petec

Viking that’s a superb summary.

I got the sense he was meant to be a Fairfax lifer and possibly Bernard’s heir apparent, so this is a blow.

Fairfax is short Zoom? :o Speculating! Read upthread (or maybe it was on another thread.)

Yup-plus that Zoom short ;)

It was done with Odyssey but under duress and I can’t think why they’d do it now. The point is to monetise investments.

They do have some assets at the holdco. And listed/liquid assets are better for capital purposes than Private ones, so there’s that also.

Tech companies that lose money are a winning combo at the moment! My guesses would be Farmer’s Edge, Quantum, and what I will call Retail Crapco, a Frankenstein entity with all their retail assets. Total market cap about $1bn. *Wild guess*

I own all three in (roughly equal) size, for my sins. BAM wins. Tailwinds and cash flows are immense. I don't understand the bankruptcy argument here. FFH likely no2. Combination of hard insurance market and revaluation, probably with some of the investments finally coming good, but low rates a drag, and cash tight. BRK brings up the rear, but with higher certainty of outcome.

This is what I was responding to: “Its hard to imagine a scenario where they try to sell their stake at a 50% discount to TBV and there are no takers .” And if it was not clear (tone does not always come across well) my question was a genuine one not an aggressive/rhetorical one. I’m genuinely interested to know why anyone thinks ATMA could have fetched more right now. It might be worth more later, which might be why FFH remain bullish on its value, but there is room to disagree, which might be why Helios isn’t.

What makes you think that, in the middle of a pandemic, they could have sold ATMA for 50% of book when it hasn’t traded that high in years and there are plenty of FAR better banks available at or below that price (Wells, Lloyds, even Eurobank)? And even if they could, what makes you think they could have done it fast enough to satisfy Helios and get this deal done? They’ve made some huge errors here, so they have sold the whole entity (as opposed to stakes) and given operating control to a third party. That’s a fairly clear admission of failure in my book and actions speak louder than words so I value it more than even the most groveling apology.

OMERS always got paid its dividends in cash. I'm not sure whether that was a preferential arrangement, or whether Fairfax opted to capitalise Brit to grow by taking stock instead. I need to revisit the disclosures on Brit over the years. I think OMERS have done quite well.

No. The insurance subs are in a hard market. They would absolutely ooze cash (which could be dividended to the holdco) if they stopped growing. What we need to worry about is that Fairfax has somehow contrived to arrive at a place where it can’t fund growth in a hard market or buy back many shares at bargain levels without taking on more debt. The sequence of bad decisions that caused us to arrive at this point is staggering.

Very odd. They should have included a put right.

petec, we could say the same in relation to FAH and their injecting more capital into CIG. It really wasnt so long ago, and they had insiders. Yet they made the move... Such a clever move. That’s slightly different. They already owned it. Injecting capital could have saved the investment. That can’t be said of Helios. Again, I’m just wondering what’s new, if anything, other than the late filing.

Again, what’s new? Do you really think they thought CIG was healthy 3 months ago? Because I can tell you it wasn’t.

You make a compelling case, although you’re spending far more time than I would speculating about something we will have a definitive answer to soon. One comment though. Read the parts you put in capitals. Do you honestly think Helio’s hadn’t considered these points before? If it’s only just occurred to them that they’re giving up control then they’re morons and I hope the deal doesn’t go through.

Why’s 2099 shares a day the magic number? Are they limited (as the issuer would be for an NCIB)? That's probably the amount of daily volume they can purchase without overly impacting the price. So they're investing around $7,000 daily. If that was the case you’d see the odd 2098, 2101 etc. This is something else.

Why’s 2099 shares a day the magic number? Are they limited (as the issuer would be for an NCIB)?

For what it’s worth the webcast is still “public” in the sense that the audio is available to Bloomberg subscribers. They know they can’t suppress it, so I doubt they’re trying. IIRC (which may well not be the case) this is not the first time ATMA has reported late. I’m not defending it, but it may not be a red flag for the deal. Here’s hoping.

I think Helios would have known, or could have figured out, all of this when they did the call. I can’t imagine any of it being a surprise.

Given the p/bv of ATMA, that's a good (albeit small) deal. If they can do more of those with the noncore banks, and end up with UBN (ideally consolidated) and Botswana the shares should rally significantly.

Agreed with one exception: so far they haven’t *monetised* anything in the strict sense. They’ve swapped one asset for another (APR for Atlas, Dexterra for Horizon, FAH for HFP). I like the look of each deal but none is cash.

I share a lot of those views but fwiw the points of difference are below. CIB is a fantastic bank and will outgrow inflation so currency is not a risk long term. But I don’t trust Egyptian institutions. CIB could compound at 15% for 30 years and then go to zero. Chug chug boom. I don’t know how to handicap that. Eurobank is a very well run and is a great option on reflation in a country that’s had a depression for 10 years and has a newly-consolidated banking sector. There was no risk in the Grivalia merger, which wasn’t a banking merger - more of an equity raise. Institutions are far stronger than in Egypt (arguably true even if they leave the EU). Fairfax’s mistake was being too early and buying too much at (far) too high a price, but I think there is a high probability that the return from here is superb. Atlas equity stake is, I believe, below $1bn.

By the way, why do you characterize Eurobank as a low quality investment and CIB as a high quality one? Is this rondo with the quality of the franchise, or the domicile?

I don’t entirely agree with your characterizations, Viking. For example, I’m not sure Atlas is a better business than Stelco, and it has far more debt, so its arguably riskier. The difference between the two is the price Prem paid relative to intrinsic value. That, and the position size; credit to him for sizing them right, I suppose. Eurobank to me is also a mistake of price rather than anything else. This is my biggest issue with Prem. He says he’s a value investor but often, when he buys things, I run my slide rule over them and I don’t think they’re that cheap. Resolute, on the other hand, is a classic case of a bad business. BlackBerry is a great example of totally missing what’s going on. Those were poorly chosen assets, not just expensive ones. I agree there are signs of mistakes being rectified, which is great. That, plus the promise not to hedge, the success of the rest of the investment team, the discount to book, the hard market, and the leverage, all make me think the next 5 years could work out quite well.