All Activity

IRGC unleashed their pit bull, Hezbollah, onto Israel. Israel clobbering Beirut. Iran says they will now attack Israel. More pain ahead for Iran. So much for MOU signing today!

It's already happening. Iran's leverage will not last forever- Gemini: Saudi Arabia and the UAE have aggressively rerouted and expedited alternative pipeline exports to bypass the restricted Strait of Hormuz. Saudi Arabia has maxed out its East-West Pipeline to redirect millions of barrels daily to the Red Sea port of Yanbu, while the UAE is utilizing and accelerating pipelines to the Gulf of Oman port of Fujairah. [1, 2] Details on how the countries are currently shipping their oil include: Saudi Arabia: Rerouted its East-West pipeline to run at full capacity (roughly 7 million barrels a day), shipping crude and aviation fuel out of the Red Sea directly to Europe and the West. [1, 2] The United Arab Emirates: Increased usage of the Abu Dhabi Crude Oil Pipeline (ADCOP) to send crude to Fujairah for export, completely outside the Persian Gulf. Abu Dhabi is fast-tracking a second major pipeline to double this bypass capacity by 2027. [1, 2] Ship-to-Ship (STS) Transfers: State firms like ADNOC and Aramco have utilized transshipment hubs, moving some tankers through or just outside the strait in the dark trade to offload to other vessels. [1, 2, 3] Oman Storage: The UAE has moved and stored crude at alternative facilities like Ras Markaz in Oman, allowing buyers to load oil without traversing the traditional Hormuz route. [1] Despite these workarounds, the global energy map is permanently shifting, as Gulf states increasingly view avoiding the Strait of Hormuz as a permanent necessity for energy security rather than a temporary fix.

Liars and cheats don’t last? Inflicted enough damage, remember Israelis begged for US help for Iran to stop attacking them. Former Israeli PM confirmed, Iran maintained the agreement (start at 1:40 mark). Remember what Trump said, “everyone hates Israel. “ https://x.com/NEWSMAX/status/2065882550233391512/video/1?s=46

100%. I expect hell to rain down on them from the US and Israel when they break the MOU. Iran can't be trusted one iota. Unlike Biden/Obama who trusted Iran and gave away the store to terrorists. Once they break the deal - how long will it take to inflict more damage to Iran? about 24 hours - just like when Israel/USA took out their Ayatollah and key IRGC thugs. Iran has been set back tremendously regardless of what the CoBF cheerleading section says.

Wow, now I get your point! What makes this strategy genuinely brilliant is a layer most investors miss and one I hadn't fully internalized until now: regulators force insurers to hold low-risk fixed-income assets with the float, which at first glance looks like a constraint that caps returns. But by structuring acquisitions as convertibles etc., Fairfax hijacks precisely that regulatory straitjacket and turns it into a compounding acquisition engine. The "boring" bond portfolio isn't just parked capital anymore, but it's quietly pre-financing takeovers at locked-in prices, subsidizing itself through above-market coupons along the way. When conversion finally hits, Fairfax owns the company at a cost basis that the open market never had access to. Funded largely by the target's own interest payments. The float isn't the constraint. It's the weapon.

FWIW, I think any upcoming signed deal is mostly a stop-gap. Certainly worth the cost and effort but subject to breach at any time and return to where we are now. Deals with liars and cheaters don't last. Doesn't appear that we have inflicted enough damage for change of leadership in Iran.

I think there will be a large effort to pivot away from that choke point by major producers in the area.

That's cool. I'm very much looking forward to seeing the real MOU. If one's ability to wage war is destroyed and nuclear capabilities are set back many years - and SOH is open - call it anything you like. I find it completely laughable. Oh, I especially love the part about how this keeps Trump out of jail ! Quite the imagination.

If we get a 60 day window why wouldn't everybody scramble to top up their inventory? We might go right back to a blockade after 60 days and presumably China and US won't be drawing down SPRs during the 60 day window, if anything they will be building them back up. So if that is the case why wouldn't oil go UP if there's a deal?

