AmTrust Financial Services

By Jim Pearce • February 7, 2017 • Stock Updates

There wasn’t much activity in AFSI last month. Other than issuing a press release two weeks ago announcing the date it will release its fourth quarter earnings report (February 27), there was no news of any sort issued by or about AmTrust to push its stock one way or the other. That may not be such a bad thing, since being in the news these days could mean that our new President has singled out your company or industry for public harassment as I wrote about last week in my weekly Mind Over Markets column.

There is one recent tidbit of good news from a technical perspective; on February 3 AFSI crossed above its 50DMA after falling below it two weeks earlier. During the past week it has achieved higher lows and higher highs, but it is too early to tell if this represents a meaningful reversal. I originally put a three-month target hold period on this pick, which expires on March 15. Depending on how the stock market reacts to AmTrust’s quarterly report later this month I may extend the holding period, but will wait until then to make that determination.

Although AFSI is not widely followed, the six Wall Street analysts that do track the stock have a one-year target of $36.50, implying a 35% increase in value from yesterday’s closing price. Four of them have it rated as a ‘strong buy’, while the other two have it as a ‘buy’. It is unlikely that the six people who know the company the best are all that far off the mark, in which case we may see strong price movement after the company reports earnings on February 27.

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Jim Pearce

02/27/17 ‐ 9:58am ET February 27, 2017 at 9:58am ET

AFSI released quarterly results this morning (http://finance.yahoo.com/news/amtrust-financial-services-inc-reports-113000171.html). The company achieved record revenue in the fourth quarter, but also took a large write-off that pushed adjusted earnings considerably below expectations so the stock is trading lower. That moves us from the black into the red on this holding, which still has a couple more weeks left in its target holding period so at this point it looks like this one will end up around break even once today’s selling abates.

Rick

02/27/17 ‐ 10:34am ET February 27, 2017 at 10:34am ET

Jim,

They apparently also disclosed some internal control issues relating to accounting and are asking for an extension to file their 10K. Never a good sign, but they say they expect immaterial adjustments to prior years.

Larry Johnson

03/01/17 ‐ 3:57pm ET March 1, 2017 at 3:57pm ET

Today, I saw in the news where several law firms are preparing to file class action law suits against them for their “internal control issues”.

Dramatic License

02/27/17 ‐ 10:36am ET February 27, 2017 at 10:36am ET

I’ll be happy to get back to break even after today.

Rick W.

02/27/17 ‐ 2:32pm ET February 27, 2017 at 2:32pm ET

Today marks the last day of my initial trial period and is the last day for a full refund. I was “hoping” not to be in this situation but I’m at a net loss in my trades after taking the trades that were available to me. I missed out on CSCO and CAH which would have improved things a bit making the numbers look better. I took all the other trades.
Unless someone has a compelling reason to continue on or they extend the trial period and give it more time to prove itself, I can’t justify the expense of this service.
This is really disappointing. Any thought out there?

Rick

02/27/17 ‐ 2:52pm ET February 27, 2017 at 2:52pm ET

Sorry it has not worked out for you. Obviously, CSCO and CAH would have a made a huge impact. I am very satisfied with Jim’s approach and recommendations. This service is value-oriented and it takes some patience as value does not immediately show itself.

Only you can decide how to spend your money, but I just wanted you to know that there are people here very satisfied.

Rick W.

02/27/17 ‐ 3:02pm ET February 27, 2017 at 3:02pm ET

Thanks Rick. How long have you been in the SW service?

Rick

02/27/17 ‐ 4:19pm ET February 27, 2017 at 4:19pm ET

About six months – I used another service not affiliated with these guys for a couple of years and it was all about momentum. It was ugly for me.

I came here because of the value orientation and the systematic approach.

Dramatic License

02/27/17 ‐ 4:58pm ET February 27, 2017 at 4:58pm ET

I also really liked the systematic approach and short(ish) term profit taking as that was what the markets seemed to be giving, but I am frustrated right now also. Things could turn around, but I am not doing well overall with the pics outside of a few. I think optioning some of these picks may have been better, but still difficult.

We’ll see what happens, but I can understand the frustration here.

Janis Bell

02/27/17 ‐ 4:20pm ET February 27, 2017 at 4:20pm ET

Hi Rick W., I am pretty much in the same boat, although I have another 6 months to go. I lost a bit more than I should have on GNC and another earlier loser as I didn’t have stop losses in place. Today I lost on AFSI. It seems that the losses, at 15% below purchase price, have not quite offset the gains, but the gains haven’t brought me close to break even on the subscription price. Perhaps for those trading 10 to 20 K on each stock, the gains well offset the subscription; I tested the waters gently with 1-2 K purchases, so need pretty consistent gains to offset subscription fees. But if I get good results, I may raise the amounts of each stock. How much were you putting into each?

