dartmonkey

Exactly. BV itself is a very poor indication of intrinsic value, and the ratio of IV:BV will be quite different from one company to another. I would argue that FFH merits a higher ratio than Berkshire, just because it has such a large float available for investment (about twice equity) in relation to Berkshire where that float is a small fraction (about a quarter of equity.) But in both cases, the INCREASE in BV from year to year, over the long-term, is a good indication of how quickly IV is increasing. The following is a bit dated, I'll update it when we get float numbers from Berkshire and Fairfax in a few weeks, but it hasn't changed much and illustrates the point that Fairfax can do a lot more investment with a given amount of book value: Berkshire float, year end 2022: $164b; market cap $859b; float leverage 19%; Fairfax float, year end 2022: $31.2b; market cap $23.8b; float leverage 131%.

Great, thanks. Seems like information that should be on their web page but the like to keep it bare bones.

Quibble: this would be a 4-bagger, not a 3-bagger. Starting Dec 31st 2020 at $340.94, when it gets to $3409.40, it will be a 10-bagger, i.e an increase of 900%. Factoring in dividends: according to Yahoo Finance, FRFHF was at an adjusted price of $314.96 at the end of 2020, so it is now at 471% of its price just over 4 years ago, almost a 5-bagger.

John Chen took over in 2013 and I thought the hypothesis was that the patent portfolio was worth a fortune. Ten years later, I doubt it. I guess having Blackberry in that 13-F investment profile probably helps us keep the share price low and maximizes the value of share repurchases. But I would still be happy to see it gone, even if the repurchase window closes, and maybe now that Watsa is off the Blackberry board (Feb 15 2024) it can happen this time...

I hate to bring up this painful subject, but... What the hell is happening at Blackberry? Recap from last year's AR: We got our money back on our convertible ($167 million in 2020, $183 million in 2023 and $150 million in 2024) plus cumulative interest income of approximately $200 million. Our common stock position as of 2023 ($162 million or 8% of the company) which was acquired at a cost of $17.16 per share was valued on our balance sheet at $3.54 per share. Another horrendous investment by your Chairman. At $3.54 at the end of 2023, this would mean they owned 45.8m shares, which is what they reported on p.15 of the report. Dataroma says they have 46.7m, maybe because Watsa owns some personally, but let's take that 45.8m, assuming they have neither bought nor sold any shares. A year later, the share price was much the same, $3.68, after trading as low as $2.01 during the year 2024. But in the last 6 weeks, the price has soared, to $6.20 right now, or up 68% year to date, in a flat market. Ok, that's only a gain of $115m, which is small fry for Fairfax nowadays, but still, it's something. And I can't see any news that would justify this: Blackberry just sold off their cybersecurity business (Cylance) at a huge loss, and are focusing on Internet of Things (IoT), whose revenues are growing a bit (13% last year, to all of $62m...), and now they are trying to give away the software (QNX) to engineers in India and elsewhere in the hope that it will become a standard. Blackberry's current market cap is $3.7b, hard to fathom. Is there speculation they might be acquired? As a long-suffering Fairfax shareholder, I can only dream...

I hate to bring up this painful subject, but... What the hell is happening at Blackberry? Recap from last year's AR: We got our money back on our convertible ($167 million in 2020, $183 million in 2023 and $150 million in 2024) plus cumulative interest income of approximately $200 million. Our common stock position as of 2023 ($162 million or 8% of the company) which was acquired at a cost of $17.16 per share was valued on our balance sheet at $3.54 per share. Another horrendous investment by your Chairman. At $3.54 at the end of 2023, this would mean they owned 45.8m shares, which is what they reported on p.15 of the report. Dataroma says they have 46.7m, maybe because Watsa owns some personally, but let's take that 45.8m, assuming they have neither bought nor sold any shares. A year later, the share price was much the same, $3.68, after trading as low as $2.01 during the year 2024. But in the last 6 weeks, the price has soared, to $6.20 right now, or up 68% year to date, in a flat market. Ok, that's only a gain of $115m, which is small fry for Fairfax nowadays, but still, it's something. And I can't see any news that would justify this: Blackberry just sold off their cybersecurity business (Cylance) at a huge loss, and are focusing on Internet of Things (IoT), whose revenues are growing a bit (13% last year, to all of $62m...), and now they are trying to give away the software (QNX) to engineers in India and elsewhere in the hope that it will become a standard. Blackberry's current market cap is $3.7b, hard to fathom. Is there speculation they might be acquired? As a long-suffering Fairfax shareholder, I can only dream...

