anshulp

amazing. I usually do like to read the wiki for companies when I haven't heard of them, just hadn't looked at fairfax. Really well written also.

Looks like it is up and running

So that would be 1.1B cad equity value and $2.3B EV . Est 259m in Ebitda would put the deal at 8.89 EV/EBITDA or 13.3 EV/EBIT. They have a lot of debt with Interest costing them 60m a year right now, so not sure if Fairfax would be able to increase the debt load a lot .

Tim Eriksen released his Q4 letter today. He made Exco 8.4% of his fund. If I remember correctly Fairfax owns 49% of the company marked at $20.01 (just about where we are at today). Posting his comments: During the quarter we added a new major expert market position, Exco Resources (expert: EXCE). We have followed the company for a number of years and previously owned shares in 2021. Exco is an independent oil and gas company focused on onshore US shale development and production. Their primary areas of focus are Haynesville and Bossier shale in east Texas and north Louisiana, Eagle Ford shale in south Texas, and Marcellus and Utica shales in Appalachia. Exco went through a restructuring and emerged from Chapter 11 in 2019. Exco has performed very well since then (see stock chart to the right). Production is nearly 90% natural gas. At the end of 2020 Exco had just over $560 million of equity ($11 per share based on 51 million shares). Fast forward to September 2025 and Exco had equity of nearly $1.1 billion ($23 per share based on roughly 46 million shares). Mark-tomarket gains and losses on derivatives (hedging) make their earnings swing wildly. We ignore most of that and focus on operating income and cash flow. What caught our attention was their increased production the last three quarters - from 22 Bcfe (billion cubic feet equivalent) in the March quarter, rising to 27 Bcfe in June, and then to nearly 36 Bcfe in September. Additionally, in December they announced a $430 million capex budget for 2026 compared to a ~$185 million budget for 2025. We don’t think you have to be an expert on future natural gas prices or well flow rates to like the setup. With production set to increase and having a proven track record of hedging successfully, we are quite optimistic. If natural gas goes to $2 per mcf, Exco is near breakeven, but will have about $4 per share in cash flow. Assuming a 10% increase in production and pricing of $3 per mcf we think they can earn about $3 per share (and have $7 per share in cash flow), and at $4 per mcf they would push $6 per share (and have total cash flow of about $10 per share) in comparison to its current $19 per share price. As we write this, current two year strip pricing averages about $3.75 per mcf. Hopefully we are underestimating their potential production increase. Lastly as of the end of 2024 reserves were 28 times production. Admittedly, 75% of reserves were undeveloped, but that is still quite impressive. Their PV-10, which is the estimated present value of Exco’s future after tax cash flows discounted back at a 10% rate, was nearly $40 per share. Natural gas pricing outlook is more favorable today than it was at the end of 2024. Obviously, they would be an attractive acquisition candidate. Link to his letter (guy is a beast btw) : https://static1.squarespace.com/static/5ea6570a0ba57d406203e048/t/6971662dea3ab16d2ec514e0/1769039405165/Q4+2025+Results+for+Cedar+Creek+Partners.pdf

Will second that ! I really like what East 72 holds. Good letters produced by them too.

Here is the post. Buying Fairfax Now_ Smart Move or Late to the Party_.pdf

Big increase if it happens

I love his blog, super interesting post usually.

Yeah taxes mainly, plus just has to be easier without a controlling shareholder at that level.

Thanks, kind of you to say that!

It is a good company + cheap. I believe it will get taken private soon. I have owned it in various sizes since Summer 2023. The stock has gone from 0.5x bv to 1.0, to 0.7x ish now. I think what’s important to understand is that this is the last large publicly traded fixed annuities firm remaining. Makes it super valuable for the asset managers. Wrote about it twice: https://alankritcapital.substack.com/p/f-and-g-annuities-and-life-fg https://alankritcapital.substack.com/p/first-athene-then-ael-now-fg

Fair enough. I think they pair well.

Thanks. I was very happy with the Flyht deal. I think Brad and the team can get their 15% a year target and view that as a good proxy for future returns. They do make nice tuck in acquisitions opportunistically which should continue. It's not much but sometimes they tout their wins in the Chinese programs, but I discount those to zero. Also out of curiosity since you own KKR any reason why APO isn't included? I view both good in tandem though APO future is more driven by Athene and KKR Strategic Holdings.

I always enjoy reading through these. My top three have remained pretty much the same for the past few years but full port minus a couple tracking positions are: Sygnity SA Fairfax GE Aerospace Next Nav Innovative Aerosystems Firan Technology Taiwan Semiconductor Bel Fuse Strathcona Old Republic Apollo KKR WR Berkley FG Annuities Mako Mining EL Financial I also want to build a quasi long term index position in late 2026 with three components: a direct SP index (likely via Frec), EL Financial and CET.

I believe the French and Spanish governments own more of Airbus then the Germans (FCAS alliance) . The whole statement I made was just a comment that I wouldn't want to be in Germany position - who is pretty left out right now for a future fighter.

I didn't word that well - I will just just refer back to my Nov 11th post and clarify I mean France doesn't need Germany for the technical knowledge to build the plane, nor do the Swedes. Its only the money. Not a good spot to be in

Can't build the plane without Dassault!

Its officially in

VL_20251128_FFH9TO.pdfI took a glance at the recent value line report. I thought their eps estimates were interesting . $201.35 for 2025 and $205 for 2026. I personally have $200 ish in my head for next year. Obviously sales etc could influence this.

Thanks for sending - always interesting to give these a read.

I get to read my copy on Friday, can't wait.

Yep decades of underinvestment in the western part of the continent. Will take a lot of money and time to fix.

Time is the key factor. There is a reason why more countries have nuclear weapons over an indigenous fighter jet engine for example. Not saying the Germans can't do it. And I fully agree for most programs Germany will overtake the other European countries and be the leader. Another reason why France likely isn't happy!