Rick W.

02/27/17 ‐ 4:40pm ET February 27, 2017 at 4:40pm ET

I am managing three different portfolios of different sizes and risk no more than 5% of account value per position. On my cash account which serves as a good example, I made $878 on DHI but then lost $785 on GILD. JONE, SNI (long puts) and AFSI are all sizable losers right now which more than offset the smaller gainers. It’s supposed to be the other way around with small losses and big gainers.
Consistent winners will justify the expense but the losers are simply overwhelming the winners which will make it difficult to just get back to break even.

Roger Hill

02/27/17 ‐ 5:54pm ET February 27, 2017 at 5:54pm ET

Hi Rick W.
I’ve been a subscriber to the SW service since October, 2016.
Since then I have closed 12 SW trades (56 option contracts) for a net return of +25.6%.
I now have 11 open SW trades (206 option contracts) that as of today are showing a net return of -26.8%.
I am currently showing only a small profit. However, just one of the open trades (CSCO) has so much potential for positive return, that I am hoping to be well in the black within the next few months. So, overall, I am happy with the SW service and the advice that Jim has been giving.

I hope this provides you with another perspective though I realize this is kind of a hit or miss situation. For example, I decided not to participate in the SNI trade.

Good luck with whatever you decide.

Rick W.

02/27/17 ‐ 6:17pm ET February 27, 2017 at 6:17pm ET

Thank you Roger for your honest feedback, I appreciate it. Based on everything I have been able to gather and Jim’s hit or miss method of hoping there is a positive/negative earnings surprise to move the stock, I am going to call it quits.

Larry Johnson

02/27/17 ‐ 7:50pm ET February 27, 2017 at 7:50pm ET

Hi Rick.
I’ve been a subscriber for a while now. I’ve had a few good trades thru the service, but here lately, I’ve been like you….bloodbath…LOL SNI, which was a 3TL recommendation was a disaster, and AFSI right now is looking pretty bad. I had initially recouped my SW investment and had some profit prior to these two trades. These ones have now set me back on my heels, so I know the frustration that you you’re feeling. Only you can decide what direction to take, but I just wanted to let you know you’re not alone. Take care and good luck in whatever direction you take.

Rick W.

02/27/17 ‐ 8:14pm ET February 27, 2017 at 8:14pm ET

Thanks Larry. Good luck and best wishes to you as well.

Janis Bell

02/27/17 ‐ 4:24pm ET February 27, 2017 at 4:24pm ET

The huge drop seems to have triggered the $24 stop loss and now is down to $22.34. I expect Jim will have to message us a Sell alert, even though the comment from this morning suggests it may come back to break even once it recovers from this drop.

black arrow

02/28/17 ‐ 6:30pm ET February 28, 2017 at 6:30pm ET

Hi This is just a general comment. I have mentioned why various features of stocjcharts.com are so important to me, hoping some folks might get more into charts, and all the great things they have to offer.
Here is what transpired for me on 2/24; I was reading the blog of the CDN Technician namely Greg Schnell. The subject of that days blog was Canadian Insurers Pull back, Seeing negative signs on those charts made me look at afsi chart link: http://schrts.co/gWoImO I could see an RSI below 30 which was a negative sign, and MACD was also weakening. I added a PMO indicator to bottom pane this is a momentum and price toolin this case the light blue line is the signal line and the Black the pmo itselfOn the 24th it was flashing a PMO sell signal which weakened even more as it went below th 0.0 line. I had 300 shares of AFSI stock in my IRA as well as my taxable account, I still have a few call options. I sold my stock in AFSI immediately at 27.66 which gave me a very small profit, but better than losing.

I don’t think I should be warning others,so I was not sounding an alarm. I do think we should all learn to read charts, and eventually act on signs we have come to understand. I don’t personally think any of this is Jim Pearces fault. I dont know myself why this occurred It may be inflation or deflation. I recent years markets seem more difficult to navigate. I think today markets have been on hold because the President is addressing Congress, and wall St has to analyze it all. This is why I took the day off so to speak and went to see my oldest stepson in an Alpine Ski race, and spend some time outdoors, and go to a newish coffee shop in downtown East Burke where a local artist drew my picture. I thought it could be a day to stand aside. And now its time for dinner with my family

I do want to leave on a positive note in my comment, we have put in a piercing pattern and may be able to see a rebound if this stock or sector resumes an uptrend we should be able to get back to the highlighted 62% retracement off todays bottom.

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