We only touch on the earnings just announced late today by Atlas Financial Holdings (NASDAQ:AFH), because the company had sold a 6.625% baby bond a year ago and then recently announced a surprise write down sending the baby bonds tumbling. We had bought the bonds in the Medium Duration Income Portfolio as well as in our personal accounts at $25.45. Shares had traded as high as $27 early in 2018. Today, just prior to the earnings announcement the baby bonds ended the day at $24.84.
Atlas is a small specialty insurer involved primarily with the taxi and limousine business. They had announced a huge write down based on old claims which had not been adequately reserved for–the write down was massive, but getting the news out and the write down behind them should allow a recovery in the baby bond price–over time.
AFH announced earnings of 45 cents/share which is pretty much on target and there were not any surprises in the earnings report. We have noted over the years that when a company announces a surprising financial event it takes at least a quarter and many times 2, before investors begin to regain some trust.
With these earnings we feel some comfort and relief that the company appears to be on the road to recovery–but 1 more quarter is required for us feel totally comfortable.