Atlas Financial Holdings (NASDAQ:AFH) has once again surprised with a huge loss reserve taken in the quarter ended 12/31/2018. The reserve has sent the book value of the common shares down from $7.42 to $4.04.
AFH is a specialty insurer insuring taxi cabs, ride sharing vehicles etc.
AFH has a 6.625% baby bond outstanding (NASDAQ:AFHBL) which we have in the Medium Duration Income Portfolio. We had previously had a personal position in the baby bonds, but had exited last year.
It was 9 months ago that we wrote on improving earnings from the company which had followed a previous large loss and we had noted that it took a couple quarter, typically, to begin to have faith in a company and their management–this obviously is not the case with Atlas–their management is “bush league”.
We will not be selling the baby bonds-yet-in the model portfolio, although we may sell 1/2 the position in a week when markets get the news digested.