I try to find stocks where there is a wide divergence between the stock value and the underlying company value, and leave it at that. I'm a poor trader, I'm weak at interpreting macroeconomic trends, and I don't even try to predict the market. As an update, here is the performance of the portfolio. Nothing is completely safe and there is no one factor that makes one stock safer than another. An absence of debt and a large cash position, for example, is certainly a positive, but it doesn't by itself make a company a safe investment.
Management can always fritter away cash and add debt.
It is only by assessing a company from every vantage point that an opinion on safety can be rendered. CEO Mike McGavick still has a lot of work to do, as Safeco is just getting back in shape after grossly overpaying for American States in 1997. The turnaround has been slow, but this stock should rise The sale of the credit business will halve the debt carried on the books at Safeco. Further expense reductions, to be announced shortly, mean that the company is changing the model to become leaner and more profitable. The core auto and homeowner insurance is a valuable franchise, worth much more than the current value of the stock, but only realizable when current problems are fixed.