Wednesday, July 23, 2008

CINFIN admits defeat on Fifth Third

In my first post on Fifth Third I noted that Cincinnati Financial (a well run insurance company) had a massive holding in 53 during its great run up. They retained the holding as the stock fell from $60 to $10.

Guess what - they sold half today - and the explanation makes no sense. They want to reduce their exposure to low-dividend stocks.

What is remarkable about the sale is that they are selling 480 million in stock after the price collapse - and they still have to pay 120 million in capital gains tax. That is reflective of how good a stock 53 was before it became bad...

And having to pay 120 million in capital gains tax is a high quality problem - but it would have been a higher quality problem to have paid 600 million in tax a few years ago!

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.