Middle Coast Investing on F&G Annuities & Life, Inc.
Thesis
F&G could benefit from higher rates stimulating demand for annuities, while the stated book value is well above the market price. A better-aligned strategic owner could also unlock value, although the manager acknowledges this is a remote possibility at present. The investor added modestly despite disappointing investment returns and intends to wait for improvement.
“Still, we bought some more at the beginning of Q3, and we are going to be patient while seeing if the company can sort this out.”
Key risks
- Alternative assets are returning less than management expected
- Weak reported and preannounced earnings
- Reported book value may overstate realizable economic value
- A strategic transaction may not happen