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Did Trump say that?

I didn’t have a clue what a CDS was at the time, but had a coworker who was involved, not with buying them, but creating and selling them to other companies on behalf of the property casualty company I worked for. We used to have quarterly q and a sessions with employees being allowed to ask senior management about the quarterly results. A few quarters in a row we recorded some losses from the part of the company that he was working in, which involved investing in and selling derivatives such as CDS’s. I was sort of the lone employee gadfly who was willing to ask questions about negative items to management, and I believe I’d been influenced by Buffett’s comment that derivatives were financial instruments of mass destruction, so a few quarters in a row I asked the leadership why we were involved in creating and selling financial instruments that we were losing money on, in an area we had no specific expertise in. Sometime later, but before the GFC in 2008, the company announced that they were shutting down that department and my coworker had to find a job elsewhere. All by way of noting how unusual it was at the time for someone like Francis Chou to be working with an insurance company, understanding what a credit default swap was, how valuable they would be in certain economic environments, and encouraging Fairfax to purchase substantial amounts of them. I was happy the company I worked for simply avoided a major problem and a near death experience such as AIG with their Financial Products division experienced by not selling credit default swaps to other parties. But I’m not aware of any insurance company other than Fairfax that took the right side of that trade…. Kudos to Francis!

Not sure how many people know this, but Francis would have been the first and probably only mutual fund manager to have bought CDS for his funds, if the regulators had been a tiny bit faster in approving his request. Francis had made a request to regulators to allow him to buy CDS in the Chou Funds, but by the time regulators approved the request, the CDS prices had started to move. He was also instrumental in Brian and Fairfax looking at the CDS in the first place and buying more as things started to look worse. Cheers!

I think Wade Burton talked about public versus private on the most recent conference call (strengths and weaknesses of each). I think he said they are agnostic - they want the best investment. The more I hear Wade talk the more I like him. Very logical and rational.

I don't know if it's intentional or not, or perhaps related to their bigger size allowing it, but I do see them doing more private equity type investments, a lot more control investments, or atleast having significantly more board representation rather than minority public market positions. An obvious exception to this being their recent position in UnderArmour. The lost decade errors not withstanding, I see them as vastly superior capital allocators than pretty much any of their investee management, who tend to be more operators. So their closer involvement is a good idea in this sphere. AGT foods recent balance sheet restructuring is a good example.

But the Treasury can - by sending direct checks to consumers (2020) or by writing checks to take over companies (Fannie/Freddie), or by coercing corporations to buy out failing competitors, or by deficit spending in the trillions. All while Fed Reserve holds rates at 0% and buys treasuries. You tell me which Congressman, elected by popular vote, is gonna say "fuck it - we've got to do the difficult thing and deal with the pain instead of the easy thing and print" And not just one - but enough of them to push through legislation. America doesn't have the will to do the hard/right thing Exactly. Which is why it's easy to know they'll do the easy thing - and print.

@Txvestor , one of my central ideas is something changed around 2018 with how they picked and constructed their equity portfolio. But it was even more - they started to focus more on optimization (like what got started in insurance in 2011). All you have to do is look at the companies they owed then - the biggest positions. It was loaded with very poor performers (putting it politely): - Legacy: BlackBerry, Resolute Forest Products/Abitibi, CIB, Sandridge Energy, Recipe - Purchased 2014 to 2017: Eurobank, Fairfax Africa, APR Energy, Farmers Edge, Boat Rocker, EXCO Resources, AGT Foods Issues: some combination of weak management, weak balance sheet, weak profitability/cash flow (some had all three). Eurobank, EXCO and Recipe are much improved companies today. The jury is out on AGT. Fast forward to today… the portfolio is loaded with queens. Common theme: all have strong management, strong/solid balance sheets, strong/solid profitability/cash flow. Complete 180 from pre-2018. That has to be by design. The change is simply too stark.

If anything, all of this takes time. I'm certain nothing will happen until we're peering into the abyss. There will be opportunities.

And you're right, they will print. But it's not that simple. The Federal Reserve can't fix a massive credit crisis just by providing liquidity to the Treasury market. Many of the systemic problems during times of extreme stress require fiscal policy, an act of Congress. The Federal Reserve is simply a lender of last resort; they legally can't spend money. Have you taken a good look at our Congress lately? I've been more impressed by the intellectual display of chimps at my local zoo. A fiscal crisis would leave everyone with nothing but bad options. I do not expect good judgment to come from our current government.