I hate to bring up this painful subject, but... What the hell is happening at Blackberry? Recap from last year's AR: We got our money back on our convertible ($167 million in 2020, $183 million in 2023 and $150 million in 2024) plus cumulative interest income of approximately $200 million. Our common stock position as of 2023 ($162 million or 8% of the company) which was acquired at a cost of $17.16 per share was valued on our balance sheet at $3.54 per share. Another horrendous investment by your Chairman. At $3.54 at the end of 2023, this would mean they owned 45.8m shares, which is what they reported on p.15 of the report. Dataroma says they have 46.7m, maybe because Watsa owns some personally, but let's take that 45.8m, assuming they have neither bought nor sold any shares. A year later, the share price was much the same, $3.68, after trading as low as $2.01 during the year 2024. But in the last 6 weeks, the price has soared, to $6.20 right now, or up 68% year to date, in a flat market. Ok, that's only a gain of $115m, which is small fry for Fairfax nowadays, but still, it's something. And I can't see any news that would justify this: Blackberry just sold off their cybersecurity business (Cylance) at a huge loss, and are focusing on Internet of Things (IoT), whose revenues are growing a bit (13% last year, to all of $62m...), and now they are trying to give away the software (QNX) to engineers in India and elsewhere in the hope that it will become a standard. Blackberry's current market cap is $3.7b, hard to fathom. Is there speculation they might be acquired? As a long-suffering Fairfax shareholder, I can only dream...

When is the annual report released? I see that last year, they published 2023 Q4 results on Feb 15, and there is also the letter that accompanied the annual report, with the letter dated March 8 but with no mention in the press releases of when it was actually released. This year, we got Q4 results on Feb 13, and there is also no announcement about when the letter might come out, unless I'm looking in the wrong place. Has the company ever announced when the annual report will be released?

I guess all we know is that they bought it in Q4, so somewhere between $42 and $67, and it is now at $66, so it could be about breakeven if they bought it at the beginning of the quarter, or it could be up as much as $65m if they happened to buy it in December when it was at its lowest. Looking at other mark to market positions like Blackberry, we are not told anything about the cost basis, the way Berkshire used to report its big positiions, so I guess we will probably never know. Still, it seems like a safe thing to own, at 18 times pretty steady earnings. 4.8% dividend yield, buys back a lot of shares, industry that's not going away...

We tend to have a negative view of employee stock grants or stock option grants because some tech companies give them out like candy, cause a lot of dilution to their existing shareholders, and then don't want to account for them as an expense. Buffett has made fun of this in the past, for instance, and said: “Stock-based compensation is the most egregious example,” Buffett said. “The very name says it all: ‘compensation.’ If compensation isn’t an expense, what is it? And, if real and recurring expenses don’t belong in the calculation of earnings, where in the world do they belong?" But a program that wants employees to purchase stock, and gives them part of their compensation to encourage them to do this, and repurchases those shares as they are granted, and accounts for all this appropriately by calling this a compensation expense which reduces earnings, is really doing something completely sensible and, probably, positive for the long-term culture of the company and retention of its employees. It would be good to review exactly how Fairfax is doing this, and it may not be exactly the same in each of the companies it owns (following the principle of allowing managers some discretion in how they do things), but from what I can tell, Fairfax seems to be doing this right.

The price broke through CAD$2000 for the first time in Dec 2024 and touched a high price of $2071.49 on Dec 6, before dropping back below $2000 and finishing 2024 at exactly $2000 (or $1978, adjusted for the dividend paid in January.) The highest price today (which was $2075.81 when youu posted, and $2089.26 now, but the day is young) would be an all-time high as far as I can tell, in absolute terms, but even more so if you adjust for the CAD$21.50 dividend.

that’s great, I was really looking forward to those Q3 earnings!