I can't predict the future. I can only take and manage risk. My personal bet is that CSU has put in its bottom but I would expect some more consolidation under 3250 CAD. We have just been through a season of peak positive catalysts - earnings, the Annual Meeting, and a large open insider buying window. This coincided with a cooling of the "all software is dead no matter what" narrative into more of a pick your winners and losers narrative. Adobe and Salesforce kept going down but IGV as a whole tried to rally. At some point in a stock's bottoming process, investors shift from "did I buy too much of this too early?" to "is the bottom in and I don't own nearly enough of this, why didn't I build a proper position??" mindset. For me, I built my position, its big and taxable and I'm not going to sell anything here. Average cost basis is $1702.87 USD on CNSWF and $2672.095 CAD on CSU

Very well written substack article about the Korean market and the Value Up program, that is supposed to improve corporate governance. https://substack.com/home/post/p-200629257

Even if there were a deal, the threat to the SOH is now latent. All it takes a few relatively low tech rockets, drones or $20k robot speed boats to close it. This asymmetrical tech didn’t exist 10 or 20 years ago, but it does exist now. Iran and other states have it. The Iran could not close the SOH in the Iranian- Iraq war or during the Islamic revolution in the early 80‘s but now they can now. Once the technological cat is out of the bag, it can’t be put back in.

Maybe, let’s be clear. UAE are a bunch of self dealing crooks: https://www.mofa.gov.ae/en/MediaHub/News/2026/6/12/UAE-Russia

I was just thinking that sometimes Fairfax gets involved in deals with partners who need capital, and sometimes they provide that to their partners in the form of an equity investment, while other times they do so in the form of debt instruments and sometimes they do both, with an equity investment alongside convertible debt. If the investments were made at the insurance subsidiary levels, then perhaps the debt portion of the financing would be viewed by regulators similarly to (and a replacement for) corporate or government bonds without running the risk of adversely impacting regulatory assessments of the risk levels. And since the bond portfolio is large and of relatively short duration, the insurance subs would appear to have a steady stream of maturing bonds that might be sources of debt financing. I don’t claim to understand the details of the Kennedy Wilson transaction, but the SEC proxy statement regarding the proposal indicates that Fairfax has provided an equity commitment letter promising to purchase “equity or debt securities, or provide debt financing” in an aggregate amount of $1.650 billion to allow the transaction to take place. Presumably, whatever portion of the total $1.650 billion is provided in the form of debt financing could easily be supplied by principal repayments of existing bonds already held at the insurance subsidiary level as they likely mature at the rate of perhaps $2 billion a month. Dozens of pages in the proxy statement list all of the entities at Fairfax involved in the proposal, including management and board members of numerous Fairfax insurance subsidiaries including Odyssey, Allied World, Brit, Northbridge, Crum & Forster along with the Holding Company. So I think @SafetyinNumbers was on the right track in suspecting that much, if not all, of the funds required for financing this transaction will be provided at the insurance subsidiary level.

Love ya cubs, but I agree with change

@Txvestor, you make a good point. There are two (updated) posts coming on that topic… should be out shortly “Those who cannot remember the past are condemned to repeat it." George Santayana

Return to Feb 28th status quo Return to Feb 28th status quo Explain? Cause last I checked their missle projection power was reduced by max 20% according to US intelligence, they’ve proven they can launch missiles at gulf/israeli targets at will and despite all efforts they closed the SoH for two months and despite the US attempts it could never be re-opened by unilateral force. If we want to talk about Iran’s war toolkit here, deterrents. their credible threats, their leverage… moving forward it looks greatly enhanced to me. And if that weren’t enough Trump is going to send them money, plus sanction waivers to get himself out of jail here. Then Gulf neighbors are going to pay tribute to keep the SOH open. Oh yeah - last I checked the MOU has kicked everything nuclear out to Phase II….and anyway the baseline here (for epic fury’s success) is what was available in Geneva Feb 27th at the negotiating table compared to today ….ive not seen much nuclear incrementalism in the deal rumors but let’s see. Israel/Bibi are livid because they should be……they signed up to change the game for the better in the ME…you can tell a story about things being much much worse in ME moving forward for all the reasons we discussed. Anyway my sense is that this deal looks so poor that I think Trump double taps Iran after the midterms. If things were left as they are here it’s frankly embarrassing for his legacy (which he cares about deeply).

