Source: Barron's Chinese Author: Nicholas Jaskinski Evan Greenberg, CEO of Chubb Ltd, has a highly influential fan - Warren Buffet, CEO of Berkshire Hathaway. Berkshire Hathaway disclosed last month that it held 6% of the shares in Chubb, one of the world's largest insurance companies, by the end of 2023. Berkshire itself is a major participant in the insurance industry, but it is not the only buyer. In the past year, Chubb's stock return, including dividends, was about 40%, surpassing the S&P 500 index's total return of 25%, and making the company's market capitalization reach $110 billion. This increase in market capitalization reflects Chubb's outstanding performance, which is attributed to its prudent underwriting practices and conservative management of its investment portfolio of about $140 billion. The company's earnings per share increased by 48% in 2023 and its book value per share increased by 21%. Greenberg is the son of Maurice "Hank" Greenberg, the former CEO of American International Group (AIG). Greenberg worked at AIG for 25 years, rising through the ranks. He left the insurance company in 2000 and took over Ace Limited in 2004. The company merged with Chubb in 2016, the largest M&A in the property and casualty insurance industry at the time. Today, Chubb is the largest commercial insurance provider in the United States, and the company is also known for its high-end homeowner insurance for the wealthy. However, about half of the company's premiums last year came from outside the United States. Asia has always been a growth area where the company is bullish: Although Asia accounts for 40% of global GDP, the insurance industry accounts for only 26% of the global insurance market share. This gap is expected to narrow over time. Greenberg sits on the board of several nonprofits that focus on international and Asian affairs. Barron's recently interviewed Greenberg about his underwriting philosophy, the challenges of dealing with increasingly frequent climate disasters, and US-China relations. Following are the edited excerpts of the conversation.
$Tesla (TSLA.US)$The data on delivery volume in the second quarter drove the share price soaring and triggered numerous comments from Wall Street on this result. Now, the stock has returned to its early year highs, almost wiping out all the losses this year.
After the delivery volume was announced on July 2, Tesla's share price rose by as much as 10% in a single day. On July 3, the highest trading price of the stock reached $248.35, only about 13 cents lower than the closing price in 2023 - on April 22, Tesla's share price was only $142, an astonishing rebound.
Since June 25, Tesla's stock price has risen for seven consecutive trading days, making CEO Elon Musk's wealth increase by nearly 30 billion US dollars, becoming the leader of the global rich list. Previously, Amazon founder Jeff Bezos held the top spot.
Investors want to know what will happen to Tesla's stock price next?
Car delivery volume exceeds expectations.
In the second quarter, Tesla delivered a total of about 0.444 million cars, higher than the previously predicted 0.438 million cars, a year-on-year decrease of about 5%. As Wall Street's lower expectations were in the range of 0.415 million cars, the final result was satisfactory to the market.
Most of the comments on Tesla's delivery results are currently positive.
Wedbush analyst Dan Ives wrote: "With the pricing policy winds down and global demand for electric vehicles (especially Chinese demand) stabilizing, we believe Tesla will achieve its goal of annual sales of 2 million vehicles in the coming quarters."
Ives rates Tesla's stock as a 'buy' and raises his target price from $275 to $300.
CFRA analyst Garrett Nelson also rates the stock as a 'buy', raising his target price from $230 to $250. Nelson believes that Tesla's second-quarter delivery data 'significantly alleviated concerns about weak demand for electric cars'.
Energy storage business contributes to valuation increment.
Some argue that the rise in Tesla's stock price is due to its energy storage business - the company sells battery backup storage to households and utilities paired with wind/solar power generation to save some electricity when there is no wind/sun.
Guggenheim analyst Ronald Jewsikow pointed out that a 5% decline in deliveries (of Tesla) was not optimistic. The power driving the stock price up 10% was mainly from record energy storage deployments, not car sales data. Jewsikow rates Tesla's stock as a 'sell' with a target price of $134.
In the second quarter, Tesla deployed 9.4 gigawatt-hours of battery storage products, setting a new record high, the previous high being 4.1 gigawatt-hours. Jewsikow said that the significant growth of energy storage products may boost the company's sales and profit expectations - currently, Wall Street expects the company's second-quarter sales to be $24 billion and gross profit to be $4.2 billion.
Wells Fargo analyst Colin Langan also rates the stock as 'sell' with a target price of $120. Langan does not think that Tesla's sales this year will reach the generally expected 1.8 million cars.
What will be the future trend of the stock price?
As of the close of July 3, Tesla's stock price has risen for seven consecutive days to $246.39, with a drop of less than 1% from the beginning of the year. Investors are concerned about the growth space and potential of the stock.
In response, Katie Stockton, founder and technical analyst of Fairlead Strategies, said that Tesla is "testing the long-term downtrend line", and that a closing price above $226 in the next few weeks would mean a "bullish reversal". The downtrend line can be drawn from the high point of the stock price in 2021 (over $400) .
Stockton did not make a fundamental judgment on Tesla's stock, but used technical analysis - looking at charts to understand investors' past buying and selling of stocks and the stock's short- and medium-term trends.
Frank Cappelleri, founder of CappThesis, believes that maintaining the stock above $226 is a positive signal.
In the long term, Tesla's stock price is influenced by multiple factors. On July 17th, Tesla is set to announce its Q2 financial report. Wall Street expects the company's EPS to be 60 cents per share. Strong delivery data and energy storage deployment are expected to drive Q2 performance beyond expectations.
On August 8th, Robotaxi was officially unveiled. Baird analyst Ben Kallo wrote, "At that time, Tesla will announce how to charge for the service, normal operation time of the vehicle, and the relevant fees required for using robot taxis (not yet clear)." He rated Tesla stock as "buy" with a target price of $280.
Editor / jayden