Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.

For Twitter Heads
Originally published Aug. 3 at 12:20 p.m. EDT
Twitter ( TWTR - Get Report) is up some 6% Wednesday to about $17.30.

For whatever it's worth, I'm hearing rumors out there that Saudi Prince Al-Waleed bin Talal and former Microsoft (MSFT - Get Report) chief Steve Ballmer are allegedly working together on a buyout plan for the social-media giant.

Ballmer and bin Talal are two of TWTR's largest shareholders, and the price that's going around for such a deal is about $22 to $26 a share.

Position: Long TWTR .
Why I'm Still Big on HIG
Originally published Aug. 3 at 8:46 a.m. EDT
I'm aggressively adding to my long of Hartford Financial ( HIG - Get Report) despite the stock's 8.6% pullback in the wake of last week's large second-quarter earnings miss.

Hartford reported $0.31 in second-quarter earnings per share last Thursday after the bell, falling way short of analysts' roughly $0.80 consensus.

However, my experience has shown that buying strong business franchises whose shares have temporarily dropped due to "fixable" operating shortfalls usually provides good gains (especially in recent years).

We also can't ignore Hartford's takeover potential given the stock's current low price. Possible suitors include Travelers (TRV - Get Report) , Zurich Insurance Group and even a large Japanese insurer. However, shareholders don't appear to be "paying up" for this possibility.

Other reasons why I'm sticking with HIG:

  • Hartford's second-quarter miss was materially a function of weak results in the company's auto-insurance business, which faced "loss-cost" issues for current and prior-year claims. However, HIG lifted auto-insurance rates early this year. Because most auto policies are annual, the resulting margin improvement should begin to appear in 2017's second half.
  • Hartford's earnings shortfall also partly reflected special charges for exposure to asbestos/environmental, catastrophic experiences, etc. Many of the firm's other business lines (group benefits, mutual funds and runoff business Talcott) performed as expected.
  • HIG has had to deal with the continued adverse impact of low interest rates, which are hurting all insurers by reducing reinvestment opportunities.
  • Importantly, forward-looking premium renewals were in line. Hartford's core small-commercial-insurance business also remains a "plum" even though it faces increased competition from Chubb (CB - Get Report) .
  • Hartford's overall commercial business faced difficult comps in the second quarter due to lower property costs and favorable weather a year earlier. However, the unit continues to thrive amid mild competition that allows for a good rate backdrop. The line's expenses have temporarily risen as HIG makes long-term technology investments, but these will likely eventually improve operating efficiency and lead to market-share gains.
  • HIG has also embarked on strategic actions with its non-AARP personal-lines business, which should produce a quicker resolution to Wednesday's low margins and profitability (including a lower advertising spend).
  • As a result of the second-quarter shortfall, analysts have cut their 2016-17 earnings estimates for Hartford by about 10%. But HIG will still produce about a 9% return on equity if analysts' roughly $4.30-a-share consensus 2017 earnings estimates prove to be correct.
  • Hartford's book value rose to $47.02 during the latest quarter, up nearly 5% year over year. This reflects favorable marks on investments and quarterly results. The company also repurchased 7.8 million of its shares outstanding during the latest period.

The Bottom Line
The key to HIG's stock price in the absence of a takeover will be the company's ability to turn around its core property-and-casualty business lines at the same time that HIG shrinks and extracts capital from Talcott.

I believe that in the fullness of time, management should be able to do this -- and that HIG's shares will likely rebound even if there's no buyout of the firm.

Position: Long HIG.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long TWTR.

At the time of publication, Kass and/or his funds were long/short XXX, although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.