Haryana

@Thrifty3000 thank you for expressing what you think. Everyone, please feel free to explain your side of the bet. Projecting 2000 from the current 900 is a rate of 22% or 23% with dividends. You should be on the Yes team if you are estimating that rate over four years. Also, this is like an American style option where you can win anytime before the expiration. The Yes team will win as soon as either the book value or the share price touches US2000.

Express your opinion on the Poll. Thanks.

Likely be fine with them taking 10 tiny positions if even just 3 of them become home runs. National Stock Exchange was also a tiny position until we got it in the rear view mirror. Jaynix and Maxop are likely to benefit from expected boom in manufacturing over decades.

Keeping the duration low is likely their most important decision. Otherwise people will call this a "windfall" from unpredictable interest rates. Certainly, interest rates are unpredictable. However, the cyclical nature of the markets is well known. When you reach the South Pole, the only way you can go anywhere is North.

The Internment - 1944 That blanket seizure of all assets from innocent Japanese Canadians by the government of British Columbia looks like more relevant and worth knowing! https://en.wikipedia.org/wiki/Internment_of_Japanese_Canadians ...Canada forcibly relocated and incarcerated over 22,000 Japanese Canadians—comprising over 90% of the total Japanese Canadian population—from British Columbia in the name of "national security". The majority were Canadian citizens by birth and were targeted based on their ancestry. ...The internment in Canada included the theft, seizure, and sale of property belonging to this forcefully displaced population, which included fishing boats, motor vehicles, houses, farms, businesses, and personal belongings. ...In August 1944, Prime Minister Mackenzie King announced that Japanese Canadians were to be moved east out of the British Columbia Interior. The official policy stated that Japanese Canadians must move east of the Rocky Mountains or be deported to Japan following the end of the war. https://www.canadashistory.ca/explore/military-war/japanese-canadian-internment "After Japan attacked Pearl Harbor in 1941, both the United States and Canada cracked down on their citizens of Japanese descent. In British Columbia, entire Japanese-Canadian neighbourhoods were eradicated. Homes and possessions belonging to Japanese-Canadians were seized and sold."

So the system entertains that there be his kind of royal that is allowed to jump the estimation by >22% in one shot while continuously maintaining an evaluation of overvalued.

Analyzing an analyst could be an entertaining educational exercise. Any analyst that stands his ground would be worth watching regardless of the ground they are standing on or the odds they are facing which in this case are the odds of Fairfax fair value over CAD 800. Looking forward to future developments and of narratives.

With all due respect, Brett Horn has been a well acclaimed analyst at Morningstar for a long time. https://www.morningstar.com/authors/708/brett-horn "Horn holds a bachelor’s degree in business administration, with a concentration in finance, from the University of Wisconsin and a master’s degree in business administration from the University of Illinois. He also holds the Chartered Financial Analyst® designation. He ranked first in the business and industrial services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted." Recently, however, Brett Horn has been a polarizing figure among the Fairfax investor community. While most other analysts turned bullish on Fairfax, Brett has stood sturdy holding as a pillar of strength at the opposite pole. He has been publishing one report per quarter on Fairfax (FFH), within a few days of quarterly results coming out. This is what he said after 2023 Q1: https://www.morningstar.com/stocks/fairfax-earnings-both-sides-business-show-strength "Fairfax FFH reported a strong first quarter, with attractive results on both the underwriting and investment sides of the business. As a result, book value per share, adjusted for dividends, increased 7% from the year-end figure. However, we see nothing to alter our long-term view, and will maintain our CAD 730 per share fair value estimate for the no-moat company." After reading this, it appeared that the fair value estimate is too low as it is in CAD. I was wondering how will he able to save face if the actual results are too far off. What kind of tricks will be used? That is what I was wondering at that time. This is what he said after 2023 Q2: https://www.morningstar.com/stocks/fairfax-financial-earnings-strong-underwriting-margins-partially-offset-by-investment-losses "Fairfax Financial FFH reported a solid second quarter with relatively strong underwriting margins. However, this was partially offset by some investment losses. While the second quarter was weaker than the first quarter, Fairfax is having a good year so far, with book value per share up 11% since year-end, adjusted for dividends. We will maintain our CAD 790 fair value estimate for the no-moat company and see the shares as overvalued at the moment." So he quietly changed that fair value estimate to an apparently strategic number of 790 from 730 while maintaining that the fair value estimate was being maintained! I suppose in future he could change CAD 790 to USD 790 and still continue to "maintain" the fairness of estimate or Morningstar would simply assign a different analyst to cover Fairfax.

20B @15% = 1T in 28 years.

