Hello Together

[minarm]

I started in 2020 with the options of Jens Rabe (German Options Guru) unfortunately I have in 2020 a loss of 5,000 USD Erwirtschaftet.

I would now like to focus my strategy on long-term investing. In old age once from my dividends life. 
I am now 26, unfortunately I have not started earlier to invest

I bought my first dividend stock and that is: UNM



According to Fastgraph, the company is undervalued....


What did I do wrong?

[ken-do-nim]

Definitely undervalued with a P/E ratio of 6.46, but I'm looking at Unum's graph and it shows a clear downhill slope from its high in Jan 2018 until it cratered in March 2020. Then it picked back up to 30, where you bought it, and now continued on the descent it's been on for 3 years. Casually browsing the yahoo conversations no one seems to know why it is performing so poorly.

[minarm]

(08-04-2021, 04:05 PM)ken-do-nim Wrote: Definitely undervalued with a P/E ratio of 6.46, but I'm looking at Unum's graph and it shows a clear downhill slope from its high in Jan 2018 until it cratered in March 2020.  Then it picked back up to 30, where you bought it, and now continued on the descent it's been on for 3 years.  Casually browsing the yahoo conversations no one seems to know why it is performing so poorly.

Thanks for your assessment.

What should I do with the position?

[ken-do-nim]

I'm sorry your thread hasn't generated any discussion.

I always tell friends new to investing their first equity should be VOO. It is an S&P 500 index fund (SPY is another, with slightly higher fees). I would recommend you move out of UNM into that, and build that up to about $10k while you research what else you'd like to invest in.

[crimsonghost747]

You haven't necessarily done anything wrong. I do not personally know UNM, I've never even heard of it, so I can't comment on it specifically. But it's common to see the stock price drop temporarily. If the company is a good one and keeps growing, getting more profitable, increasing dividends etc. then the share price will also go higher in the long-term.

In the short term there are so many things that make a difference, in the long-term the quality of the company is what matters.

[fenders53]

In my opinion Fastgraphs is the premiere tool to determine valuation so you are off to a good start. FAR better than just glancing at the PE on a financial site. UNM has grown the dividend for 10 consecutive years. Earnings growth is more choppy as insurance companies sometimes are with interest rate changes. It's extremely common for sound companies to drop right after you purchase them. UNM share price dropped significantly in 2019. Can you tell us why? That is the sort of thing I would investigate before I purchased shares in a company. I also like to read brokerage reports and check youtube for discussions on a stock I am interested in. Company financial reports as well but the narrative is not unbiased.

[NilesMike]

I own UNM for the dividend, bought it in the low 20s.

Looked at my long term chart and have a heavy line at 24, UNM sure hits 24 a lot.

Next time it runs to 30s I'll sell CC and wait for drop.

I like FASTgraphs but never enough to subscribe LOL. My stock picking drill down is pretty simple. Long term div increases, stock at high end of it's yield range, low payout ratio, near support on the chart, then look if there's any significant bad news.

[ken-do-nim]

(08-24-2021, 06:44 AM)NilesMike Wrote: I own UNM for the dividend, bought it in the low 20s.

Looked at my long term chart and have a heavy line at 24, UNM sure hits 24 a lot.

Next time it runs to 30s I'll sell CC and wait for drop.

I like FASTgraphs but never enough to subscribe LOL. My stock picking drill down is pretty simple. Long term div increases, stock at high end of it's yield range, low payout ratio, near support on the chart, then look if there's any significant bad news.

I also read Yahoo Finance Conversations.  Sometimes there's a useful poster there (and sometimes it is our very own stockguru, unless the ID being the same is a coincidence).

Here's one from the UNM board:

JK19 days ago

After listening to the conference call I was left with the impression UNM management is ok with a PE and PCF of 5-6X which gives you the price we have today. Multiple comments that things were "in-line with expectations" and then comments some areas improved more than expected but are not expected to continue. Leaves the impression management has fairly low expectations and the good news is fading. Who drives for aspirational goals? Where is the focus on pushing sales and improving margins? If that is not coming from the team on the call then it does not exist in the company.

