Insurance Fraud – Fountainheadinvesting

Globe Life (GL) $53

Category – Financial Services – subcategory- insurance

There is a short-selling operation going on by Orso Partners, alleging insurance fraud and of course the usual denials, and the short covering, which caused the 10% bounce premarket.

https://www.cnbc.com/2024/04/11/globe-life-shares-plummet-50percent-after-short-seller-accuses-company-of-insurance-fraud.html

Historically, though higher mortality rates, mostly pandemic related, was one of the main reasons for the drop in 2022 income.

While the balance sheet is relatively OK, debt levels are elevated, which is not ideal in a high-interest rate environment.

There is a lot depending on declining or increasing mortality rates, and this could cause a lot of volatility in its stock.

That said, the company and analyst estimates are calling for 8% earnings growth in the next 3 years, and if the fraud claims are bogus and just short seller manipulation, the valuation is quite good. It has been a profitable company in the last 5-7 years.

But without enough information on the validity of Orso’s fraud claim it would be difficult to make a call.

Globe Life (GL) $53

There is a short selling operation going on by Orso Partners, who’re alleging insurance fraud and of course the usual denials, and the short covering, which caused the 10% bounce premarket.

https://www.cnbc.com/2024/04/11/globe-life-shares-plummet-50percent-after-short-seller-accuses-company-of-insurance-fraud.html

Historically, though higher mortality rates, mostly pandemic related, was one of the main reasons for the drop in 2022 income.

While the balance sheet is relatively OK, debt levels are elevated, which, in a high-interest rate environment, is not ideal.

There is a lot depending on declining or increasing mortality rates, and this could cause a lot of volatility in its stock.

But without enough information on the validity of Orso’s fraud’s claim it would be difficult to make a call.