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Looking through the deal press release, seems like this is much more of a retail, distribution business. 101 store locations plus an importer business in addition to the wine and liqueur brands.

Honestly I was only half joking about the KW land redevelopment or Recipe synergies. Is there anything unique about this one? Are Canadians really loyal to it? Scratching my head down here in the US as I’ve read for years about how volumes are struggling and even Napa and Sonoma wineries are closing left and right. And if Prem thinks it’s cyclical, why not buy STZ, TAP, BUD, DEO?

Thank you for the Leucadia reference...it's been forever since I even thought about the company, much less saw something in writing about them. -Crip

Here is a stab at what Fairfax might be thinking… Management believes the future is likely to feature higher highs and lower lows in inflation and interest rates. Long-term financing becomes more valuable. From that perspective, paying an extra 1% today for a 30-year bond may be a bargain. Imagine two scenarios: Scenario 1: The last 20 years (1982-2020) Inflation trends lower. Interest rates trend lower. Refinancing gets cheaper over time. In this world, issuing 30-year debt often looks expensive in hindsight because you could repeatedly refinance at lower rates. Scenario 2: Th current environment? Inflation is structurally higher. Government debt levels are much higher. Interest rates are more volatile. The risk of a future refinancing at higher rates is meaningful. In this world, a 30-year bond is valuable because it removes uncertainty. The company is effectively saying: "We are willing to pay a little more today so we never have to worry about what the bond market looks like in 2036, 2046, or 2056." This is very consistent with Fairfax's historical approach to risk management. The company often sacrifices a little current profitability to reduce exposure to adverse scenarios.

If you are just trying to match S&P there is no point in managing 50 2% positions, just buy VOO and call it a day...just sell a small% if you need cash

Great write up! Wasn't it AIG & other financial companies that also took on the counterparty risk for the CDS. Imagined if the government allowed it to fail like Lehman and what a catastrophe for the whole financial system this would have had. They recognized the exposure but did not imagine their hedge could have been wiped out entirely by the same companies that were taking these extraordinary risks?

@MMM20 that's funny. Ian Cumming and Joe Steinberg of Leucadia fame bought four wineries the first in 2000 iirc. They opined in every shareholder letter about how bad they were as businesses but they liked wine and wine lubricated camaraderie. Eventually they spun off the wineries in 2013 as Crimson Wine Group. It's publically traded on the OTC but tiny and still a terrible business. lol

>20x FCF for wine? Isn't that a struggling industry with typical multiples in the mid single digits? What's Prem's angle here? Working with KW to redevelop the land? Synergies with Recipe?

@Viking sorry I am a little late here but, I've been thinking about this since they raised the debt. Do you have a sense for why they chose such long-term financing with a 2056 maturity? I believe you asked management about this during AGM week, but I can’t remember their response. At a 6.2% coupon, the debt was issued at ~123 bps over the 30-year Treasury, at that time. I understand the logic of locking in long-term capital, but I’m trying to better understand why Fairfax would prefer 30-year debt versus something shorter-dated, especially given the cost.

This is exactly why you don’t truly understand Iranian culture, its people, or its religion. “To know your enemy, you must become your enemy.” — Sun Tzu The last two points will start shifting right after Friday’s signing. Iran is about to undergo a major growth acceleration. Simple question: What percentage of Iran’s $300 billion reconstruction fund will American taxpayers end up covering? Just asking that question reveals how much the US has lost in this outcome.

Don’t forget the protection payments from GCC countries, which are stepping up as they no longer fully trust the US to safeguard their interests. There will be no gloating until we see the full details of the MOU. Only then can we determine which side emerged stronger after the war. Based on the rumours of deals flowing, I strongly suspect Iran came out significantly ahead and is poised for a major growth acceleration in the coming years. As I have said in the past, they enriched to 60% to get a deal and Trump played into it. - it’s a beauty!

I have a midsize position and sold the shares in my retirement account. The taxable shares are a tougher decision because some of them will hit the 1 year mark (and lower capital gains) in a couple of months.

I have a small starter position in this. Bought a little early but I almost never bottom tick anything. If there is anyone who isn't going to vibe code software, it's underpaid municipal employees in cities that you never heard of.

