. Why do I bother?

I’ll tell you why I bother, you fucking faggots.

Because I am going to be right. Not only that, I am going to keep buying until my face turns blue, my hair walks away from my head — and the sun crashes into the moon — sucking the fucking galaxy into a black hole — burning all living things to a cinder. I will never stop, so don’t try stopping me.

What now Fly?

I am very glad to be having conversations with myself on this fine day. A little Q&A is perfectly normal. I will soon tend to my quantitive positions, which beat the S&P again this week, and perhaps make a move in my discretionary account. By my vantage point, we’ll know the true nature of the damage inflicted upon Florida by Monday, which makes today a very unique day to play the storm.

Having fun yet?

Not yet.

UPDATE: There are reports circulating that China might move to ban Bitcoin exchanges.

The cryptocurrency craze has provided the semiconductor industry with much appreciated demand for high powered chips and graphic cards. However, according to DigiTimes, the recent ban of ICOs in China might hinder sales.

Source: DigitTimes

China authorities have recently issued a ban on initial coin offerings (ICOs) on grounds that it is a form of unapproved fundraising, requesting all the China ICO platforms immediately cease their illegal financing operations and return funds to investors. The move has significantly dampened the fever for mining virtual currencies among people in the country, which, in turn, is expected to affect the shipments of graphic cards to the China market in the fourth quarter of 2017, according to industry sources.

Prior to this, the values of virtual currencies such as Bitcoin, Ethereum and Litecoin, had galloped since April this year amid global investment craze and the sprouting of ICO platforms, with the crytocurrency mining fever drastically pushing up demand for graphic cards through mid-Agust.

This helped to reverse the traditionally flat shipment performance of graphics card suppliers in the second quarter this year. Gigabyte Technology, for instance, saw its graphics card shipment volume hit a new quarterly high of one million units in the April-June period, with revenues surging 4.8% sequentially and 16.2% on year to reach NT$13.96 billion (US$464.7 million) for the quarter. Micro-Star International (MSI) also scored record shipments and profits for graphics cards in the quarter.

Most suppliers of graphic cards witnessed their shipments hit new monthly highs in July before declining gradually in August and September due to China’s crackdown on ICOs. Nevertheless, they are still expected to maintain robust shipment records for the third quarter. Gigabyte Technology, for instance, shipped 550,000 graphics cards in July and 500,000 units in August, with shipments estimated at 450,000 units in September. Accordingly, combined shipments of graphics cards for the first three quarters this year would reach the same level as registered for the entire year in 2016. This is also the case with MSI.

For graphics card suppliers, the largest factor affecting their shipment performance is not the memory supply shortage or rising memory cost, but the difficulty in predicting the movement trend of virtual currencies. As the mining fever has started to ease since mid-August, the high quotes for graphics cards have also gradually declined to normal levels. Accordingly, industry insiders expect graphics card shipments for the fourth quarter to fall to the same quarterly levels as seen in the past years.

The most pronounced weakness in the semis can be seen in AMD (-3%), SWKS (-1.45%) and NVDA (-1%).

Eretheum is down 8% and Bitcoin -5.3%

The stock is down ~15% in pre-market trade, after fucking up and simply giving away HALF of America’s social security numbers or 143 million tax paying citizens.

Criminals exploited a U.S. website application vulnerability to gain access to certain files. Based on the company’s investigation, the unauthorized access occurred from mid-May through July 2017. The company has found no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases. The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers.

In addition, credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were accessed. As part of its investigation of this application vulnerability, Equifax also identified unauthorized access to limited personal information for certain UK and Canadian residents. Equifax will work with UK and Canadian regulators to determine appropriate next steps. The company has found no evidence that personal information of consumers in any other country has been impacted.

Also, might I add, 3 executives at the company made large sales of the stock, outside any pre-planned 10b5-1 program — which has raised some suspicions. In other words, they might’ve known about the data breach, failed to disclose them, and then sold stock to avoid losing money. If true, they deserve asshat awards. Stock prices can come back, jobs and careers do not.

Chief Financial Officer John Gamble banked $946,374 on the sale, U.S. Information Solutions President Joseph Loughran made $584,099 and Consumer Information Solutions President Rodolfo Ploder earned $250,458.

As you can see, prior to this debacle, EFX had been doing quite well.

