I've posted about them before, and here are the basics.

TCHC is a small Florida-based insurer.  They were beaten up due to the hurricane season and the ensuing industry regulation in Florida a few years ago and have since restructured their business.  Here is why I like the stock:

1. They pay a decent dividend.
2. They are debt free.
3. They exceeded earnings expectations for last year (2007).
4. They've maintained constant, substantial growth since re-structuring after the hurricanes.
5. On January 1, 2008, they had a book value of $10.45 per share (including $22 million cash in the bank).  Right now, they're trading at $13.20.
6. There's talk of increasing the dividend amount.
7. They bought back some stock, and are authorized to buy back another $5 million in shares.
8. Bigger insurance companies like State Farm and Allstate have quit writing homeowners policies in Florida.  Someone (TCHC and others) has to fill that void. See the links below as proof. 
9. Link - As of Feb 2008 State Farm, for the most part, no longer writes homeowners policies in Florida.
10. Link - As of January 2008 Allstate is no longer allowed to write homeowners policies in Florida. 

Of course, they've been focusing on auto lately, but if a big hurricane comes, it would probably be wise to sell.  

Basically, they're another outperforming small cap stock that the market ignores because they're "too small" by market standards.  If I have the patience, I'll try to go long...but going long isn't really my style...sigh...so I'll probably sell on the next pop and buy back in later.

Here is Dutton and Associates take on the company: http://biz.yahoo.com/bw/080115/20080115005838.html?.v=1

Here's the PDF of their analysis: http://www.duttonassociates.com/research/tchc/notes/tchc_note_021908.pdf  It shows a $20 one year price target. 

As evidence of my "reasons to like the company", here is a link to the conference call:

http://insurancenewsnet.com/article.asp?n=1&neID=20080219560.2_5c1a009ddbc85894

Here are some of my favorite quotes from the confence call:

"On a diluted basis, the Company reported earnings of $2.65 per share on average diluted shares outstanding of 8,030,205 as compared to $1.72 per share based on 8,085,722 average diluted shares outstanding for the 12 months ended December 31, 2006.  Total revenues increased $15.2 million or 14.6% to $119.1 million for the 12 months ended December 31, 2007, as compared to $103.9 million for the same 12 month period last year.

One thing I wanted to call your attention to was that in the press release that went out this morning, we mentioned that our record results in 2007 included a 35% increase in net income. That was actually a 53% increase in net income and a 46% increase in earnings per share. " 

--Growth and above expectation earnings.

"I also want to make a point to say that for the first time in company history we're entering 2008 debt free. " 

- So, they're making loads of money, AND they're now debt free.  Just cash sitting in the bank with zero debt.

"CHARLES BERGER: Were you impacted at all by the recent tornadoes that just hit Florida?

PETER PRYGELSKI: No, we've had no impact. "

- Zero exposure to recent natural disasters.

"AL HUMPHREY, ANALYST, SOMONO GROUP: Congratulations, you guys. Just a terrific quarter. I was wondering if you had a cash position at the end of the year and possibly a book value?

PETER PRYGELSKI: Yes. Our book value 12/31/2007 was $10.45. Our cash in the bank shareholder equity is about $88 million. Our cash in the bank is approximately $22 million."  - Trading at just above $13, when the book value is $10.45.  There's zero debt and $22 million in the bank.  At $13, this is a steal.  Only their small cap status is keeping them from having the same multiples as the bigger companies.

AL HUMPHREY: Is there any further talk about spending some of that money to buy back more shares, increase the dividend?

PETER PRYGELSKI: As far as the buyback goes, as we discussed on previous calls, through '07 we bought back approximately 320,000 shares for about $3.8 million and the average price of $11.89. We're authorized to buy up to 5 million right now, so that's where we stand on that. As far as the dividend, that will be discussed at the next board meeting which is in the beginning of March."

--Increasing the dividend?  Maybe, but it's already at 5.5%.  And another buyback?  oh yea.

"OPERATOR: (Operator Instructions). There are no further questions at this time. Are there any closing remarks?

PETER PRYGELSKI: Yes. I just wanted to make one closing remark. I just want to highlight the fact that over the past three years our income before taxes has steadily climbed; in '05 we were at $15.7 million; in '06 we were at $21.3 million; and this year we finished the year at $32.5 million. We enter '08 debt free and we're certainly excited about the future. "

--Yea, that sounds good to me too!  Let's do the math on the pre-tax income.

• 2005-2006 = $15.7 million increased to $21.3 million.  That's just over 36% growth.
• 2006-2007 = $21.3 million increased to $32.5 million.  That's just over 50% growth. 

Now, for the part that the market won't like:

"AL HUMPHREY: Okay. Can we expect any guidance going forward?

PETER PRYGELSKI: Well, I'm glad you brought that up. I think in light of the changing events and the emerging corporate disclosure trends that we see on the financial markets today and the Company's focus on delivering improved results over the long term, we've examined our practice of providing forward-looking financial guidance and have made a decision to steer the company on a long term path and not give out annual guidance going forward. "

The market HATES when a company does not give guidance.  This might have something to do with why the stock is down this morning, because everything else is coming up roses.  I think the stock could bounce if this info is looked at by the larger market... 

Overall, the company has shown consistently strong management.  They got hit hard by the hurricanes a few years ago and Florida's following regulation of the insurance industry following the hurricanes, but they rebuilt their business by changing the model a bit, and are back to growing and blowing out earnings.  Based on the CC and their impressive turnaround of the company after the hurricanes, this company could become one of my favorites. 

Of course, it's too bad that the market barely notices them because they have such low volume.  But again, like I did with AFSI, I'll buy up now, ride the wave up and down, and then Baron's, IBD, the WSJ, or some other publication will mention them, and then I'll be getting a sharp bounce.  I just hope I actually own the stock when the bounce occurs.  My short term trading style sometimes gets me burned when a big bounce occurs.

Opinions?

(--Again, my trading style is that I tend to "bottom feed" on small cap stocks.  I look for well-managed profitable companies that the market tends to ignore. I ride the wave up and down taking profits when I can, and hope to be holding the stock when one of the major outlets/analysts takes notice.  I trade larger companies too, but I like the small ones the best.)

**There is a shareholder lawsuit going on that claims management mislead about earnings results.  However, this does not worry me.  In the future, I will try to update this blog post with my thoughts on the lawsuit and why it does not worry me.  TCHC verified the existence of the suit today (4/2/08) in a filing, and the stock is getting hammered for it.  This doesn't really matter to me much, because if a person follows the company properly, he/she would already know about the suit.  Anyways, I'm long.  It doesn't change the financial state of the company, and lawsuits usually take years (often times, many years) to settle.   Until I hear bad financial news, I'm riding out the storm.

I'll certainly sell in the next few days/weeks/months expecting the summer weather.  If the summer is mild, I'll snap up a few shares at the end of summer.  If I were going long on a company, this is one that I would go long on.  However, to minimize risk, I would definitely sell before summer and buy back in towards the end. 

Right now, I'm not making much money on TCHC because, despite the info above, they are too small for the overall market to notice.  If you review my trades/blogs, you'll see that AFSI was one of my favorites.  I traded them for months, buying on lows, selling on highs, and finally got out at around $15.30-$15.50ish after Investor's Business Daily mentioned them.  Today, AFSI is trading in the $17's.  However, TCHC has very low volume (20,000-50,000 on a typical day, even less in the morning).  This low volume is unusual, even for my small cap trades.  AFSI usually at least hits 100,000 shares.  But like I've said in other blogs, if a company is making money, the market won't ignore it forever.