giulio

Thank you for posting this gem!

Thinking about value on a per share level, buybacks will also mitigate some decline in earnings. And don't forget India! Fairfax India, BIAL and Digit are high quality business and should generate higher earnings going forward. Lots to like, on top of higher interest income. G

Very good news for shareholders! Succession does not seem to be a problem; talent bench is deep at FFH thanks to their culture and ability to retain top employees. Another advantage not much appreciated by investors.

I did this exercise and arrived at your same conclusion. I have not updated my numbers for 2022, but in 2021 I get net investment + capitalized underwriting profits = $1800 per share value, which seems too high. Calculating look-through earnings I estimated FFH earning power at $1.5B in 2021. At 13x it gives you $20B of equity. These two numbers should be roughly similar: either the BS is "inflated" or the company is severely under-earning. I believe the latter to be true and 2022 seems to be confirming evidence. FFH can easily earn $2-3B IMO. What multiple would pay for this streaming of cash? Highly subjective. "Adjusted BV" valuation and earning power valuation should converge thanks to good execution and lower number of shares, however I am not saying fair value is $1800 per share!

On IFRS17: I found this article helpful https://www.footnotesanalyst.com/prudent-versus-unbiased-ifrs-17-insurance-liabilities/ On Ffh: this discussion on rates, the fed cutting, portfolio duration etc is so boring. Fairfax was cheap in 2020, cheap in 2021 and cheap in 2022. I agree with what @MMM20 said. To own FFH as an "interest rates play" is ok but it misses the point. Earning power is there irrespective of the fed. Same for management, culture and capital allocation. G

https://www.wsj.com/articles/bitcoin-core-maintainers-crypto-7b93804?mod=itp_wsj&mod=djemITP_h "Bitcoin Core developers are bound by their reputations, Mr. Dobson said. Any maintainer who made harmful or unethical changes would likely suffer reputational damage and have his or her access revoked by other maintainers, he said." Sooo relieved!

Mohnish Pabrai highlighted multiple times that the risk of fraud in India is extremely high. You need to be there, have connections, meet people, know how things work (i.e., customs and culture, not bribes!). Fairfax has been investing in India for a long time. I believe this is a big advantage for Fairfax. Don't you think Prem already did so? He is a great sponsor of India and Modi, and said he wants to invest $7B more in the not-too-distant future. Maybe Fairfax has better chances now. Maybe it will look like a more reliable partners to others. I'm optimistic on this front.

https://www.bloomberg.com/opinion/articles/2023-01-26/chatgpt-is-not-much-of-a-pitch-robot?leadSource=uverify wall Matt Levine with an interesting story "DeWi rug pull". Essentially some projects MIGHT make some sense...except for the token part! Still can't understand what Ackman sees in something like Helium

I've been using this one https://draftable.com/compare It saves me time and helps spotting accounting standards changes.

AR 2021: "For our stock price to match our book value’s compound rate of 18.2%, our stock price in Canadian dollars should be $1,335. And our intrinsic value exceeds book value, a principal reason being that our insurance companies generate huge amounts of float at no cost. This is the reason we continue to hold total return swaps with respect to 1.96 million subordinate voting shares of Fairfax with a total market value of $968 million at year-end." AR 2020: "Investment returns are very sensitive to end date values, so with a stock price of only $341 per share at the end of December 2020, our five and ten year and longer returns have been affected. We expect this to change as Fairfax begins to reflect intrinsic values again. Nothing that a $1,000 share price won’t solve!" Also on the TRS, Prem said this in 2020: "since the latter part of 2020 Fairfax has purchased total return swaps with respect to 1.4 million subordinate voting shares of Fairfax with a total market value at the time of those agreements of $484.9 million ($344.45 per share). We think this will be a great investment for Fairfax, perhaps our best yet!" I don't see anything wrong with giving shareholders clues about intrinsic value, especially when the stock is trading meaningfully below IV. Buffett gave clues when starting the share buyback. Ackman provided a share price in its latest report. What's wrong is talking your stock up, with no regard to IV, like someone expecting 50% CAGR on her portfolio!

Hi everyone, this is Giovanni from Italy. I've been following the forum for 2+ years and I just purchased my membership. This place is awesome! I hope I can contribute to keeping the quality of the discussion high with some posts. WRT the TRS, I never understood why it is seen as a repurchase of shares. This is my prospective: if shares are worth $1000 and FFH holds TRS on approximately 2m shares @ $373, then I would expect the company to collect $1.3 billion ((1000-373)x2m) as long as this position is open, assuming they would close it once the share price converges to intrinsic value. What FFH decides to do with the cash flows is entirely up to them. I believe management thought their stock was a great investment in 2020, but they did not have enough money/cash flow to purchase shares. The TRS was a "creative" solution to both their problems: 1) make an investment with superb risk/reward, 2) generate cash flows. The reason I think this was a great move is simple: TRS cash flows can ALSO be used to repurchase shares, driving IV higher, which in turn generates more cash and so on, as long as the position is open. This is why I would be extremely disappointed if parties to the TRS are actually winding it down. Am I missing something? Isn't this the way TRS work? thank you all for the discussion, G