$KNSL short pitch:
– Excess and surplus (E&S) insurer trading at a remarkable 12x book value and 40x earnings.
– E&S insurance cycle is topping out and will likely start turning down next year, leading to a fantastic short opportunity in this highly inflated stock.
– Kinsale has rapidly taken share as standard insurer carriers did not want to participate in E&S area in the aftermath of the financial crisis and during COVID.
– Six-year old hard market is now about to turn – competition and E&S supply is quickly ramping up after years of outsized gains.
– Trades at 12x BV multiple – roughly six time higher than historical average for P&C business.
– At 3x BV and 16x 2024 earnings, KNSL is worth $100/share.
Exp. gain: 67% to $100/share.
Full write-up (free guest account required):