We are selling Fidelity National Financial, FNF, from portfolios, which may take a few days to complete trades. On 2/6/20, FNF announced an acquisition of F&G holdings, symbol FG, an insurance company that sells annuities. We do not like this merger for two reasons: 1) FNF’s business of title insurance does well when interest rates fall as mortgage refinancings increase. This success is opposite of most finance companies who earn less on spread income when rates fall. The purchase of FG will dilute this counter interest rate property which has been attractive. 2) FG has some concerns primarily their investment portfolio is too aggressively invested in lower quality bonds. I am concerned that a disruption in the BBB debt market would impair this company’s balance sheet and ability to conduct business. The BBB debt market has seen significant growth through this market cycle and appears frothy. FNF stock has fallen -13% since announcing the merger.
Skip to content