Ali Meshkati (Analista) sobre WMIH
A similar transaction (WMIH current market cap is approximately $600 million, with the
expectation that they will acquire a company, at least, twice the value of their current market cap) for WMIH is the minimum expectation. The Faneuil acquisition was constructed by a management team, board of directors and investment banking help that pales in comparison to what WMIH has assembled. With KKR, Blackstone and a veritable who's who of financial restructuring experts, WMIH is likely aiming for a leveraged transaction that will be 3-4X its
current market cap. That is $1.5 to $2.5 billion. If you assume a 20% profit margin, then you are looking at a company that can generate net income of $300 million per year. On a non-diluted basis that would mean that the current market cap is valuing an operating entity under the WMIH umbrella at a paltry 2x earnings.
Even assuming that the combination of BS/KKR/BOD are only able to make an acquisition that is 2x current market cap, a 20% margin would put current valuation of WMIH at 2.5x earnings. Average multiple on insurance companies ranges
from 12-15x earnings, with the potential for expansion as the bull market continues. A 12x multiple would put WMIH market cap at 2.4 billion on a $1 billion acquisition and 3.6 billion on a $1.5 billion acquisition. And that is just to start. Assuming a max dilution scenario where the outstanding share count blows up to 300 million shares that would put the share price at $8 for a $1 billion acquisition and $12 for a $1.5 billion acquisition. Again, this is to start, without growth, multiple expansion and the numerous favorable winds that are at the back of insurance companies, in general.
This entire scenario assumes that WMIH is going to morph into a P&C insurer (I've highlighted
the reasons this will be the target industry for M&A in the past)