dartmonkey

I think most of us here are happy enough with the recent ~20% annual BV increases (or intrinsic value increases, if you will) and can settle for continuing 15-20% BV increases, regardless of the temper tantrums the market might take with its multiples. Multiple expansion is icing on the cake, but the cake is value expansion. Since we're at a low multiple already, multiple contraction looks unlikely, at least in the medium- to long-term, and if there is further multiple contraction, it will just make value expansion happen faster thanks to share repurchases. To get back to the original point about whether selling shares might be a good idea, I think this is what is setting this board ahum, as it goes against the instincts of value investors to sell low. It would be nice to have a small position that could be made bigger, but selling now is a horrifying concept for many of us, myself included. No wonder people are shaking their heads in dismay. I don't think it's denial - if the company were performing poorly, most of us would probably agree that sometimes it's better to take a loss than stick with a loser. But if the company is performing well, as is my belief, then it is naturally shocking to think about throwing in the towel at the exact wrong time, when multiples have just contracted.

Your are right, 15% is just average for me in the last 5 years or so because I have had half my investments in Fairfax, so I am spoiled. I don't really expect to get more than that in the long run. The 6% annualized from FIH has been a drag on my returns, and although is the average disappointing return from Indian shares, I really expected to do better, 11 years ago in 2015, especially given the unexpected bonus of having Modi continuously in power since then (beginning in 2014; now 2 more years in his 3rd 4-year term). Even better, considering that the book value return is much better than the FIH share price return, on paper, and that can't diverge forever.

I think the logic of holding this investment is not that another 75-100% might happen, just because it happened before. It is that 74% of BIAL might be worth about $5-10b, meaning Fairfax's 74% might be worth $22-$44/share including the after tax Anchorage gain. Assuming the other holdings are worth about $15, say $10 with the current discount applied, a successful Anchorage IPO might take FIH shares to $32-$54, a gain of 78%-200%. I should probably lighten up this holding which is way too big, with small gains, but I am terrified that the week after I do that, I will be looking at how many million % annualized I lost by selling half just before it goes from $18 to $45.

Yes, it's been a very long wait, but we may wake up one of these days to see that our shares have gone from $18 to $45, when the IPO gets priced, or maybe just when the IPO happens. Even that would only take this 11-year investment from being bad to being about average (I get 15% annualized if it went to $45 tomorrow), but it sure would make a big difference to my returns this year!

They certainly could do this. They have the cash to do whatever makes most sense, and getting rid of the TRS, while perhaps repurchasing an equivalent number of shares, would lessen the amplitude of swings in their earnings, which might meet with more market favour. On the other hand, bigger swings in share prices does have some advantages, for a company that wants and is able to repurchase a lot of its own shares, so maybe leaving the TRS alone makes sense, in a perverse way? If the TRS are contributing in any way to a negative feedback loop, then it’s more shares repurchased for the same dollar outlay, so we will end up in a better place. For a company with Henry Singleton-like ambitions, maybe they should have more TRS, not less?

I would be too, and so much the better. They have been very slowly reducing it: 5,940,000 shares sold in Q2 2025, 5,389,380 in Q3 and 415,100 in Q4, all at something like half today's price, so who knows what they will have done in Q1 2026 at similar prices and now in Q2 at much higher prices.

BB continues breaking out - closing today at $9.72, up from $3.79 at the end of 2025 and a triple from its $3.24 price at the end of Q1, or a $227m gain for Q2 so far. Still a long way from breaking even based on Watsa's description of a cost basis of $17.16 (although they made around $200m interest on the convertibles), but at least it will improve Q2 results if the current price holds up.

OK, let me make one last attempt to clear up where I disagree with the above, and then I will probably shut up. First, a quibble: the share price increase from €0.92 to €3.97 is about 330%, not 530%; I think you have a +1 in your table where it should be a -1. More importantly, when you say that Eurobank's demonstrates why book value and reported earnings are becoming less useful, and that much of the value creation never flowed through EPS or BVPS, I am agreeing with you about book value and book value per share, but not about reported earnings and earnings per share. This is because IFRS allows Fairfax to count its share of all the Eurobank profits, on its earnings statement, even if it doesn't get to count all that new value as book value on its balance sheet. Eurobank has increased in value by 330% largely because its earnings have gone from €15m in 2020 (9 months -shortened year) to €469m in 2021, €1388 in 2022, €794m in 2023, €1458m in 2024, and €1362m in 2025. Dividends paid out in those almost 6 years were 0, 0, 0, €410m, €240m and €556m, so assuming Fairfax's share was about 33% throughout this period, that means carrying value got marked up by about €5m, €156m, €496m, €184m, and €289m in those 6 years, or €1130m, which is roughly what happened to the carrying value of its Eurobank stake, plus or minus some forex adjustments. But the important point is that all those €1130m in earnings did get reported by Fairfax as they arrived, so if you are looking at reported earnings, or earnings per share (EPS), in other words the earnings statement, and if you are valuing Fairfax at some multiple of earnings (as I am, principally; currently at 8x last year's earnings, and now less than 9x this year's pessimistically assessed earnings, assuming average underwriting gains but only a 6% return on the non-fixed income portfolio, half their 6-year average), then there is really no distortion at all, and no hidden value. The distortion only happens with book value, where you have to take account of this extra hidden value that is not being counted on the balance sheet.

