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The $2.5b includes Q425. I don’t think it’s helpful to look to try to match the source of earnings. This is another attempt from me to consider the holdco operations differently from the insurance subsidiary operations. In this case, the holdco did own $400m of Poseidon at the holdco at the sale price so I suspect that is capital available for buybacks. The rest of it would come from new debt like the recent $750m 30-year issue and mostly dividends from the insurance subsidiaries which have a lot of cash on hand to pay dividends.

Agreed. I like the idea of a stable company like Berkshire buying highly cyclical businesses that generate significant free cash flow at the top of the cycle, and over earn on average across the cycle. They’re almost uniquely positioned to own businesses like these given the stability of the energy assets, the strength of the balance sheet and the constant need to put float to work.

It doesn’t matter he will be pardoned.

Of the 2.5 billion or so in buybacks, how much of it can we estimate came from FCF? Is most of it from the Poseidon sale?

Much to your chagrin, you just earned a MAGA cap...ha!

Yeh some dudes have lost their mind, but need to remember that Trump is a vaccine for woke. It wasn’t too long ago that men were women, you were a bigot for not agreeing so, kids should be injected with hormones, white privilege means you can’t have an opinion, can’t talk about immigration without being a racist, discrimination in college admissions…. Pretty long list. And I’d say that many of the aforementioned ills haven’t really gone away either, Trump is great in some ways but terrible in others too.

Smart man turns into moron...MAGA to blame! They need to create a MAGA vaccine, but I doubt this administration will since they don't believe in them unless there is a world-wide pandemic. Another of the mighty who have fallen after associating themselves with Trump and his beliefs! Literally went from brave soul conspiracy nut to right wing loser conspiracy nut...the chart looks nearly identical to Giuliani's fall except replace the underaged hotel room sexcapade with a Russian double-agent girlfriend scandal! Cheers! https://www.yahoo.com/news/politics/articles/judge-awards-hunter-biden-1-153923367.html

Sorry if the quality is bad. In retrospect, it's kind of amazing just how stupid the Dot Com bubble was.

Wow. Really interesting. The last few moves have been awesome...high quality companies in depressed industries: OxyChem, Taylor, and now another homebuilder

Cato Institute: World Hyperinflations

I figured out how to get ahold of some and thought they were cool. 2008 - Washington Mutual.pdf 2008 - Lehman Brothers.pdf 2008 - Freddie Mac.pdf 2008 - Fannie Mae.pdf 2008 - Countrywide Financial.pdf 2008 - American International Group.pdf 2002 - Yahoo!.pdf 2001 - eToys.pdf 2001 - Enron.pdf 2000 - Yahoo!.pdf 2000 - Cisco Systems.pdf 2000 - Amazon.com.pdf

Sure but it would give a certain short seller another opportunity or at least something to think about - especially if they still hold the same beliefs about the company. Just thinking out loud - you guys are great and help crystalize these issues.

They will get more creative. Yes, the TRS trick could always be used again.

They will get more creative.

You might have a higher return hurdle than they have. To me it easily clears their 15% return hurdle.

Can't really speak to UA and Andrew Peller b/c admittedly don't follow those industries and candidly don't understand what Fairfax management sees there. So to answer your question, would probably prefer Fairfax buybacks to THOSE investments (little as I know or care about either). And b/c of your point that dividends are and can be sent by insurance subs to holding company, not sure it matters specifically which is buying what - they're all part of Fairfax Financial. The point I was trying to make is that Buffett passed on repurchasing BRK shares at times when the stock traded at and below BV, i.e., ridiculously cheap - for reasons I could never understand. Fairfax is not at such a price, though it is cheap enough for me to have purchased shares this year at various times. But it raises the thought that what if Fairfax repurchases its limit of stock for the year and then the stock price craters to BV or below?

I don’t think they want to sacrifice the 3:1 investments to equity leverage. I’m very happy for that. They are turning over the portfolio which allows them to keep making new investments. The risk/reward buying FFH is better than anything else they could buy.

The $1.7b they have spent on share repurchases is a big investment, and I agree that it is reasonable to ask whether they didn't have other, better opportunities. I wouldn't want them to buy back shares if it meant they couldn't take out minority holdings like Allied. But how would you compare buying more Fairfax to buying Under Armour, for instance, or buying wine producer Andrew Peller? I have SafetyinNumbers on the conscience, and I am imagining him saying, right now, that we are failing to make the distinction between the insurance companies (who are buying Peller and UA) and Fairfax the holding company, buying Allied and doing repurchases. But to some extent, the insurance subs could be buying more things like Peller and UA instead of sending dividends to the holding company to repurchase shares and buy out preferred shares and buy out the minority interest in Allied. So it may be fair to compare acquisitions, whatever level they are at. I for one think that Fairfax repurchases are a very sensible investment, and if they can't sensibly expand their insurance holdings, I would just as soon see them repurchasing rather than increasing the dividend or, like Berkshire, just holding onto a mountain of cash. And I like to see them stay small and nimble, like Berkshire was at an equivalent point in its trajectory. By my calculation, that would be in 1992, when Berkshire had a market cap of $15b, which would be the equivalent of Fairfax's current market cap of $35 in 2026 dollars. I expect Fairfax will keep growing, but I selfishly want it to stay under $100b for the foreseeable future, and not get to Berkshire's $1.1t where small opportunities like the $1.4b Fairfax paid for Eurobank in 2014 don't move the needle.

I thought your reasoning was correct, then it occurred to me that, if they're bumping up against the 10% limit, they might not want to close the positions, because they don't have the capacity available to buy back the shares. In that scenario, if you pretend the TRS is approximately like a buy back if you squint, then the volume of shares the company can acquire through the combo of a maximum 10% buyback and maintaining the TRS is effectively higher than the combo of a maximum 10% buyback and closing the TRS (while being unable to buy back shares equivalent to the TRS because of the 10% limit.)

I think this is a good way to think about it. The TRS position is basically leverage on their own shares. Fortunately, they are in a strong enough cash and leverage position that the volatility can be handled without too much problems. They also bought so low that the likelihood of needing to pay on them for further drops was remote. At least we can say that in retrospect. Does anyone know the run rate cost on keeping this position going? I guess the only other thing to consider is that if the share price does fall, they have to pay up cash to Settle, at the same time that it would be opportune to buy back their shares as well. I'm sure they have a good strategy around this investment, and we will realize what it was in due course.

You may be right. Perhaps I'm viewing the issue more as a Berkshire shareholder with a younger Buffett at the helm. They are different companies and different management teams. Gotta always keep that in mind.

Not really, unlike what you are implying, what I was saying is if they cash out the gains on the TRS and simultaneously buy back the shares when they are priced lower, you'd actually be gaining from the increase in share price. The only thing you would be locking in is the lower taxes. That's a subtle difference.