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I do not want to spoil a thing for those behind watching replays but the game Spain Portugal shows some textbook examples of the tiki taka play system including the sequence where Spain scored. Not the best game overall though, but this pass sequence was brilliant

I have been watching football way longer and agree with this. The second penalty should not have been given, maybe not even the fist. The Brazilians are well known for theatralisch in the penalty zone and thy seem to have set up their game to do just that. Inhaber enjoyed watching them over the years, but the brilliance is gone it seems.

Won’t have time for the Braves….My buddy tells me it’s quite the production around the Benz with all the fifa activities. Hope the game is an exciting nail biter…

Oh yea, gorgeous stadium. Check out a Braves game too if you’re able to. We re doing a trip next month. So much to do over there

Really good topic—incentives do indeed drive behavior, and oddly enough, many companies fail to craft incentives that drive the optimal behavior and financial results they seek. Buffett used to focus on this in his letters back in the 90’s around the time he took control of Geico. He mentioned that incentive plans should be easy to understand, measurable…and Munger would add that they should also not be easily gamed. All great points. Oftentimes companies strive to have both profit and growth (the Holy Grail). But growth can be a challenge since it is so easy to grow if pricing is too low, and thus underwriting profit would suffer…. Buffett’s original GEICO incentive structure was a matrix that produced bonuses based on underwriting profits of policies written more than a year, and number of new policies written, so both growth and profit. He knew that if the underwriting profit goal took into account all policies, that he would be incentivizing employees not to write as many new policies, since in auto insurance, it is almost a given that the newest policies will be the most likely to produce underwriting losses (known as the new business penalty). If he wanted GEICO to grow, he was willing to let the company absorb the new business penalty, and not allow it to adversely affect employees decisions about whether or not to write new business policies. A company I once worked for thought they could motivate insurance agent policy production by granting agents bonus commissions for achieving year end policy count targets set for each agency. They thought that the measurement would be a foolproof way to drive growth, since it would motivate both retention of existing policies and production of new business. However, the incentive system was easily gamed because agents could cancel current auto policies for customers who insured more than one vehicle, and then write separate auto insurance policies for each separate vehicle. Presto! A single policy that previously insured four vehicles owned by a customer could canceled and become four separate new policies, each insuring one of the originally insured four vehicles. Do this for every Inforce customer with multiple vehicles in a household, and an agency’s policy count at year end could easily exceed their assigned growth targets, and the company would pay them a bonus. This could even be the case where the total number of vehicles insured and total premium volume declined for a given agency year over year. The company incurred increased mailing and printing costs to cancel and reissue all of the policies, and employees’ time was wasted. Clearly, in such cases, neither growth nor profit was the result of the agency incentive system. Fairfax appears to be a good deal smarter than the company I worked for. While we don’t have the details of their incentive systems, we are told that it is primarily based upon underwriting profit. That is definitely a good sign.

And I’m stoked… arrived in Atlanta and will see Argentina vs Egypt… never been to any professional soccer game before.. only Ted Lasso haha… just started watching you tube highlights over the past few weeks… Buddy invited me and I hear the Benz where the game is being played is fantastic.

1. I’m not sure what you are asking exactly but I think the key with 20%+ ownership positions is the contribution to book value is only from our share of earnings. We don’t get the benefit of the multiple or multiple expansion until the asset is turned over. 2. I’m 99% sure that Hamblin Watsa did not manage the portfolio until they took control. 3. it’s a good question. Maybe the Fairfax India block is available. Someone reading this probably could bid them.

What multiple range do you think we’ll trade in? My bracket of 1.2-1.5x is pretty tight and we’re right in the middle as it stands now. I think there are a lot of people on this board that will sell at least some of their shares at the high end of the range even if BVPS is compounding 2-6% a quarter, don’t you?

There’s definitely varying degrees of it in everything. But agree 100% the level of toughness with hockey and probably even football is way higher. Broken bones, knocked out teeth, concussions, no problemo. Until recently at least. Never really had any interest in soccer, and still don’t. It’s like boxing. Great social watch event. But no credibility at the organizational level and a bunch of scheming and shenanigans that often overrun the games. Baseball now, is way different than when I was in college and what they’ve done is effectively eliminate all the whiny player bullshit by bringing in challenges with video replay and now even balls and strikes. There is no more this nonsense of “blame the refs(umps)”. Contrast that to the NFL where it’s ref ball and every hold or PI is subjective. Ruins it. College is a bit better cuz the kids definitely care more and you have 15 yard limits on PI calls but the auto first down is still dumb. Hockey is basically a band of brothers a the apex of teamwork. Everyone gives it all. You sacrifice so much from a young age playing. Going to practices 45 minutes away, at 4:30am before school, 3-4 days a week. God bless the parents too. Basketball and soccer(and to a degree baseball) are way more popular though because they’re easy to play in poor countries. They require no commitment from parents quite often, and facilities can be makeshift…And also apparently teams of 11 want to play against teams of 20 or whatever lmfao

I am generally an idiot when it comes to understanding market multiple. I am looking forward to see what P/BV multiple (the range) Fairfax's stock trades at in the coming years. I think Fairfax's 2010-2020 multiple range was something 1.0x to 1.3x range. That looks much too low to use today, given the strong performance the company has delivered over the past 5 years and its strong prospects. But what is an appropriate multiple range to use today? Interestingly, what multiple will Mr. Market use? I am not optimistic. I think there is a good chance Fairfax stays cheap. For a whole bunch of reasons. If I am right, the silver lining is Fairfax will be able to buy back an enormous amount of stock at a low valuation. For long term shareholders that would an amazing outcome. Of interest, that is exactly what they have been doing for the past 6 years.

