Stan WongAon Corp.AONBUYNov 16, 2023

Insurance broker, lumped in with AI losers. AI risk is not there. Commercial insurance broker, not just home and auto. Volume discounts for clients. Taking on lots of debt to fund huge acquisition, market not happy. 

Tends to grow 5-6% a year, with earnings growing ~10%. Trades at 13x forward PE. PEG ratio is ~1x. One to hold and let compound, as it's done for the past 2 decades. Yield is 1.21%.

Bumpy through 2024 due to acquisition of mid-market company plus weak results in corporate division. Will benefit from higher transaction volumes due to lower interest rates. Very stable, high cashflow.

US insurance broker. Really likes the business model. Corporate benefits, retirement planning. Right now we're in a "hard" market, where pricing is accelerating. Doesn't have the risk of paying out claims, just collects the premium and takes its share. 

Insurance brokerage, risk management, employee benefit, compensation consulting. Steady eddy with high, recurring revenue. High margin. Not many expenditures, so free cashflow goes into share buybacks. Lower risk, set it and forget it. Yield is 0.75%.

Long AON Senior Unsecured Debentures 4.760%, Short Government of Canada 1.25% of March 2018. Likes the company because it is a very highly rated investment grade bond, the only one they have in Canada. A strong company with good credit that generates stable earnings and has good growth potential. Bond trades at a higher spread than all their other bonds.(Stock price will not match as this is a bond.)