Of course ……..
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How long will it take for people to click on that you can buy an asset for less than half it’s value. Very few rushing in for the Christmas sale. Need the Briscoe lady to do a OCA sale pitch. Topped up again 🥴
^^ I guess the question for some of us longer term holders is when do we see a re-rate closer to "value".. sure it's a bargain but maybe it remains a bargain for 10+ years, like SR is hoping for.. It depends if you are in accumulation mode or have enough...(maybe you can never have enough)
It seems like the sentiment suggests you could pop the cash elsewhere for 12 months or more without really missing out..
Yeah there are multiple reasons,
But the main ones;
OCA float growth is way higher.
Much bigger in relation to equity, MUCH bigger.
Unregulated (this is a huge one as insurers are very limited in what they can do with the funds - Berkshire less so but still)
Highly contested, so the float is so valuable the industry on average is happy to lose money in order to get hold of it.
Yes, but as many have pointed out I only want it to remain 'value' for 10 plus years if it is in fact cheap in relation to its intrinsic value, not because intrinsic is also declining. If I have the opportunity to buy $100 notes for $50 then I want that to last for a long time.
The popping the cash somewhere without missing out is a huge gamble...
Thanks.
Feel free to correct me if I'm wrong but one fairly significant disadvantage I see to Oceania's float is that it is relatively capital intensive. For OCA to grow it's float they need to develop property into a retirement village and sell(lend) the units, whilst an insurance company can just write an insurance policy. So as long as OCA wants to grow it's float, they'll need to continue spending cash developing these villages which have relatively low returns compared to say owning an equity portfolio.
Despite that I'm sure OCA's float comes out ahead compared to Berkshire's insurance operations, but still worth considering.