UPDATE:

Hearing of people having to abandon houses as they're torn apart around them. Truly a nightmare storm. #Irma #Turksandcaicos

— Lynne Watts (@lynnewatts) September 8, 2017

Good news! My friend in #turksandcaicos (who is about a mile away from the shore) says no problem with storm surge at this point. #Irma

— Brad Carl (@FOX23BradCarl) September 8, 2017

I once vacationed in Turks and Caicos for a week. It was the most delightful beach vacation I’ve ever had. I even got to smuggle in some Cuban cigars through it’s makeshift airport.

Now all of that is about to end, as nature descends upon the British commonwealth, laying waste to a once glorious locale for America’s one percenters. Hurricane Irma is entering Grand Turks now a category 5 hurricane, sustaining winds of 165mph.

My heart goes out to the Turks and Caicos ?? as they are taking the eyewall of #Irma with 175 mph winds and up to a 20 foot storm surge! pic.twitter.com/D5UHS38ert

— Jim Cantore (@JimCantore) September 7, 2017

Here’s a live cam from the Ocean Club Resort — a real shitty and grainy feed.

As an aside, this review speaks volumes about the panic taking place in Turks now.

Did @British_Airways help this poor family out? Prayers to them and all ppl in #IrmaHurricane path #turksandcaicos pic.twitter.com/HRjvJ0psja

— Queta (@mevs38) September 7, 2017

The Governor of Turks and Caicos tells residents to ‘stay put and hunker down’. There’s no place to go.

Coke has a large position in MNST and have been mulling over buying the company for half a decade. Trading at 10x sales, no one I know believes MNST is grossly overvalued. Instead, they praise the power of the Monster brand as something that has intrinsic value and will be bought out by KO in due time.

The same must ring true with FIZZ (I AM LONG).

If PEP doesn’t man up and acquire FIZZ, a company crushing it in the grocery aisle selling faggotry sparkling water, they’d be doing their shareholders a grave disservice.

Valuing FIZZ is simple: 10-12x sales, just like MNST.

How, why? Their growth is greater and their ramp is young, unlike the mature energy soda racket.

A Pepsi buyout for FIZZ should range between $200-$250 per share. The longer they wait, the more expensive it will become — leaving them sorry, shaking their heads, stuck selling fucking garbage inside of trashcans dubbed as ‘soda’.

As an aside, people in Florida must be awfully parched now, trying to escape the nuclear hurricane. Perhaps they should stockpile on some apricot sparkling water.

Pepsi has no choice but to buy all of these cans out

Enough is enough. I’ve seen this brand of cowardice before, many times, over my meaningless career as a stock junkie. Each and every time the consensus leans one way, due to a hurricane or some other sort of horrible event, the exact opposite occurs.

Granted, I might’ve been a tad early with my UVE purchase, especially in light of today’s revelation that Irma is armed with nuclear bombs. However, seeing the drop in life insurance stocks, those domiciled in land locked areas in the midwest, is a bit too much for me to bear.

I stepped in and bought ALE — because MUH hurricanes won’t kill people in Iowa.

Other life insurance stocks getting hit include LNC, CIA, FFG, MET.

You should all own a bit of FAZ, in the event the damages to Miami are anywhere near $300 billion. There is palpable damage being applied to the finnies today.

UPDATE:

Unstoppable #IRMA pic.twitter.com/nKdvcZcnBD

— Jim Cantore (@JimCantore) September 7, 2017

Imagine yourself hosting a party and a hurricane filed with nuclear bombs showed up and blew away your little condo, like the big bad wolf did to that little piggy straw house. According to the Miami Beach Mayor, that’s exactly what Hurricane Irma is going to do when it lands in Florida this weekend. He’s warning residents to ‘get out’ because Hurricane Irma is a ‘nuclear hurricane.’

Miami Beach Mayor: 'This is a nuclear hurricane' pic.twitter.com/9NjeE6Dpod

— The_Real_Fly (@The_Real_Fly) September 7, 2017

As an incentive, hotels and condos are shutting down power to force people to leave.

The Governor of Florida, Rick Scott, warned residents that ‘the storm surge can kill you‘, pleading with people to leave.

It’s important to note, Hurricane Irma is sustaining 180mph winds for the longest time in history and is now the size of Texas.

Dr. Masters from Wunderground opines.