Antifa is not real. Must be my imagination. ROFL https://www.ngocomment.com/p/562-years-in-prison-all-members-of 562 Years in Prison: All Members of North Texas Antifa Terror Cell Now Sentenced The 16 members of a North Texas Antifa terror cell have been sentenced to over 562 years in prison in the first federal Antifa terror case in U.S. history.

This is an interesting document. Thanks for sharing. The discussion around buying on ATS is interesting. It seems like they can exceed the daily limit by bidding on an ATS. I think they have done so on occasion when looking at insider filings but I wasn’t curious enough to figure out how they were able to do so. In this way it makes sense to cross blocks on the TSX and save the room for the ATS if necessary. We think they bought a 416k share block last week but there can’t be many of those left so this allows for faster buybacks if the price is right and the capital is available.

Lmfao ok you’re clearly either off or trolling cuz this is like the third thing you’ve posted this afternoon that’s that out there. Ok so to follow up as the above is a bit lacking of a reasonable response in the event you just don’t understood and aren’t trolling, there’s a huge difference between high level athletes seeking ways to gain advantages, such as watching film to decipher plays, watching for pitches being tipped or even putting non banned substances on their sticks, bats, hands, etc…hell even grimy stuff like in the NFL lineman biting or eye gouging…it’s all widely seen as folks trying to gain an edge, but it’s 180 degrees different than actively lobbying to remove players from the game so you don’t have to compete as hard. High level athletes embrace the competition, they don’t generally(clearly there’s exceptions) hide from it. But it’s easy to see how one not familiar(I guess as you said, just a watcher) wouldn’t know how this is any different.

I believe this is the current TSX document: https://cdn-ceo-ca.s3.amazonaws.com/1in03pb-TSX_Company_Manual_-_April_20__2023__English_.pdf (ix) "normal course issuer bid" means an issuer bid by a listed issuer to acquire its listed securities where the purchases: (a) if the issuer is not an investment fund, do not, when aggregated with all other purchases by the listed issuer during the same trading day, aggregate more than the greater of: (i) 25% of the average daily trading volume of the listed securities of that class; and (ii) 1,000 securities; (b) if the issuer is an investment fund, do not, when aggregated with all other purchases by the listed issuer during the preceding 30 days, aggregate more than 2% of the listed securities of that class outstanding on the date of acceptance of the notice of normal course issuer bid by TSX; and (c) over a 12-month period, commencing on the date specified in the notice of the normal course issuer bid, do not exceed the greater of (i) 10% of the public float on the date of acceptance of the notice of normal course issuer bid by TSX, or (ii) 5% of such class of securities issued and outstanding on the date of acceptance of the notice of normal course issuer bid by TSX, excluding any securities held by or on behalf of the listed issuer on the date of acceptance of the notice of normal course issuer bid by TSX, and for the purposes of (b) and (c), whether such purchases are made through the facilities of a stock exchange or otherwise, but excluding purchases made under a circular bid; In other words, the 2% in 30 days rule seems to only apply to investment funds.

I take it you've never played competitive sports then. In competitive sports, pretty well everyone both wants and takes any competitive advantage that they have. That's why the things you are saying are silly, because they're so obviously incorrect, and pretty well everyone who even watches sports knows it.

But this document https://www.fasken.com/en/knowledge/2022/07/toronto-stock-exchange-staff-notice-on-normal-course-issuer-bids does not mention the 2% restriction. OTOH, it does mention the fact that only 25% of the average daily volume in the last 6 months can be repurchased in a given day, but that one block trade per week is permitted even if it exceeds this limit, and that no trades are allowed at the open (how many minutes after the open?) nor in the last 30 minutes of the trading day, and that trades on other exchanges do not have these restrictions, except in as much as they contribute to the total allowable shares authorized to be repurchased in the year by the NCIB.

There are those that dive and perform like most sports, but I'm guessing you haven't played much soccer or at a high level. We won the Provincial Championship twice as 14 and 15 year olds and I also tried out for one of the best clubs at the time...many players on that club eventually played at the college and national level. I wasn't as good as some of my friends who played at that level. I can tell you for a fact they aren't sissies. And back then, like you saw with the Canadian player a couple of weeks ago, if you were a top level player...they often did try and hurt you or break your leg. The diving started with the Italians and Brazilians...fucking divas because they won so many championships historically. But then it became habit and part of the game everywhere over time. They still are trying to hurt the top players, but diving is no different now than the push off fouls in the NBA, jersey pull flops by NFL receivers, or dives by a handful of NHL players. Any advantage they can get! I didn't play a ton of hockey, but I will tell you that hockey players are the toughest athletes. My 11 year old nephew, in the "no-contact" under 13 club he plays with, has been hit hard into the boards, corners, open ice, etc. He even lost a tooth on one hit...at 11 years old! You jump to the under 15 category, which allows hitting, and they are throwing around the weight like major-junior players. And when these kids get hurt, they want to be on the next shift! Cheers!

