Why Tower Group International, Ltd. Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of embattled insurer Tower Group International, Ltd. spiked 10% this morning after its quarterly results topped Wall Street expectations.
So what: The stock has plummeted over the past several months on growing capital concerns, but a market-topping second quarter -- operating loss of $5.10 per share on revenue of $460.5 million -- suggests that Tower Group's turnaround initiatives are gaining some traction. In fact, management announced that it is reducing its workforce of about 1,400 people by 10%, a move expected to save the company about $21 million in annual costs.
Now what: Management continues to review several strategic options to help deal with its current situation. "To address current liquidity needs at the holding company, we are exploring the sale of some of our holding company and operating assets as well as exploring the possibility of raising additional capital," said President and CEO Michael Lee. "We are working diligently to address these challenges." Given Tower Group's still very speculative nature, however, I wouldn't be so quick to bet on it.
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The article Why Tower Group International, Ltd. Shares Popped originally appeared on Fool.com.
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