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Time to sell?

Dear friend,

Remember last week I was talking about my previous job editing investment newsletters?

It’s amazing how useful keeping in touch with different people can be helpful when you’ve moved on. You can help them out and they can do you a favour in return.

So I suppose when I left to come here, my old workplace lost a good editor, but gained a reinsurance guru!

Anyway, here’s what I found in my inbox this morning — an email from a former colleague

Yo, Mr G

How's it hanging?

[that was nice of him to ask – but he soon gets to the real point]

What's your view on all this merger talk in the insurance sector? Could Amlin be part of this consolidation?

PS. I won't quote you!

The wider investment community is having one of its periodic love-ins with Lloyd’s vehicle stocks.

Next week it will be gold, and the week after that it will be oil, soft commodities or emerging markets, but for better or worse, all the action is in our camp right now.

This is what I wrote back (excuse the shoddy grammar):

“It's all kicking off - another one was taken out by private equity this morning

- but I think this could be a sell signal

I reckon most people are buying each other because prices and margins are starting to come under pressure

- why not consider taking profits, dear boy? You can always buy again after the next big hurricane, quake or 9/11 (of course, once you’ve made sure they're not going bust)

Profits are looking really healthy this year - all the third quarter numbers from Bermuda have been great — you'll have no shortage of takers to sell to

- Also Amlin is a probable acquirer — before the Catlin-Wellington deal, they were the biggest in Lloyd’s and got a premium rating from the stockmarket because of that. Amlin might feel under pressure now to buy something just for the sake of staying top - never a good idea.

Please, please stop here and remember that this is a personal email to a friend of mine — it is not intended to be investment advice to you. And anyway, I’m usually wrong!

For the sake of good order, I also declare I don’t hold a position either long or short of Amlin stock.

Now what do you think?

You might be lucky enough to be sitting on stock and options — are you hanging on for more or are you thinking about cashing in?

Let me know (I promise not to quote you unless you identify yourself)

Comments (2)


What stock should I buy??


A serious question here.


Deal or No Deal?

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