BHF and JXN might be true bargains, but they are complicated
This is not investment advice. Please read the disclaimer.
Brighthouse Financial Inc. (BHF) initially came to my mind through a quarterly letter. I created this post draft on Aug 5, 2020 and started to look at BHF in Oct 2021.
BHF buys back shares en mass. My interest was mostly triggered by the high share buy backs and (potentially) low valuation metrics. If these metrics are to be trusted, this might be a very profitable investment opportunity. For perspective: current marcet cap is $4bn (0.3x book value, data some days old now).
BHF offers annuities and life insurance. Both products that are sold today for financial liabilities far into the future. Annuities basically provide the buyer with a (guaranteed) income stream for a preset period, often until death. Life insurance mostly provides a payment in the event of the insured’s death, for the benefit of other people. Both products can be attached with a bunch of features, like guarantees, flexibility, etc. or embedded options. … BHF states more than 2 million customers, 2.5m contracts and total assets of $254bn.
Jackson Financial (JXN US) was spun-off from Prudential PLC, and I believe I stumbled over the name on stockspinoffinvesting.com.
Taking comfort from regulations. One way to take comfort in BHF’s and JXN’s financial health is to trust regulation and regulators’ vote to allow them to use funds for share buybacks and pay out dividends to shareholders.
BHF’s CEO holds 178k shares (.22%, worth about $8m) as of beginning of 2021 after adding 41k shares. One might take further comfort in this fact, especially when the company continues to buyback shares. But, I do not know how he got hold of his shares (usual private buys, or remuneration package). The picture at JXN might look similar.
JXN got a buy rating from GS yesterday, and the stock rallied 14%. It is surprising how such ratings do still influence stock prices. For spin offs a growing number of analysts covering a stock can indeed be an effective catalyst!
For the time being, I will not dig deeper here.