FGF WACC - Weighted Average Cost of Capital
The WACC of Fundamental Global, Inc (FGF) is 6.9%.
| Range | Selected | |
| Cost of equity | 6.0% - 8.9% | 7.45% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.6% - 8.1% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.46 | 0.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 8.9% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.17 | 0.17 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.6% | 8.1% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FGF | Fundamental Global, Inc | 0.17 | -0.07 | -0.06 |
| AMBC | Ambac Financial Group Inc | 0.46 | 0.98 | 0.74 |
| CNFR | Conifer Holdings Inc | 1.24 | -0.03 | -0.02 |
| EFH.V | EFH Holdings Inc | 0.01 | 0.61 | 0.6 |
| HRTG | Heritage Insurance Holdings Inc | 0.19 | 0.87 | 0.77 |
| ICCH | ICC Holdings Inc | 0.2 | 0.34 | 0.3 |
| KFS | Kingsway Financial Services Inc | 0.15 | 0.73 | 0.66 |
| NSEC | National Security Group Inc | 0.32 | -0.37 | -0.3 |
| PPHI | Positive Physicians Holdings Inc | 0 | -0.12 | -0.12 |
| SAFT | Safety Insurance Group Inc | 0.03 | 0.48 | 0.47 |
| Low | High | |
| Unlevered beta | 0.17 | 0.52 |
| Relevered beta | 0.19 | 0.58 |
| Adjusted relevered beta | 0.46 | 0.72 |
FGF's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for FGF:
cost_of_equity (7.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.46) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.