Prudential Financial (PRU)

Overstated Organic Growth through Repurchase: Since there are a limited number of insurance investments to be made domestically, a significant amount of Prudential’s $3 billion in excess capital will go towards share common stock share repurchases. Share purchases tend to overstate the book value growth of a company.

Limited Domestic Insurance Development Opportunities: With all of the excess capital that Prudential has amassed, there are a limited number of domestic insurance opportunities to capitalize on. Prudential has expanded primarily through acquisition of less-capital intensive businesses and although it is currently a buyer's market, there are few domestic life insurance targets capable of expanding return on assets.

The economy has been slow to pickup, and large banks such as Citi and Bank of America have announced disappointing Q2 results. This could be issue for Prudential as it and other insurance companies' revenues are dependent on trading gains. Thus, a weak recovery for the large banks could negatively impact the insurance companies like Prudential Financial as well.

Shifting Management: Prudential’s CEO Art Ryan has made it clear to the Board of Directors that he intends to retire within the next two years before the age of 66. Prudential has yet to put forth a succession plan in the event that Mr. Ryan retires.