Conflicts and cooperation will continue in cycles. Even the most cuddly neighbours of the world, Canada and USA have had recent moments of intensity during the lumber dispute and the rewrite of NAFTA by Trump. Not to mention the glorification of the War of 1812 by the Harper government when the great Canadian warriors burnt down the White House to black soot. https://ncph.org/history-at-work/remanufacturing-1812/

https://www.businessinsider.com/personal-finance/homeowners-insurance-made-hurricane-season-florida-less-stressful-2023-7 No particular insight into FFH's hurricane exposure but it is likely nothing to see there, business as usual. Hurricane fears will keep bubbling every year, some years they will underestimate, some years overestimate. Those fears can present more opporutunities to get more in on the asset when their stocks gets depressed. Similar to tobacco companies, the demand for insurance is inelastic. People will pay regardless of price. Governments keep increasing taxes on tobacco and the hurricanes keep getting worse due to climate change. Both the tobacco companies and the insurance companies keep increasing their prices, revenues and profit. For insurance companies there is the added advantage of increasing float and increasing investment gains.

2023 Invesco Global Sovereign Asset Management Study https://www.fundresearch.de/Invesco-Global-Sovereign-Asset-Management-Study-2023-FINAL.pdf "India exemplifies the attributes sought by sovereign investors. Viewed increasingly positively for its improved business and political stability, favourable demographics, regulatory initiatives, and a friendly environment for sovereign investors, India has now overtaken China as the most attractive Emerging Market for investing in Emerging Market debt"

Most self-acclaimed investment experts fail to include dividends in return calculations. Dividends make an unexpectedly extraordinary difference to total return due to compounding. Since Berkshire never paid a dividend, those making these comparisons get yet more Buffett brainwash. Prem had to write the following in 2022 letter (page 31) to remind us for our own benefit: "Don’t forget the dividends in your return calculation!"

So Warren Buffett himself is teaching us against the use of risk-adjusted return (Sharpe ratio) but we are still looking for an excuse to use the Sharpe ratio to justify our reverence for the one and only, the chosen one, the Prophet (Oracle of Omaha). This is wonderful.

Not including dividends when comparing Berkshire to anything is the biggest brainwash folks have been falling for decades.

Despite the so called lost decade and current undervaluation, Fairfax seem to outperform Berkshire so far this millennium.

A simpler way of what you were trying to convey could be as follows: Those who are concerned about that fee structure of FairfaxIndia should understand that the fee has already been paid upto the book value of ~$18 and it applies only on returns in excess of first 5%. So, if the book value grows at only 5% per year average over the triannual periods for the next 10 years and the discount closes in the mean time, the ending stock price will be ~$30 and almost zero fee will be paid over these 10 years. The triannual averaging may ease the book value volatality. This means a return of about 8% per year assuming a conservative increase in book value of only 5%. Now, if you get a higher book value increase than 5%, leading to some fee having to be paid, then your stock return can be higher than 8%, then will you really have that fee to complain about?

This is so miniscule compared to Wells Fargo that it may be ignored. Buffett, for decades, sang praises of Wells Fargo, was his "Big Four". Our Buffett, the Prophet/Oracle, brainwash makes it difficult to see. 1. https://money.cnn.com/2016/09/21/investing/wells-fargo-fired-workers-retaliation-fake-accounts/index.html 2. https://www.cnn.com/2022/12/20/investing/wells-fargo-cfpb-foreclosure-fine/index.html " The Consumer Financial Protection Bureau said Wells Fargo’s “illegal activity” included repeatedly misapplying loan payments, wrongfully foreclosing on homes, illegally repossessing vehicles, incorrectly assessing fees and interest and charging surprise overdraft fees. The CFPB ordered Wells Fargo (WFC) to pay the $1.7 billion civil penalty in addition to more than $2 billion to compensate consumers for a range of “illegal activity.” CFPB officials say this is the largest penalty imposed by the agency. The misconduct described by the CFPB echoes previously reported revelations that have emerged about Wells Fargo since 2016 when the bank’s fake-accounts scandal created a national firestorm. “Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” Rohit Chopra, the CFPB’s director, said in a statement. Officials also made clear on Tuesday that Wells Fargo is not nearly out of the penalty box with regulators. ‘Repeat offender’ Chopra described Wells Fargo as a “repeat offender” and a “corporate recidivist,” adding that Tuesday’s fine is just an “initial step” towards holding the bank accountable. During a call with reporters, Chopra said the new settlement should not be read as a signal that “Wells Fargo has moved past its long-standing problems or that the CFPB’s work is done here.” For instance, Chopra noted that the settlement does not provide immunity for individuals at Wells Fargo, and the agency recognizes the $3.7 billion in fines and restitution will not fix the bank’s problems. " 3. https://www.nytimes.com/2023/03/15/business/wells-fargo-carrie-tolstedt-jail.html