Ready for it!

This document https://corporatefinanceinstitute.com/resources/wealth-management/normal-course-issuer-bid-ncib/ would seem to suggest that the 2% rule during a 30-day period is back.

@wondering, I appreciate you taking the time to post your thoughts and questions. That is how we all learn. Here are some answers to your questions: "1. ...are you saying that the equity-accounted investments (20-50%) does not reflect the economic earnings of those." My post tried to weave together two different partnership models. The accounting treatment for each is very different (consolidated versus associate). Fairfax's share of earnings from the associate holdings (20 to 50%) showed up in the 'share of profit of associates' bucket. "2. When Gulf Insurance was equity-accounted, did Fairfax still have control in investing the float?" I don't know. My guess is Fairfax, as the minority partner, did not have control of the float. Kipco was the majority partner. "3. The head guy OMERS recently left the pension plan. Does anyone on the board be the know if this will materially effect the relationship with Fairfax. In the past OMERS seems to be the go-to guys for partnering on big investments? I guess it is a speculation question." I don't know. OMERS is a massive organization ($145 billion in assets under management?). The amount they have invested with Fairfax is pretty small (from their perspective) and they earned a solid return of the various investments over the years (collectively). It looks to me like Fairfax has been a very good and profitable partner for OMERS. I agree with your final point... I think Fairfax has a long list of companies they could partner with in the future. And given how strong the company's performance has been over the past 5 years, my guess is the list is getting longer...

I tried to look up how this ruile was framed and found this, which suggest that the 2% rule wouldn't apply to a company purchasing its own shares: "To prevent the company from manipulating the stock price, exchanges enforce daily purchasing restrictions. For TSX-listed companies, the daily limit is restricted to the greater of: [1, 2] 25% of the Average Daily Trading Volume (ADTV) of the shares. 1,000 securities per trading day. [1] (Note: There is a separate 2% rolling limit applied specifically to investment funds over a 30-day period, which doesn't apply to standard corporate equity). [1, 2]. The second note goes to a 2007 Stikeman Elliott document that summarizes the change from the prior rule which DID prevent a compan from buying more than 2% of its own shares over 30 days: "The rolling 2% restriction on the repurchase of shares within any 30 day period has been eliminated for issuers that are not investment funds. The new limit is now the greater of 25% of the average daily trading volume (ADTV) and 1000 securities per trading day. This limit will only apply to purchases made through the TSX. The rolling 2% limit for investment funds remains. " That was 20 years ago, but it would not surprise me that there is a more recent version. Does anyone know?

Thanks for reading!

Nice write-up, thanks.

My guess is Fairfax wants employees to write new business - if it hits Fairfax's underwriting hurdle rate. Incentives drive behaviour. Below are a couple of details. They provide some useful information. Underwriting profit: One part of the compensation program is the employee stock ownership plan. Part of it is linked to underwriting profit. Exhibit 1: Prem Watsa on Employee Stock Ownership Plan (2025 Annual Report) Fairfax also has an Employee Stock Ownership Plan that is available to essentially every employee in the company. The plan offers each employee the opportunity to take up to 10% of their salary annually in Fairfax shares. The company will automatically match 30% and then if certain targets are met (primarily underwriting profit), the company matches an additional 20%. The participation rates differ by company but generally for our large companies, we have a participation rate of approximately 60% and it has been increasing over time. (More on this plan in the Miscellaneous section at the end of the letter.) Long term timeframe: Another part of the compensation program is the annual bonus for senior executives. 50% is cash and 50% is Fairfax shares that vest over 5 years. Exhibit 2: Prem Watsa on Employee Ownership (2025 Annual Report) We continue to encourage all our employees to be shareholders of Fairfax. We think it will be a great investment for them over the long term and great for the company to have our employees as shareholders in the company. As part of that initiative, close to 10 years ago we decided to have a general principle that our annual bonuses to senior executives across the company would be awarded 50% in cash and 50% in Fairfax shares that vest in five years. As these bonus shares are awarded, the company buys the shares in the market (which comes out of shares outstanding) and they are recorded as treasury shares, as shown in the table below. As the shares are vested and or exercised, the shares are then reissued and come out of treasury shares and back into shares outstanding. You can see over the years our treasury shares have increased from 0.6 million to 1.8 million today. We think this is fantastic and hope they continue to grow over time.

Yes, I watch soccer at best, 2-3 times during a World Cup or Olympics type big event. Otherwise can’t stand it and think it’s for extremely well conditioned sissies