Great write up as always Viking. You wrote quite extensively recently about the 2017-2025 period during which their execution has been near perfect and now here about their 2002-2008/9 home run with the CDS. I'm looking forward to the one about the intervening period as well, just so it's fair. I think it partly also explains the ongoing selling overhang in the stock. So it's an unsavory chapter but worth discussing. It may have also partly been why Prem felt the need to consolidate voting control.

Could you please explain the mechanism you have in mind in more detail? I think I forgot or misunderstood that too. How can the turnover of float (so about the 25bn you refer to) be used as a debt like funding? I always thought that the invested float is regulated. So like in fact most of it has to be invested into bonds and only a small fraction in equity. So if you'd invest a bigger portion into equity and change the "risk" (from a regulators perspective) when turning over after two years, you'd loose your rating. As the float returns from my understanding go straight to the holding (and you seem to refer to the float turnover, which from my understanding has nothing to do with returns). Of course the insurance subsidiaries could change the debt level; but again that would change the risk from a regulators perspective I guess. In fact I am missing the link between "turnover of float" and "opportunity to buy equity" without changing what regulators define as risk. Would be great to learn more about that. @SafetyinNumbers

Now you tell us. Thank you for the variant perspective. I sold Intel recently. Maybe I should have looked at the chart first. It's not the fundamentals driving the price up... Any other stock chart you could help us analyze? CSU hit the 200 days moving average last week: I was thinking about selling at that point, but it's a long-term holding so I'm not touching it right now. I think CSU will be trading on sentiment and not fundamentals for a long time as will ADBE.

Good point, @SafetyinNumbers. This has been a blind spot in my thinking about the company’s investment options. I’ve tended to think that they can only really afford to spend/invest what they earn plus what they can raise in the debt markets in any given year…perhaps $5 or $6 billion or so, with investment options spread out between buying out minority partners, paying dividends, buying back stock and making new equity investments. I’ve completely forgotten about the $50 billion or so of fixed income float investments, most of which is held at the insurance subsidiaries, and which is turning over at about $25 billion a year if duration is short and at around 2 years. This can be a source of debt-like funding (other than only equity) which can be used to help finance purchases and deals as you note above. And when that is not enough, it helps to have partners like OMERS who are willing to front money for larger purchases, receive preferred equity, and provide Fairfax with future dated options to buy back their interests. And of course, as @Viking has noted, the operating subsidiaries have the ability to raise debt on their own to help fund bolt-on acquisitions or refinancings that they may be interested in doing.

Here is an AI generated summary of Sleep Country's recent acquisitions (Sleep Number pending). I think the IP angle is key given the size of Sleep Country's Canadian footprint. The UK acquisition last year also enhanced Sleep Country's capabilities. Given how slow the housing market is today in the US and Canada, this is likely the perfect time to be a buyer. This is right out of the Fairfax playbook. At the 2024 Fairfax AGM Alan Kestenbaum told the story of when he called Prem during Covid (when the steel industry was getting killed) wanting to do a big strategic transaction... Prem pushed him hard to do it. And a few years later it turned out to be a brilliant move. That is the value of having a parent who has the right temperament. https://www.mccarthy.ca/en/experience/stelco-signs-long-term-pellet-supply-agreement-and-option-to-acquire-25-interest-in-minntac-with-u-s-steel Common thread... these are all distressed purchases. All give Sleep Country capabilities they didn't have before. Shitstorms are opportunity. Very counterintuitive. It will be interesting to see where the funding for Sleep Numbers comes from. Probably partly from Sleep Country issuing debt. And partly from cash from Fairfax.

Thats what's visible on the spreadsheet. Sleep number also has some valuable technology/patents. Its store footprint nicely fits with Sleep Canada's map, and since this will perhaps triple revenues for Sleep Canada, I'm sure there will be some synergies to be had. Hopefully we are close to the nadir of revenue declines and the company cultures fits well. It has the potential to be a very lucrative acquisition. Considering what Fairfax paid for Sleep country($880M or about 8-9x EBITDA) this would be very cheap if they can integrate it well.

You are kidding right? SOH open, oil back to normal, Iran's ability to wage war finished, nuclear ambitions set back 10+ years. Give me break.

Cubs - what you just described (SOH reopening) is a return to status quo that existed prior to Epic Fury….characterizing a return to the status quo ex ante as a successful output to military campaign is an oxymoron.