Insider Banks On Jackson Financial

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An interesting open market purchase took place on Nov. 12 at Jackson Financial Inc. (JXN). Chad Myers, current Vice-Chairman of Jackson Holdings LLC (a division of JXN) bought shares for himself (twice), his spouse, and his son at an average price of $32.96. In 2020, Mr. Myers received a base salary of $680,000 and an annual bonus of $4.5 million.

The company had stellar earnings, with a dividend and share buyback announced. One major takeaway from JXN’s first earnings post-spinoff (Nov. 10) was the announcement of a dividend ($0.50 per share) or +7% dividend yield and its $300 million share repurchase program.

Together, this translates to a shareholder return of $490 million, well ahead of Jackson's previous commitment of $325 million to $425 million over the next 12 months.

Currently, its peer Brighthouse Financial (BHF) does not pay any dividend to its shareholders while Equitable Holdings (EQH) has a dividend yield of 2.1% (versus JXN’s announced 7.3% dividend yield). JXN will likely see its 3 analysts covering the stock increase vs. 10 for EQH and BHF.

The company is the largest US player in the annuities space. It holds the largest market share versus its peers in variable annuities in the US (JXN at 17% vs. EQH at 10% and BHF at 6%). We believe JXN should be valued on a Price to Book value of 0.6x (currently being traded at 0.3x price to book value) compared to EQH’s 1.3x and BHF’s 0.3x.

Overall, we see upside potential of 68% (on a base case) and potential upside of 82% (bull case).

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