Navigators: Sailing to a Split

12/22/2016 8:00 am EST


Neil Macneale III

Editor, 2 for 1 Stock Split

Neil Macneale, editor of 2-for-1, builds a model portfolio by adding one stock each month — chosen exclusively from companies that have announced upcoming stock splits.

Last month was another slow one for splits; ServisFirst Bancshares (SFBS) — a small bank holding company based in Alabama — was the only 2-for-1 split announcement since late October.

Then, early in December, Navigators Group (NAVG) came along and saved the day.

This is a nifty little insurance company operating out of Stamford Connecticut and specializing in marine coverage worldwide.

High scoring metrics include a low measure of volatility, growing returns on investments, steady growth in revenue, and reasonable price-to-earnings and price-to-book ratios.

When these numbers, and others, are compared to those of its peers, most do not appear exceptional. But taken together, they paint a picture of a very well run, steadily growing business.

There are a few negative factors to consider regarding this recommendation. This is a fairly young company in the insurance world and it got into trouble a few years ago.

The company was fined $275,000 for providing insurance to foreign flagged vessels under sanction by the Treasury’s Office of Foreign Assets Control, including those of North Korea.

The company has improved its compliance controls, has moved on, and this blot on its reputation does not appear to have been permanent.

While NAVG has a reasonable market cap of $1.7 billion, its stock is relatively thinly traded at about 50,000 shares a day. A limit order and patience are recommended when purchasing this stock.

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