Former pro sports bettor now retired into 公営競技 and stocks. Check out my books: https://teapaw.org/t.co/RgNtFxpcQ4
Japan
Joined November 2017
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The stock game is just so wild. One of those deals where if you hand someone the headline the day before 80% would have gone short.
There was way more money that was "long AI, funding short absolutely everything else" around the world than I could have imagined.
In Japan the other forms of legal gambling mostly suck. And all have the same high takeout. It is not right to say that they have a monopoly. Just objectively the slots they have here suck, and boat racing is totally rigged and sucks, the lottery is not for serious gamblers. Keirin is actually awesome but will always be super niche compared to horse racing.
The other competition is offshore betting where the cops have really cracked down even though the law doesn't really support it. They are big on this as it cuts into their pachinko cash cow that they regulate; these pachinko regulatory positions are used as amakudari for retired cops. It also looks like they are doing something good after the horrible, dastardly fraud that happened to poor Shohei Otani, whose translator was able to obtain massive credit lines from bookmakers simply by touting his relationship!
Regardless this strong competitive position allows them to take a long term view and re-invest in better facilities and more promotion which keeps the sport healthier. There is also a strong ownership culture for whatever reason. They also got lucky with the uma musume game. I still think long run the sport is slowly declining without some unforeseen catalyst. Some of the handle growth is just better economy/stock gains meaning big bettors bet more and also likely increased syndicate action. People are already starting to rotate back into pachinko/pachislot.
On the topic of betting, in addition to the lack of bookies they also never have had good rebates in Japan. This is all smart and good for the system as it reduces pro handle and late odds moves, which are still awful and have gotten worse recently. Despite the higher takeout in Japan recreationals probably lose slower in Japan than in the US.
The UK betting market on racing is in decline
Japan bets nearly twice as much on racing as Britain does: £21.5bn a year against £11.0bn.
Hong Kong, with a population of about 7.5 million, bets more than Britain too.
What Japan and Hong Kong have in common is that racing runs the betting. The pools belong to the sport, and the takeout goes back into prize money and racecourses.
If British racing owned its own pool or exchange, would you bet with it?
Follow @mindmodeller for more on where racing's money goes.
@RacingPost @racingoncourse #horseracing @BHAHorseracing @japan_racing
The most hilarious pump today was $KMPR a non standard auto insurance company in CA. Basically they sell to drunk drivers, policy lapses, and illegal immigrants, anyone who can't get a normal policy.
Recently earnings have been terrible because the minimum policy limits in CA were doubled. This shouldn't have mattered that much. However, because it was now worthwhile for ambulance chaser lawyers to file at the higher limit, the frequency of claims drastically increased, and at the higher limit. So they swung to a big underwriting loss. However this is temporary, they just have to file for rate increases, which they are doing, and then they will be good. In CA that takes a year or two but the company has plenty of capital and still positive earnings due to a cash cow life insurance business. With normal returns in non standard auto this is like a 45 to 60 dollar stock.
Competitively this is not a bad company because $PGR can't use credit scores or telematics to underwrite in CA so it's easier to compete.
The real threat is not other insurers but people driving uninsured in CA which is now like 1 in 5 and that will probably continue to go up since they are raising rates on what was already the absolute cheapest policy people can get. That policy has already doubled in price since covid. Their best customers are actually illegal immigrants - much safer than drunks. Tuesday's election and really the recent dem dominance ensured an increased supply of their best customers moving forward.
I unfortunately sold my position last month having bought in at the low, to bag hold $ABVX which I still consider to be strong. Long run I think the election will be good for that stock also because big food should do well. This means we will get more cases of various bowel diseases which should increase the valuation of their franchise.
Yeah this “boom” is dead. Who would have thought that something with zero upside for your community that can only make economic sense if it causes mass unemployment would be politically nuclear? People don’t care about China anymore either (most are communist)
Nikkei did not appear to like these early returns showing the historical dem blowout. Wasn’t following this but the only races not 99% D are ones where Ds barely ran a candidate and even they have like 10-20% equity. Lmao
So I initially got this wrong knowing it had to be equal or this doesn’t show up. Finally realized, didn’t say ace had to be the first card.
