I’m quite interested in the insurance sector at the moment and I’m considering buying Liberty Holdings – do you think this is a good trade idea? There is an obvious disclaimer here that we don’t dispense f inancial advice and we believe you should bounce this off a licensed f inancial adviser or your broker but here is our 2c.
Liberty (LBH) came in slightly ahead of earnings consensus forecast and the special dividend was a pleasant surprise. But it should be remembered that this is now being factored into the price as it stands. Personally, we are quite concerned that equity markets are starting to look fairly expensive – specifically in the US and SA – and we wouldn’t be surprised if there is a bit of a pull-back. LBH is obviously geared toward the stockmarket performance, which has enhanced earnings quite significantly.
If it is for a longer-term investment, then an earnings multiple of less than 10 and a dividend yield of nearly 5 look quite attractive. If you are looking at a shorter time frame, I would perhaps wait for the share to go ex dividend and then