Because ROE has earnings in the numerator. For example, Eurobank has a ridiculous carrying value, so that its book value is far from intrinsic value, but Eurobank’s earnings are all reported properly, so earnings (whether it is eps or earnings as a percentage of book value) give a fair picture of intrinsic value. You can’t just add the CV-FV value creation as ‘additional earnings’, because then you would be double counting Eurobank’s earnings (and the earnings of the other associated/consolidated holdings.) I’m not saying you were doing this, just that someone might misunderstand it that way.

It hasn't been a great few years for value investors, that's for sure, and the odd time they took a stake in something that could have been brilliant, they have been quick to take small profits. But I wouldn't hang it in the hall of shame until the fat lady sings. A lot of investors sitting on huge unrealized gains may see them dissolve away in the next few years. Or not. But anyways, I'm quite happy with Fairfax if they can keep up anything like the recent pace, misses like APR and MU and INTC notwithstanding. I currently have FFH at 9x this year's earnings, assuming what I think is a very pessimistic 6% return on their non-fixed income portfolio, or about $1.5b, which would be half the average non-fixed income return (12%) of the last 6 years. With the Poseidon and Eurolife sales already in the can for about $1.2b, I think their chances are good of clearing that low bar.

I see your APR and raise Micron - they sold off their remaining shares at <$100 a year ago and the shares are now over $900. In Q1 2024, they had 3.9m shares, worth about $260m. Those shares would now be worth about $3.5b ...

Thanks for reviewing this. I think the last sentence I quoted is not quite right. The main point, I believe, is that accounting rules require the company to count towards book value only the historical cost of associate and consolidated interests, plus retained earnings and minus dividends and some other adjustments, as you pointed out. This is a good reason to distrust book value as a measure of value. However, earnings of associate and consolidated holdings are fully reflected in Fairfax's total earnings. This means that book value is off, but EPS and ROE are not affected in the same way. To take an example, Eurobank, which is responsible for almost half the difference between carrying value and fair value, is currently carried at $2.790b, whereas Fairfax's stake has a market value of $4.579b, as per your table. From Dec 31, 2021 to March 31, 2026, Fairfax's stake has gone up 6 times, from $800m to $4.6b, and this understates the rise since Fairfax has been selling shares to keep its stake below 33%. However, in the same time, total Eurobank earnings have gone from €328 to €1.35b, so Fairfax's share has gone from roughly €109m to €445m, a fourfold increase. If you are valuing Fairfax by taking some multiple of earnings (the current price is 8x last year's earnings), then your valuation of Eurobank's contribution has gone up by 4x using earnings, as opposed to 5x using market value or 2.4x using IFRS-mandated carrying value. Just one more reason to prefer using earnings (appropriately smoothed for underwriting and realized investment gains) rather than putting too much weight on book value. But my main point is that we should not be adding that $873m/year in FV-CV to the earnings of Fairfax, which would be double counting.

Who are the progressive, drunk, inexperienced FFH people here? Yes, many of us here like to think that we are conservative, sober and experienced-FFH people, so if petec is our leader, take us to him.

The ‚investment returns of 7.7% are only ‘subpar‘ because 2/3 of them are fixed income, mostly treasuries.

The total return swaps on 1.76m shares means that they lose $1.76m for every $1 decrease in their share price. The share price dropped US$206 in Q1, from 2025-12-31 to 2026-03-31, which is why they already lost $206*1.76m= $363m in Q1 (the company reported that the loss was $341.8m, which may be the effects of tax, or maybe there's something else that's wrong with my calculation.) But the point is, if we're counting in US dollars, the stock is off $206 from year end and about $300 from its peak (I believe this was Dec 30, 2025, at $1949 intraday on Jan 2, 2026) but that is already baked in as of the end of Q1. The share price was $1702 on March 31st, and is now slightly lower, at about $1650 as I write this, so that means there's another $50*1.76m= about $90m loss, pretty insignificant. Anything can happen to the share price, of course, but with $215 diluted EPS last year and very likely over $200 this year, I don't think there's much chance of the share price going lower than say $1000, and even that drop from the $1702 share price at the end of Q1 would be represent a manageable loss of about $702*1.76m = $1.2b pre-tax. And if they hold something like their current price, representing about 7-8x earnings, there would be no significant further loss in Q2-3-4.