13 ranks on average so first ace <=~ 13th card. Chance the 2c is shown before that, >=~12/48. Basically 1/4. Chance ace was spade? 1/4.
I congratulate both teams for reaching levels that should been impossible given what they were up against and for their fine taste in literature
Pretty interesting pitching philosophy this year by the Brewers. Just throw gas right down the middle.
If you're a coach and we've worked together/visited...you have heard me say "hitters aren't batting 1.000 in BP"
They know what's coming, and still hit a ton of 'outs'.
Pretty neat to see Mil embrace the data and analytics here.
Yeah legitimately the Anthropic S-1 is completely bullish never had mind changed on something so fast. I am sure they dressed up the numbers for the IPO not sure about long term but looks like they have a good shot of being able to pay for that compute.
I basically took all the stuff in these books and put it in models and it actually all works even today. Everyone will always think "Beyer figures" but a lot of the other handicapping methods he discusses were even stronger. The man was decades ahead of his time.
‡
An all-time classic handicapping book. If you haven't read it, seek out a copy on eBay, or elsewhere. It's worth reading for the anecdotes alone.
It was based on Andy's profitable year betting in 1977, when $50,000 had the equivalent purchasing power of $278,000 in today's dollars.
Not a bad gig. 😀
I can't even begin to describe what a scam this whole apartment business is in Japan. I pay a half month's rent every year to some guarantor company and the first couple years amount was much more I think over a month's rent. My understanding is that it's a little lower for pure breed domestic cattle who have credit scores etc.
Note the landlord also collected a 2 months rent deposit anyway. This is just to cover them in case I randomly stop paying, then decide not to leave.
I looked into a pure play company Nippon Insure (5843.T) that does this. Loss given default is bad, like one year's rent, but almost no one ever defaults. Overall, they pay out 20% of premiums as gross losses, but collect most of that back from the tenant through subrogation. You don't even want to know what they are doing to collect there. Net losses are ~5% of what they take in premiums.
Their largest expense is actually the commission they pay to the agent who showed you the apartment, at 19% of premiums collected. Let that sink in, they pay out four times the amount of losses in commissions. Basically Herbalife levels. Overall after 50% in other costs, mostly to pay the sales force to recruit new apartment agents, they run at a company 25% operating margin, but real margins are 30+% as they have some revenue from a low/zero margin business.
For comparison a typical auto insurance policy would be 60-75% paid out in losses 20-35% in expenses, very low margin lose money unless you are run well and rates are cut if everyone is too profitable.
Put another way if the average person pays out 4% in rent per year to the guarantor, the landlord could just write off any default as a total loss and instead charge 2% more in rent to cover the expected defaults. Even if the guarantor company is filtering out 50% of future deadbeats (reality is approval rates are very high and this is impossible) the landlord and tenant would still come out ahead.
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$UVE up around 20% since this. Q3 print was decent not great. Nice volume, FL pricing way down but expected, offset by reinsurance costs. Didn’t say much on the call other than the hurricane wasn’t that bad (means losses less than the 111mm full retention) and no one cares about this stock.
From the stat filings they are making good progress finally working through the pre reform claims. Likely only 50mm or so of exposure left. Unfortunately with the hurricane, a bad beat as it hit right on the edge at the very end of the season, q4 will likely be a good print due to reserve releases but not ridiculous; it could have legitimately been a 6-8 eps quarter.
We will probably have to wait until q1 next year to see the real earnings power of the stock in GAAP filings. I would make sure to be fully positioned by then. I am buying hand over fist personally.
Next year margins should be similar to this year, even though everyone is cutting rates, because reinsurance costs came down by same amount as the rate cuts. They will likely get further price decreases on the reinsurance since this was a very good year for reinsurers but those will probably not fully offset cuts. Still I would estimate 20-25 per share post tax earnings between 2027 and 2028 depending on weather and how aggressive it gets. Throwing in 5 per share in excess reserve releases and 1.5 in q4 earnings we get a book value of 55-60 per share in two years.
