OCLMTL

Funny you say that because that’s when I decided to buy Fairfax shares for the first time in my life. The arb was so big between the sale at 1.8-1.9x BV and $1B buyback at 0.8x and it was so bold, it cannot have been ignored. It was a HUGE signal Prem was sending to the markets. After that, I started buying, too small at first, and now I’m hugely OW (a lot would say irresponsibly so) and sleeping extremely well at night at these levels.

Beyond the debate of the incremental benefits which the $115M per year would bring if it was focused on buybacks, dividends, investments, etc, I think the $115M could create billions in value by restoring confidence in management and the new, higher earnings power of the company. If that “social capital”, that reputation of the mgmt gets enhanced enough in 2024 because of a big bump in dividends, then the “ROE” of that $115M could be a 0.2-0.3x BV impact. THAT is money well spent …

To me that’s the biggest « hidden » upside. A lot of people are worried about rates heading lower and the potential impact to EPS/FCF in 3 years. It’s totally legitimate if you ask me. The problem though is that if we look at Viking’s earnings expectations, for example, and we see that $4B of earnings PER YEAR gets added to BV, and slap an incremental ROE on that $4B of 10%, you’re talking about a LOT of earnings power in years 4+ simply on the added equity we’ve built in the last few years. Am I completely wrong to think that incremental ROE of 10% is achievable on each tranche of $4B of earnings per year the company adds? Am I seeing this in a way that is overly simplistic? Thanks for all the feedback. Trying to humbly contribute to this dialogue.

Market wide drawdown in the safe heavens, with Intact's drop today the biggest since February I think. That tells you something...just a huge top down/sector rotation post FOMC comments yesterday and 10 yr dipping below 4%. I'm frankly quite impressed with FFH being down 4% earlier today and then almost going back in the green...very solid market action. We'll see about the close but certainly some investors using this opportunity to add on weakness while perhaps more quant-oriented sellers get out to re-invest proceeds in "lower yield friendly" investments.

Can someone remind me the float impact of this transaction closing please? thanks!

What makes me comfortable is the low risk of waking up overnight and the stock being down 20-30% in one day or with one earnings release, like a biotech or very high multiple stock. The margin of safety is so big due to tailwinds + low multiples. i feel like it’s also a great hedge vs my housing, I.e. my homes have certainly gone done in value in the last 18 months due to rates while FFH will benefit. At the end of the day, mathematically, it should add $130-160 per year for 2-3 years to BV, and I don’t see how current BV gets chopped by 20-30% and/or multiple going back to 0.8x. In fact, I think the most likely scenario is a $1200-1400 BV within 3 years and a 1.2x multiple which gets us to around $2K CAD. I’m a big believer in the capital markets angle that @SafetyinNumbers has been pushing. PMs, at the margin, likely won’t add to banks here, they are all OW IFC (great company and stock) and FFH will be as big as IFC in the index soon. That will lead to uncomfortable conversations between CIOs, PMs analysts, as it pertains to why they have zero weight in FFH while the stock doubled under their nose in the last 24 months. we shall see. I’ll humbly adapt positioning if I need to.

I’m at 75% of the book and added again slightly today. As somebody referred to earlier, there a nothing in the market right now that passes the test of “is it a better risk/reward than FFH” for the next 2-3 years that I’m aware of. It’s a very aggressive stance but I think it will be, in hindsight, a great decision. TBD…

HI Viking, my first ever post here after lurking for a long time. Thanks for the incredible contribution to this website, along with other board members. To your point of things being so great for 33 months and, despite this, only trading at max 6x 2023 (and 2024-2025E) earnings is beyond my comprehension. It’s a silly % of the my portfolio as is and yet, I sometimes wonder if 100% is not the appropriate number. I’ve rarely come across such a dislocation of reality vs perception in a large cap, high quality company in my entire career. I’m trying to find FFH specific (real) risks and all I see are industry/weather/cat risks that could be major headwinds… I can totally see long/short funds piling into FFH and shorting a basket of P&Cs on the other side to make an incredibly profitable trade while staying “market neutral”. Let’s see what Thursday evening brings us…