Exactly! On this last point I completely agree. Their corporate and business structure is a thing of beauty. They don't need to do a whole lot more than hit singles on the investment side to compound relentlessly and for a long time. I'm glad you mentioned the likely link between the big win with CDSs and the subsequent upside down macro bets and shorts. I highly doubt the lost decade would have turned out the way it did without that home run in 2008/9. In the aggregate it may even have cost more. Lastly even excluding the Shorts, the deflation swaps and the market hedges. Their investment returns were well behind most benchmarks. They sure had some beauties during that period, everyone and their mother knows about the infamous blackberry, but Sandridge energy, Resolute forest and a couple others that don't immediately come to mind. They lagged the benchmarks significantly to the extent that a colleague of mine said they look more like gamblers than investors. 2019/2020 was truly a turning point. I didn't see them do anything crazy during the Covid market selloff, in fact they doubled down on what they knew best ie TRS on their own shares. And masterfully handled the emerging inflationary environment on the bond side. They kept more to the private equity side as well. I think everyone here sees a relatively viable path to 15-20% annual compounding for the next 5-10yrs if they stay in this lane.

Yes. But we've seen what happens when it's time to collect. The losses are socialized and the government prints and deflation is avoided. It's not morally right. And you should invest in the companies owing the credit. But as long as we're the reserve currency, we'll print. No, printing is the alternative outcome to offset the contraction in credit. And they'll print. And they succeeded both times. And will do again.... because they'll print.

As a starting point, more than last year. 2025 - “During the year we purchased 1,006,535 subordinate voting shares for cancellation for cash consideration of $1.6 billion, or $1,615 per share", said Prem Watsa, Chairman and Chief Executive Officer.” Fairfax thought their shares were very cheap a year ago - they were very aggressive with buybacks. The shares closed Friday at $1,625, about what they paid in 2025. But the value of Fairfax has increased quite a bit over the past year. And it is going up nicely every quarter. So Fairfax is a much better deal today than it was a year ago. As a result, I think Fairfax will be more aggressive. In terms of $, Fairfax has lots of options. They can be very creative when they are motivated (look how they funded the dutch auction in 2021). If value keeps growing and the shares stay at current levels (or go lower) it could get to a point where Fairfax acts (gets creative and more aggressive with buybacks).

Money in our economy is primarily credit. When there is a run on the system, and the means for originating credit come to a halt, deflation is the only outcome due to the money supply rapidly shrinking. 2008 and 2020 were both instances of the Federal Reserve and Treasury racing against deflation in order to stave off collapse of the financial system.

We made a deal with Iran. Whoopee fucking ding dong.

Let’s assume we stay between 1.2-1.4x BV for the remainder of the year. How much do you think they spend on the buyback? My working assumption is half of the dividend capacity of the insurance subsidiaries ~$2B, proceeds from Poseidon held at the holdco $400m, and potentially another $600m from the proceeds of Eurolife. I think the constraints are investments:equity leverage and debt to equity.

Regarding buybacks, my guess is the persistency of current low stock price has likely caught Fairfax a little by surprise (like the rest of us). Beginning in Q4 of last year Fairfax has been very aggressive with share buybacks. And it seems to be having little impact on the share price (this has surprised me). Fairfax also been very busy on the capital allocation front in recent months (lots going on in addition to buybacks). If the share price stays at current levels, I think there is a good chance that Fairfax will get more aggressive with buybacks. They are very opportunistic. And also very good at sizing their bets.

PBR.A back below $12 and I will reload.

Especially when the MOU (which is an agreement to negotiate an agreement) isn't going to be signed for another 5 days.

The use of minority parters to fund their acquisition spree from 2014 to 2017 was brilliant. An important outcome is the size of Fairfax’s insurance business is overstated (net premiums, float, underwriting profit). And that is because of the minority interest in Allied World and Odyssey. At least that is how I think about it conceptually. When Fairfax takes out minority shareholders, the earnings (driven by NPW, float and UP) that accrues to common shareholders will increase. It is the same as buying another company. Of course, Fairfax also locked in a low purchase price - when they put each of the original deals together. That is icing on the cake. This given an elegant way to continue to grow in a soft insurance market. (Not that anyone cares.)

Draft and 500k soldiers to Iran. You guys are crushing it. How about we sending a MAGA volunteer Army? Sign up at a recruitment center and show these non believers what you are made off.

Based on the track record of previous announcements by Trump I think it would be optimistic to even apply Churchill’s WWII comments to the situation: ”Now this is not the end. It is not even the beginning of the end. But it is perhaps the end of the beginning.”

@SafetyinNumbers , the Fairfax story is full of nuances. The “lost decade” moniker I like to use is catchy but it does oversimplify the reality of what was actually happening under the hood. Fairfax’s insurance business was slowly getting transformed for the better - and it doubled in size from 2014 to 2018 (acquisitions). Basically the insurance spring was getting coiled tighter and tighter from 2010 to 2020 (in terms of earning power) - and then it doubled in size again from 2020 to 2025 (hard market). There are many stories like this… where the earnings power had increased significantly but it was being masked by losses from equity hedges/shorts/poorly performing equities. There are so many interesting angles to the Fairfax story.

Oils still 20% higher than pre war and ...."oil hasn't gone up"...

https://www.wsj.com/world/middle-east/iran-threatens-to-pull-out-of-talks-after-israel-strikes-beiruts-outskirts-d0390e22

in 10 or 20 years