|Shares Out. (in M):||279||P/E||15||0|
|Market Cap (in $M):||9,150||P/FCF||15||0|
|Net Debt (in $M):||2,754||EBIT||0||0|
The common stock of Fidelity National Financial (FNF) trades at an 8-9% earnings yield. This is a bargain considering the chairman Bill Foley has utilized the durable free cash flow from the title insurance business to deliver a 15-20% compound annual growth rate in value during the past 30 years. The bargain exists for several reasons. One, the earnings yield is obscured by the company's large ownership of Black Knight Financial Services (BKFS). Two, the historical record is obscured because an investment made 30 years ago in Fidelity National turned into six securities and many more cash and stock dividends. Finally, higher mortgage rates will probably cause a near term decline in mortgage originations, the key driver of earnings for title insurers.
OUTSTANDING MANAGEMENT — 15-20% CAGR FOR 30 YEARS
Bill Foley is an exceptional manager. Each of the four preceding posts to this community has described his outstanding record.
Foley delivered 15-20% annual returns for investors in the 1987 initial public offering of FNF. The positive commentary from this community about Foley piqued my curiosity, so I set out to measure Foley's contribution for shareholders. In short, $10 invested in FNF at the IPO in 1987 would have turned into $387 of stock today, and one would have received $220 in cash dividends. The CAGR is 16% before any return on the cash dividends. If the dividends had been reinvested at 16% per annum, then the total return increases to 19%.