petec

It does feel like that. And partly that's simply a factor of scale: they can now buy bigger things, and as a very general rule for a business to have got big it has to have some quality about it. However, going through some big recent capital deployments with a quality lens and a devil's advocate mindset: Kennedy Wilson. I love this investment but most people don't seem to understand why Fairfax bought it, and it is levered to the nines. Blizzard Vacatia: again I love this one, but it's essentially some asset-backed debt and an equity option on management. Sleep Country. Sells mattresses. Yay. Recipe: COBF consensus seems to be this is a collection of fairly substandard restaurants. Foran and Orla: speculative mining investments. Under Armour: I've lost count of the number of apparel retailers I've seen fly for a couple of decades and then die. Very hard to carve out an enduring moat in this industry. Are these really all that different from the Stelco and Seaspan era investments that the board disliked for lack of quality?

The irony is that Fairfax invested in AGT and Seaspan about 6 months apart. The reality is that one of these investments worked beautifully and the other did not. It has nothing to do with old vs. new Fairfax - these are both "old Fairfax" investments. Not every investment works. Simple as that. And we must be wary of survivorship bias: we cannot look at the good investments as evidence of a "new Fairfax" and dismiss the bad ones as symbolic of "old Fairfax". I seem to recall Prem aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds. I am not convinced we should change our future expectations in that regard.

Phenomenal deal. IIRC they initially put equity in at $6.50 in 2018, and the investment was seen as confirmation that Fairfax could only buy crap. How times change!

+1 This is the key takeaway.

I'd be surprised if Atlas benefit much. Yes, some containers go through Hormuz but it's a tiny fraction of global container volumes and it's not strategically important - my guess is they just stop. And Atlas' newbuilds tend to be contracted before they're ordered, so it's not the ones coming online that can benefit - only the ones rolling off contract. The odds of getting a long term contract at a high rate because of a (likely) short war seem limited to me. In entirely separate news, an anecdote: a small company I chair is renewing its insurance. Very standard general SME policy in the UK. The rate is down 30% y/y.

I just remembered that there would be a new 2026 thread for Fairfax and tried reading through it. I gave up halfway. This remains my largest investor and nothing terrifies me more than the fact that there are already 32 pages on the 2026 thread!

I am also intrigued by PAX here.

Either. First time I have looked for details on BIAL so there's probably something obvious I have missed.

Apologies for the lazy question, but has anyone seen a coherent, detailed justification for why BIAL will be worth (for example) at least 2x current carrying value within 5 years? My gut instinct is that it will be, but I haven't followed it in enough detail to put a good thesis together.

Useful, thanks. I would not ascribe a lot of value to a preferential right to lease in 42 years' time. But good to know!

I've always assumed that the airport city is included in the concession - i.e. when the concession ends, economic rights to the development of the city will end. Does anyone know if this is right? Or is there some component of what they are developing that is permanently owned by BIAL? For example BIAL Airport Services (which operates lounges) is presumably something they can keep after the concession ends.

Yes of course you compare like with like. But my point is that having different amounts of intangibles on the balance sheet skews a simple p/bv comparison. That has nothing to do with roe.

It would be interesting to do this on a tangible BV basis. IIRD Fairfax has been more acquisitive (of insurance subsidiaries) than peers. What that effectively means is that more of Fairfax's franchise value is captured on its balance sheet as an intangible. So to compare with companies that mostly grew organically, p/tbv is a better measure.

Interesting analogy. I disagree with it Ferguson was an inspirational leader and his fingerprints were all over the old Man U. Berkshire by contrast is highly decentralised. Manu U under Ferguson was a high performing machine. I am not convinced that the same is true of Berkshire at this point, although I think it is improving. I agree succession will be difficult and a couple of high profile early mistakes could hole Greg below the waterline. But it is equally possible that Greg actually starts improving Berkshire's performance. That was never going to be the case at Man U. I saw an interview recently where one of Ferguson's key players - I think it was the hard man and captain Roy Keane - was asked which of the Man U players hated losing the most. He thought and said: Alex. Ferguson's sheer will to win is what drove Man U all those years. I don't think he was ever replaceable. It may be sacrilege to say it, but I think a 95 year old Buffett is replaceable.

Depends where the cash comes from. If they buy back prefs from operating cash flow, yes. If they issue debt to buy back shares, then no (assuming the rate paid is the same). I think this is an extension of the logic that leads them to a short duration position on the asset side of their balance sheet. If you don't think long term fixed rate debt is worth buying, you presumably think it is worth selling. So they're selling fixed rate debt and buying back floating rate liabilities. At the same time they're improving tax deductibility at little or no cost in terms of regulatory capital (because as SiN says, the prefs are issued at the holdco).

It's tiny. Chutney Mary, Veeraswamy, and Amaya are all single-restaurant brands. Masala Zone has 4 restaurants. I've eaten at Chutney Mary and Veeraswamy - they're both excellent. It will be very interesting to see how they grow it. My guess would be opening copies of the single-restaurant brands in wealthy areas of India (note the comment in the release about Fairfax's understanding of the Indian business environment). Finding a scalable format - maybe this is Masala Zone, maybe it's something new - and rolling it out in the UK/Canada/USA. How popular is Indian food in North America? In the UK it's practically a religion, but generally at a much lower quality standard than the MW restaurants.

Agreed. Do you have a good idea of the IV? I need to do some work on this.

Interesting, thanks.

Wouldn't this apply to all their Indian holdings though, including their stake in FIH? I think the better argument might be that they owe a fiduciary duty to FIH minorities (who pay them to manage FIH), whereas they do not owe a fiduciary duty to the minorities in for example KW. Certainly, if they took FIH under at what transpired to be a low price, the market would not trust them to launch another fee-bearing company again.

Amen.

What? I was buying Seaspan between $6.50 and $8. They bought it off me at $15.50. They did not buy it right at the bottom. Seems to me that the only way Prem could meet the fair and friendly description in the eyes of some on this board is to take companies private at fair value. Is that *really* how we’d expect or want him to behave, as FFH shareholders. Separately, I don’t think this deal changes their access to private credit. They already have that through investing in KW funds, which I expect they will continue to do when KW is private. What they’re buying is 1) cheap real estate as the cycle turns (NOI catching up to higher interest costs, and low supply) and 2) a growing fee stream from 3rd party capital. Also: McMorrow is 78. Interesting to see what happens when he retires. FFH now control succession.

As a minority owner of Fairfax, would you rather they paid full value? I was and will be quite content to sell both Atlas and KW at the prices offered and even happier to continue to own Fairfax. And I went into both subsidiary positions knowing full well what might happen. Also, the last time KW traded above the offer price was nearly 2 years ago. I think that’s stretching the definition of a temporary market dislocation. Edit: Prem, if you’re reading this, please do Ensign next. The cash flow is obscene.

Yes, me. Struck me as a very natural thing to have in-house. Growing asset-light fee stream backed by increasingly mature/realisable real estate. I think the NAVPS is $18 or more. Very happy owner of both today. Just wondering whether to sell my KW or hold. I could easily see the board rejecting the offer and FFH bumping it a little.

One gap in my knowledge is how regulators look at bond impairments. IIRC, when you hold a bond to maturity you record it at amortized cost for accounting purposes, but when you hold it as available for sale you mark it to market. Therefore, a long duration available for sale portfolio takes a large M2M impairment when rates rise, but the same portfolio held to maturity does not. Which way do regulators see it? Because clearly you don't want to impair solvency by going too long. So if regulators mark bonds to market for solvency purposes, then all else equal you want to bias short. Anyone know?

What are you putting in this bucket?