The Kennedy-Wilson take-private transactions was completed. https://www.fairfax.ca/press-releases/fairfax-announces-completion-of-kennedy-wilson-take-private-transaction/ In addition, an affiliate of the Consortium (the “Borrower”) entered into a Term Loan Credit Agreement (the “Credit Agreement”) pursuant to which it obtained a three-year US$1.3 billion term loan facility. In connection with the Credit Agreement, Fairfax agreed to provide a stand-by guarantee pursuant to which Fairfax would agree, upon the occurrence of certain events under the Credit Agreement, to guarantee in favour of the lenders the obligations of the Borrower under the Credit Agreement.

Trump - where men are men

Great post, and I think you are broadly right, but I would be slightly careful with the “$415m / 5x / sub-4x” framing. The $415m is the disclosed cash purchase price. It is not necessarily the full economic cost to Sleep Country. Through the Chapter 11 sale, Sleep Country is buying all of the operating assets, but it will also assume certain operating liabilities and selected contracts/leases. So the real economic cost is probably higher than $415m, although still materially lower than the old enterprise value, because the funded debt and unwanted liabilities should largely be left behind. That aside, I appreciated your post because it piqued my interest enough to put a few tokens in the jukebox, so to speak. File note and workbook attached. Where I landed (after crunching various LLMs etc) Disclosed cash purchase price - $415m Analyst-estimated effective cost - $500–600m Stress-case effective cost - $650–700m The $500–600m range is not a disclosed number. It is my attempt to account for selected operating liabilities, working-capital leakage, customer obligations, cure costs and initial integration / restructuring. The $650–700m range is more of a stress case if the leakage, assumed lease burden, or cure costs are worse than expected. Where I agree with you is that this looks potentially very attractive if Sleep Country can restore buyer-owned EBITDA to something like $110m+. Sleep Number did about $78m adjusted EBITDA in FY2025, down from about $120m in FY2024, and Q1 2026 was ugly. But Q1 was distorted by weak demand, product transition, liquidity stress and operating deleverage. I do not think annualising Q1 tells you the normalised value of the asset. The more useful question, and the thing I really care about, is whether Fairfax / Sleep Country are maintaining capital allocation discipline. To that end, I tried to answer: What EBITDA does Sleep Country need for this to clear Fairfax’s 15% hurdle? At around $550m effective cost, assuming roughly 55% FCF conversion and a 6x year-five value, I get required buyer-owned EBITDA of roughly $114m to clear a 15% mark-to-market IRR. That is not the same as saying the business immediately earns a 15% cash yield. The strict no-growth cash-yield test is tougher and requires EBITDA closer to $150m at the same cost / FCF conversion assumptions. But on a five-year mark-to-market basis, $114m looks like the key hurdle number. That is important because it does not require a heroic demand recovery. It mostly requires cost-side execution: public-company cost removal; duplicated overhead reduction; store / lease optimisation; procurement and logistics efficiencies; some marketing efficiency. So can Sleep Country take a distressed $78m EBITDA platform and create roughly $35–40m of buyer-specific EBITDA improvement? That seems plausible to me, especially because this deal likely only makes sense under Sleep Country. A generic PE buyer probably does not get the same strategic benefits. Sleep Country already has category knowledge, vendor relationships, retail operating experience, digital sleep-brand experience and Fairfax permanent capital behind it. Sleep Number is also not just a mattress-store chain. It has a recognised U.S. brand, installed customer base, smart-bed IP, SleepIQ software/data, app engagement, patents and a large U.S. footprint. I would not value that at some fantasy health-tech multiple, but I would not ignore it either. Inside Sleep Country, those assets may be worth more than they were inside an overlevered public company. On the buybacks, I wholeheartedly agree. The historic capital allocation looks terrible in hindsight. Buying hundreds of millions of stock at very high prices while the balance sheet later collapses is exactly the sort of thing that transfers value from old equity to future distressed buyers. Painful for SNBR shareholders, but potentially attractive for Fairfax / Sleep Country. Is this a game-changer for Fairfax? No. But it is another useful data point that Fairfax-owned subsidiaries are doing the kind of acquisitions one would hope for at this stage of the market: buying real assets from forced sellers, using industry knowledge, avoiding the obvious crowded trades, and still appearing to underwrite against a reasonable return hurdle. There is also a management/culture option here. Stewart Schaefer has already shown he can build Sleep Country beyond a plain mattress retailer through Endy, Hush, Silk & Snow and Casper Canada. And the broader Sleep Country culture traces back to Christine Magee and the founding team, who built one of Canada’s best-known specialty retail brands. If that operating culture can now be applied to Sleep Number’s U.S. brand, IP, customer base and footprint under a cleaner balance sheet, Fairfax may have bought more than a cheap distressed asset, it may have bought an option on a much larger North American sleep platform. So my read is: Bad outcome for old Sleep Number equity. Probably an acceptable outcome for creditors versus liquidation. Potentially good bolt-on for Sleep Country if effective cost is around $500–600m and buyer-owned EBITDA gets back above ~$110m. Very good deal if EBITDA gets to $140m+. Much more marginal if EBITDA stalls around $80–100m or if assumed lease/cure costs are worse than expected. The bigger Fairfax point is that this may actually make the original Sleep Country acquisition look better. Sleep Country is not just a mature Canadian mattress retailer; it can become a platform for distressed North American sleep-sector consolidation. This is exactly the kind of sub-level capital allocation that matters over time. Ultimately, my takeaway is that the deal only really makes sense under the Sleep Country umbrella. That is not a weakness. That may be the whole point. There are far shinier things at the moment than mattresses, but the GMs on a humble mattress I still find quite staggering Sleep Number Analysis.xlsx Sleep Number Analysis.pdf