Florida: Where and when Irma makes its right-hand turn will largely determine its track with respect to the Florida peninsula. Based on recent ensemble models (in which a large number of parallel runs are carried out to simulate uncertainty in the atmosphere), it is still possible that Irma could take a south-to-north inland track across the Florida peninsula, or a track that stays just east of Florida’s East Coast. However, it appears most likely that Irma will hug the state’s East Coast from south to north, potentially moving inland over some sections. This type of track is far different from those of Hurricane Andrew (1992) and Katrina (2005), which moved from east to west across the Miami metro area. A south-to-north track would affect a much larger part of this elongated metroplex. In an interview published in Capital Weather Gang in August, Bryan Norcross touches on the many issues that a hurricane like Irma could bring to South Florida, which has not experienced a storm this strong in 25 years.

Depending on Irma’s track, hurricane conditions could extend well inland, as well as northward along the length of the peninsula. The entire Florida peninsula is within the five-day cone of uncertainty in the official NHC forecast, and all residents of these areas should pay close attention to the progress of Irma, especially along Florida’s East Coast. NHC may issue Hurricane Watches for parts of South Florida and the Keys on Thursday.

Irma’s intensity will likely undergo fluctuations over the next couple of days, but intensity models show only gradual weakening, and NHC maintains Irma as a Cat 5 storm through Friday. Wind shear is predicted to remain low to moderate along Irma’s path until Saturday, and Irma will be passing over waters that are as warm or slightly warmer than its current environment (see discussion in our Tuesday PM post). Land interaction with Cuba could weaken Irma somewhat, but we must assume that Irma will be at least a Category 4 as it nears South Florida on Sunday, as predicted by NHC.

More from Dr. Hanson

—Irma is likely to be at least a Category 4 when it nears Southeast Florida on Sunday. There is nothing in the atmosphere on the large scale that would be expected to produce significant weakening before at least Saturday. As Irma moves just north of Hispaniola on Thursday, and offshore or just over the north coast of Cuba on Friday into Saturday, the interaction with land may disrupt Irma somewhat, as noted above. On the other hand, water temperatures will remain steady or slightly increase along Irma’s path, which is favorable for maintaining Irma’s strength. Irma may experience moderate wind shear by Sunday (around 15 knots), but it is safest to assume that Irma will maintain at least Category 4 intensity on its final approach to Florida, as reflected in NHC’s 11 am Thursday forecast. More significant weakening is expected from Sunday into Monday, because of increasing wind shear and land interaction. Irma is still predicted to approach the Southeast coast of GA/SC as a Category 3 hurricane.

—Regardless of its strength at final landfall, Irma has the potential to generate a catastrophic storm surge across the Southeast coast from northern Florida to South Carolina. Under almost all track scenarios for Irma, the vast amount of water being pushed northwest by the storm is expected to slam into the Southeast coast and produce a devastating storm surge. Even if Irma’s winds decrease as expected by Monday, this water will already be in motion, packed with tremendous momentum. From our Wednesday PM post on the storm surge potential: “Even areas up to a hundred miles to the north of where the center makes landfall could potentially see record storm surges. The area of most concern is the northern coast of Florida, the coast of Georgia, and the southern coast of South Carolina, due to the concave shape of the coast, which will act to funnel and concentrate the storm surge to ridiculous heights.” See our Wednesday post for more details.

Within the storm surge warning area along the Southeast Florida coast, water levels above ground (inundation) could reach 5 to 10 feet, according to official NHC storm surge guidance as of 11 am EDT Thursday. Storm surge expert Dr. Hal Needham has launched a storm surge website for Miami with details on the city’s surge history and surge potential.?

—Large parts of the Florida peninsula would experience damaging winds on any of the most likely tracks for Irma. Irma’s hurricane-force winds now extend up to 50 miles from its center, and that radius will increase over time. Even after Irma’s top winds weaken, the wind field will gradually expand over time. Tropical-storm-force winds extend up to 160 miles from Irma’s center, which would be enough to straddle the entire Florida peninsula. In 2005, Hurricane Wilma crossed the state at Category 2/3 strength from Cape Romano to Jupiter. Even though Wilma’s center was 60 miles north of Fort Lauderdale, the city’s downtown experienced significant damage, with many glass facades sheared off by high wind. Floridians should be prepared for massive loss of windows and glass facades with Irma, especially if it tracks near or over Florida’s East Coast. It’s worth noting that Broward County—population 1.9 million—has not experienced a direct hit from a major hurricane since 1947. At that point, the county’s population was about 85,000.

Additionally, both Jose and Katia are rapidly developing. Should all three storms make landfall this weekend, it would be the first time 3 storms hit simultaneously dating back to 1851.