The improvement in the full year outlook was described as a “lesser decline” vs. the previous outlook. Why not say "our current full year outlook exceeds our prior outlook by x%". The point was supposed to be positive.

The capital position had multiple improvements vs. Q1. The initial discussion was they would invest in organic growth but few specifics. Then the focus switched to using the excess capital to fund the LTC liabilities which is not growth oriented. In response to a somewhat astonished sounding analyst question, they also stated the pre-funding would be voluntary vs. driven by regulators. If the capital position is better than their original plan, and accelerating the funding for the LTC liabilities it is not required, why is that better than investing in growth and/or share repurchases? Improving the share price gives them more market value for acquisitions and also maintains a higher total capitalization level to stay in the index.

Many companies maintain a share repurchase authorization that they do not necessarily use frequently. Management response to the analyst question of share repurchases was a total change in tone from Q1 which seemed to catch the analysts by surprise. Unfortunately, I think UNM stock will be stuck at a grossly disadvantaged valuation based on the messaging from today’s call. I am very long so the only comfort is the healthy dividend yield.

Also vs. other companies the # of attendees seems higher which does not help in the focus and consistency of the messaging. The best managed call I listened to so far this quarter was the ViacomCBS call.


and a useful reply:


Vince, CPA19 days ago

Some interesting comment here.

I agree that the call was hogwash. I did not listen to the call, so I may be off base given I did not hear the tone, inflection, and nuances, but I read the transcript in detail. I felt like many of the Q&A responses to analysts including rambling, talking around the questions, and did not provide clear, concise, and honest answers. I prefer more straight forward communication. The analysts had to keep asking the same questions (restated slightly differently) because the UNM executives were not clearly answering them.

UNM is my largest holding and I am also a UNUM group insurance sponsor (LTD and life), but the execs really hurt my confidence in them and the company on this call. I may look to trim my holdings when/if we get back in the $30 range.

[fenders53]

(08-24-2021, 06:44 AM)NilesMike Wrote: I own UNM for the dividend, bought it in the low 20s.

Looked at my long term chart and have a heavy line at 24, UNM sure hits 24 a lot.

Next time it runs to 30s I'll sell CC and wait for drop.

I like FASTgraphs but never enough to subscribe LOL. My stock picking drill down is pretty simple. Long term div increases, stock at high end of it's yield range, low payout ratio, near support on the chart, then look if there's any significant bad news.

I don't subscribe either.  Chuck has become very active on youtube and his channel is taking off.  He probably analyzes 20 stocks a month and has hit a lot of my companies lately.  Probably half my port the past year.  I don't run out and buy everything he says is overvalued, but he is about as good as it gets at value analysis.  He puts a lot of stocks on or off my watch list

And nothing wrong with your selection method of course.

[kblake]

UNM stopped buying back its stocks once the pandemic hit. This company should start seeing growth again once we get back to the norm. I think you have a nice stock here and will do well with patience. 4% yield and PE of 6 is a nice value at these levels. Maybe buy some in that $24.25 level if it gets there here and get your average price to around $$27-28

[mid range]

You might consider buying UNMA on a dip and holding a year. It is a UNM note currently at $27.02. You would have excellent downside protection. It is callable at $25 on 6/15/2023. As long as the common pays such a large dividend there is a possibility it won't be called in 2023. The risk with UNM common is that they, like anyone else, could lower their dividend.

UNM is at $26.54 with an annualized dividend of $1.20. UNMA is at $27.01 with an annualized dividend of $1.56.

[fenders53]

(08-24-2021, 02:44 PM)mid range Wrote: You might consider buying UNMA on a dip and holding a year. It is a UNM note currently at $27.02. You would have excellent downside protection. It is callable at $25 on 6/15/2023. As long as the common pays such a large dividend there is a possibility it won't be called in 2023. The risk with UNM common is that they, like anyone else, could lower their dividend.

UNM is at $26.54 with an annualized dividend of $1.20. UNMA is at $27.01 with an annualized dividend of $1.56.

$2 loss on share price in under 2 years?