Interesting that Watsa owns just over 2 million shares, or just over C$4b. Last October, Watsa didn’t quite make it onto McLean’s list of the 40 richest Canadians, with #40 (Jack Cockwell) at $3.4b, but he’ll probably be in the list this year.

This, exactly. If you do any significant amount of trading, or converting between USD and CAD, or paying interest on margin loans or receiving interest on cash balances, I think IB is hard to beat, although I am not familiar with Questrade. The bank brokers like TD or RBC or CIBC will take a serious bite out of your returns if you do any of these things, and IB will take a tiny amount. It's not zero - any company has to pay the bills somehow - but it seems like most brokers will offer you some things for free, like free trades or free cash if you deposit funds, or great customer service (which you won't get from IB) but it comes at a high cost, as they will kill you with hidden fees like poor interest rates, terrible forex exchange rates (at TD you will lose >1% each way) or bad execution prices on trades. IB also gives you way more access to foreign markets than the other brokers, and a bunch of trading tools that you might or might not use. I have a big investment in IBKR (FD) because I think it is the Costco of brokers. They charge a fair price for its customers - not zero, and not opportunistically large either - which is why they have been taking market share for decades and will hopefully continue to do the same for decades more. The only thing not to like is the desktop trading interface, which is great if you're a pro, but which takes a little getting used to. But the phone app is pretty simple to use and it becomes quite intuitive once you're used to it.

Great question, obviously the valuation of BIAL is the central element in valuing FIH, so how much is its 64% stake worth? They just bought 10% 2 months ago for $255m, so $2.55b is a good first step in how much the whole thing is worth, if they paid a fair price. 64% of that would be $1.632b for FIH, or $12.05 per FIH share. Obviously, we hope they got a fantastic deal for that 10%, and that it is worth a lot more. For instance, FIH bought a 10% stake the previous year, at the same $2.5b valuation, which is also the price they mentioned in Sept 2021. And in last year's AR they acknowledge that this valuation is conservative: The valuation of Fairfax India’s 64% interest in BIAL increased to $1.6 billion in 2023 from $1.2 billion in 2022, implying an equity value of approximately $2.5 billion for the whole company. Excluding cash flows from the 460 acres in Airport City, BIAL is carried on our books at 9.5 times normalized free cash flow, which we consider to be conservative. Bangalore is one of the fastest growing cities in the world and air passenger traffic in India is expected to have robust growth with increasing business and leisure travel, and the improvement in air connectivity to tier II cities. The valuation is supported by future cash flow estimates driven by the growth in capacity, non-aero revenue and real estate monetization plans described above, but does not reflect apparent market interest. Given the fact that they still wanted to buy that last 10% from Siemens, they have probably been lowballing the price with this $2.5b number. Also, in the same report, they use VERY aggressive discount rates to get this number, and VERY conservative EBITDA growth rates: At December 31,2023 the company estimated the fair value of its investment in BIAL using a discounted cash flow analysis for its three business units based on multi-year free cash flow forecasts with assumed after-tax discount rates ranging from 12.4% to 16.9% and a long term growth rate of 3.5% (December 31, 2022– 12.4% to 16.1%, and 3.5%, respectively). At December 31, 2023 free cash flow forecasts were based on EBITDA estimates derived from financial information for two of BIAL’s business units prepared in the second quarter of 2023 and for one business unit, the fourth quarter of 2022 (December 31, 2022– second quarter of 2022 for two business units and fourth quarter of 2022 for one business unit) by BIAL’s management. What EBITDA multiple is appropriate, for a rough valuation? A $2.5b valuation for BIAL implies a multiple of about 12. European multiples in recent years have been about 16 ( https://airport-world.com/buying-into-airports/ ), but that is in a region with much slower growth than what we are seeing in India. Given recent growth rates, far in excess of the 3.5% that FIH has been using in its accounting, 25-30 may be closer to the real fair value than 12, and 30x would give us a $6b for BIAL, or $28.35 per FIH share. But I would love to hear how you and others go about putting a number on FIH's crown jewel.