I own RWWI as well. They are a value added distributor of ADSK software. However, one has to keep in mind that the recent billing changes moved more power to ADSK because they control more and more of client relationship. This is true even though financially the changes are more or less a wash. This is something to watch out for.

Don't forget the whole event was exclusively televised by Paramount, owned by his buddy and donor Ellison. It turns out that you can just do stuff here. The other side of the American exceptionalism coin.

I go on vacation ... and the bottom falls out of the market! Enjoy .... but keep in mind that just as the market temporarily overshot upwards, it will also overshoot downward. WTI sub USD 80, is a trading opportunity, not an investment. The war isn't over yet, all goes as planned it is just on pause .... if Israel and Hezbollah actually stop fighting. Bibi is up for election and needs the fighting to continue. Hezbollah isn't about to stop until Israel pulls back. All benefit from higher oil prices if the rockets continue to fly. Enough randoms to reasonably ensure continued price spikes, and ongoing trade opportunities. Not quite the message being sold. SD

https://www.zerohedge.com/markets/spacex-erupts-after-hours-trading-soaring-above-210-and-surpassing-apples-market-cap Seems a tad bubbly and this is coming from somebody who has drunk the Musk Kool-aid . No position in spacex but just enjoying the show.

Seriously, @thowed, The Royal House of the United Kingdom have over time [decades] been given a lot of coverage here in Denmark, and the ascent of Charles to King has changed a lot, mirroring what you have posted. Poundbury mentioned, i.e.

I own a chunk of RWWI - you guys should look at again - if you know/remember it's basically a Royalty on ADSK. And dirt cheap at moment. Seems like retiring Directors have been selling & is so illiquid it has suppressed price. And still residucal concerns that ADSK might shake things up. But feels like RWWI too big for them to want to piss off. And the cash flow is looking good. Separately - it's so wild that people here are buying ADBE, ADSK, INTU - can you imagine that 5 years ago?!

Ha, funny you know about that guy - I think of here and the arrogant know-it-alls on X as being completely walled off from each other. I hate X, full of idiots, but I do still find it useful for researching small-caps - there are a handful of great people you can exchange ideas with. Otherwise it makes me appreciate this place even more for how civilised and decent it is (excluding Politics thread!).

Fair enough. Feels like this is a Narrative drives Price thing atm, not you, but generally. It was untouchable for so long, but now the price has corrected, everyone feels more nervous (myself included!). It's crazy it's just been at the Nov 21 peak price. For me, the main issue is size - how much bigger can they get? Can Elephants gallop? But then, given the prices, the volumes probably can get bigger. Meanwhile you have an Outstanding family-led management team who execute so well. I guess the turnaround is predominantly China/Asia recovery - though I imagine all the IPO money might help a bit too! (Or will that go more to Ferrari...). I also hope it is inflation-proof.

@WayWardCloud, That reads... hmm ... <searching, searching!> ... semi-kinky!