Not sure if this was shared on this thread before but it reads like a good summary of what is being discussed here - https://www.edgepointwealth.com/article/Q4-2022-EdgePoint-commentary/ " While long-memory stocks exist in every market, the dynamic is magnified in Canada. The Canadian stock market is very narrow since there’s only a small group of companies to pick from. Institutional and retail investors have an opinion of just about every business. If you have been burned on a Canadian stock in the past, it can take years before you ever look at it again. Fairfax is the ultimate long-memory stock. It went from market darling to pariah. What should have been a comeback story was missed by investors afraid of getting hurt again. For the first 15 years of Fairfax’s life, it was one of Canada’s shining stars. The company grew its book value per share (BVPS), a proxy for the change in intrinsic value, from US$1.52/share to US$155.55/share for a compound annual growth rate of 39%.ii The CEO, Prem Watsa, was described by many as “Canada’s Warren Buffett”. By the late 1990s, the stock was trading at 5x BV (an unheard-of valuation for an insurance company). Just like the internet companies discussed at the value conference, high expectations in the stock market are often a recipe for disappointment. Fairfax was no exception. The company had a series of self-inflicted issues – first on the insurance side and then later with its investments. While BVPS has grown from US$155/share to US$570/share today,iii the multiple compression (from 5x BV to under 1x BV) has erased almost all the returns for investors. Fast-forward almost 25 years, the stock price finally surpassed its 1999 peak! An entire generation of investors had a painful experience. Imagine explaining to your clients that after years of losing money with Canada’s Warren Buffett…why this time is different. To avoid the pain, investors have vowed to stay away. "

Warren Buffett seem to get an easy pass on his mistakes while we scrutinize Prem Watsa too much. Warren wailed and railed on how bad the airlines have been for investors and capitalism for ever. "Buffett's first investment foray into airlines began with USAir preferred stock in 1989. While Berkshire made money on the dividends, Buffett himself would lament the decision for decades, casting aspersions on the low-profit, expensive nature of the industry." https://finance.yahoo.com/news/how-warren-buffetts-airline-stocks-have-performed-since-berkshire-hathaway-sold-them-134849843.html Suddenly one day, we learn that Warren Buffett is putting billions into a bunch of airlines and just as suddenly airlines become a great investment because Warren Buffett is investing in them. "All in all, the four largest airlines in the US, which also happen to be four largest in the world, are in a good place. Which is why all four warrant the investment from the Oracle of Omaha." https://finance.yahoo.com/news/warren-buffetts-10-billion-airline-174600273.html He liked Delta so much that even his own 10% limit rule got broken and then communicated like this: "What I didn't realize was that that purchase had taken us over 10%. I was already in territory I didn't plan to get, so I just decided to buy a whole lot more stock." https://www.gurufocus.com/news/898907/warren-buffett-on-his-10-rule Then, just as suddenly, in the depths of the pandemic, AGM 2020, we learn that Warren Buffett sold all the airlines near their bottom which made those airlines stocks crash even further right after. A year later we learn that the sale of airlines was for the good of airlines themselves, a form of charity for airlines at the expense of shareholder value. A fine moment of Buffett communication? I wonder how much of our Warren Buffett mesmerizing is attributable to make-up team of Betty Quick. Not hating Buffett at all. He is a great teacher by the way, I learnt from him and still learning. However, I would be on guard being brainwashed about anyone or calling them a Prophet or an Oracle!

Buffett has disclosed multiple times that he is without any defined processes or checklists for his investment decisions. Prem might be the same to some extent. When a person is working directly from the private confines of their brain and you ask them if any of those processes had changed, that might sound insulting to the person because you are actually talking about their brain. In other words, it could be asking if someone had their head fixed after losing big on the previous bets. In terms of real changes at the corporate office after lackluster stock performance, there actually was delegation of some investment power to other executives. With regards to your question going unanswered, that is nothing to be taken personally because this appears to happen with every other question. Some people insist and stick to their question and rephrase it or emphasize what their question was. Certainly, I would also dislike if that happens to my question. In comparison, Buffett also does that and in this year meeting Charlie at one point had pointed out how Buffett had likely evaded a question.

Just like beauty is in the eye of the beholder, communication could be in the ear of the listener. From my point of sound, that is what I expected him to say in full humble disclosure which I find impressive and inspirational. I speculate what happened is that they had closed most of the positions but the loss on one position might be so big that they would think of recovering that next year. However, they displayed great discipline by finally closing that as well next year even at a massive loss. I understand his explanation about the position being from the previously existing ones, instead of a new one. Maybe his communication is bit too nerdy for people. He was an engineer first, after all. Unlike, Buffett who was into businesses and stocks from the very beginning. Even Bill Gates had a hard time communicating when accused of anti-competition practices and he was world #1, instead of world #10. Personally, I find the communication of Buffett to be terrible. He makes too many loops and detours of thoughts with volatile word speed, I cannot make out anything.

https://www.morningstar.com/stocks/fairfax-earnings-both-sides-business-show-strength "Fairfax FFH reported a strong first quarter, with attractive results on both the underwriting and investment sides of the business. As a result, book value per share, adjusted for dividends, increased 7% from the year-end figure. However, we see nothing to alter our long-term view, and will maintain our CAD 730 per share fair value estimate for the no-moat company."