However competition is coming with lower rates everywhere and realistic long term returns are maybe 20% ROE (mid 90s combined plus investment income) in FL and 15% for the entire book as non FL is lower ROE. At the end of two years you would still have a stock with $9 per share in earnings power that would no longer be just FL in a FL market that would be somewhat less aggressively cutting rate and could support a higher multiple. A 10x multiple on that is $90.
Downside/bear case to the stock is if Donalds loses FL gov (20%), also if economy collapses rates going down would hurt them
Usually don't do this but $UVE is a stock worth considering.
Since 2022 tort reform in Florida economic earnings have been $10-14 per share, if one considers how policies performed versus initial management estimates. Basically, at the time they wrote the policies, management assumed losses paid out would be in the high 60% to low 70% of premiums written, because this is how they were in the pre tort reform era. Instead they wound up around 50% in no-hurricane years, high 50s after hurricanes. This is a $6-7 per share annual difference. Highly meaningful on a $40 stock obviously. Higher losses than expected on pre-reform policies offset this making GAAP earnings from 2023-2025 look worse than the actual business. Usually losses coming in above reserves is a sign of bad management, but here roofing fraudsters literally went door to door buying three year old homeowners policies then taking UVE and others to court for "hidden damage" claims to perform routine roof repairs. Hard to fault management too much. Fortunately there are no longer meaningful liabilities left from the pre-reform era.
Pricing has come down somewhat to reflect the lower legal costs in FL, which was the crux of a bear analyst piece that hurt the stock a couple weeks ago. However, they are still booking solid premium growth and even with 5% lower FL pricing their loss pick still appears conservative meaning losses probably come in below what they are booking in current earnings. In future years this difference will flow into earnings. The loss picks only make sense if you assume one moderately bad hurricane per year, which is actually worse than average.
Even with the conservatism, annualizing the last few quarters you get around $8 per share in current GAAP earnings.
More importantly the Q2 print gave us the reinsurance pricing for 2026. It appears they will be ceding at worst 2% less premium to get the same coverage they had although this number may be as high as 6%. This will flow right through into earnings. At a minimum that is $1.50 per share and could be as high as $4 per share.
Between the current size of the business, the lower reinsurance costs, and the loss picks, future run rate earnings are around $12 per share in an average year. In addition, the reserves they booked in 2025 were simply far too high and management now admits this. The loss assumptions were way too high anyway, then there were no hurricanes in 2025 yet at the end of year they assumed eventual losses similar to years where there was a hurricane.
It is likely they are high by around 15% of 2025 premium, which is $8 per share. This is real capital that will flow into earnings over the next several quarters as reserves are released, driving beats that will support the stock and money that can be used for buybacks or further business growth, which is likely to be substantial given this business earns 30+% returns on equity and always has other than in the massive FL insurance fraud era. And it is unlikely tort reform is rolled back in the near future as Rs are 80% on poly with a DeSantis disciple the likely winner as the next FL gov.
There are other soft factors that make this stock worth owning anyway but aren't really needed to support a stock that trades at under four times real earnings.
"Agentic AI will destroy banking margins, K-shaped economy will continue, consumer is getting destroyed"
All 10 consumer lenders and community banks I own:
"Best quarter ever, deposit costs are down despite the rate hike and losses are at record lows"
All my horse and bike racing feeds down due to this php deal. Apparently nearly every Japanese site vulnerable to this as most were developed soon after dawn of the internet. AI finally impacting jobs.
I have actually run into the exact same thing.
I think it's a mistake to come here long-term as a foreigner unless you are just here to party, or some corner case like a super-niche profession only good in Japan. The type of people they want here shouldn't come here.
Well it's not often that any good news comes up around Japanese taxation, in fact I'd say this is the first time ever
競馬の払戻金、与党内で非課税論が浮上 「二重に取られる」 ギャンブル税制見直し議論
sankei.com/article/20261017-…
宝くじは非課税なのに、馬券は主催者の取り分が引かれた上で課税もされ不公平との不満が根強い。納税ルールが複雑で知らないうちに「脱税」を指摘されるケースも。
