steph

When looking at p/b values for Markel and Berkshire I believe it is time for FFH to go to 1.4 -1.5 times book or between 550 -600 USD. The last quarter confirmed that on the insurance side things are getting better and that on the investment side they are still quite good.

Regarding the 15% target. Just one observation, I would like to have your opinions. If you don't take into account FFH first year book value goes from 23% to 19% per year. And if you don't take into account the 3,4 first years, when FFH was very small, you get close to 15% on average. The first decades were great, but when they started macro investing, even with the incredible gains of 2008&2009, performance has been disappointing. So 15% seems a though target if they don't stop 'macro investing'.

I believe being cheap is great as long as it is a natural way of life for you. But I know people who are cheap and are obsessive about it. I even sometimes wonder if they enjoy life??? It is all a big stress for them. That's why I prefer to concentrate on money that comes in and less on what goes out.

There is a lot of talk about BBY regaring FFH, but Bank of Ireland is their largest position. It is worth 1billion euro or 1.37 billion $! Ytd it is already up an impressive 40%!

+1 Completely agree. I own and I like FFH. We are all in the business of taking 'calculated risks' and being wrong is part of it. And FFH has been completely wrong about the way they hedged their portfolio. I have no problem with that. But they should accept it and stop talking about 'unrealised losses'.

Is there enough liquidity in out of the money puts for a multi billion portfolio?

Funny, I am just rereading "one upon Wall Street" from Peter Lynch and he clearly thinks you should always be invested, there is always something to do. And then he talks about an old saying on Wall Street, which I like a lot : "The bearish argument always sounds more intelligent."

Ok great, BAC. What would be a target price on normalized earnings?

What is your best idea for 2014? Just one stock. I always find it hard to just select one idea, but it is a good exercise. Who wants to get started?

I forgot to add that I didn't buy any banks when they were very cheap! :)

I don't see myself as a good market timer at all. I am more the buy and hold good companies type of investor. But I must say that I thought there were many red flags surrounding the financials in 2007 and sold all of them. The first warning sign was that the financials as a sector had gotten so important in all indexes. Usually from 25% to 40% in just a few years. And when a sector gets this important you know it is very popular/hot. Just look at Japan in 1990 or IT/telecom in 2000. The second warning was that although most financials looked cheap or reasonable on a pe and dividend yield level, they were not because compared to historical figures everything was way too beautiful: roe, bad debts,... Was it luck? Probably a little. But For me it was one of the easier calls of the last years.

congratulations to everybody on this board. These are all very good results! I am very happy with my 20%. But this is for a global fund. International markets have been weaker than the US this year (except Japan). Best US stocks: AIG, Google, Wellpoint, Medtronic, Endurance. Worst = Oracle and then FFH

"If you look at the psychological characteristics of a “Dangerous Bubble” – they were all present in spades at the peak of the real estate bubble in 2005. It was a “can’t lose” and “gotta be on board” speculative mentality when it came to owning real estate. The same was true with the tech bubble of the late ’90s." I just read this recently (don't remember where) and from all the people I see and meet today, I can tell that we are not even close to this speculative mentality. People are still extremely sceptical of this bull market. Just my impression. Mr.Hussman is a perma-bear. He will probably wait tu turn positive when markets get as cheap as in 1932. Good luck to him! His cost of ommission will be huge.

Duro Felguera is an interesting spanish company to look at. Aggreko Plc has lost 35% from its top. Still not deep value, but a wonderful company with big moat. Worldwide leader in its sector by far. CIR (Bestinver is large shareholder) also still cheap.

some observations about FFH. I own FFH not for their underwriting skills and not even for their equity investments, but mainly for their amazing track record in fixed income, which for an insurer is still the main part of their portfolio. I was happy to see that underwriting is getting somewhat better. FFH has always had a 'special' way of managing their equity portfolio. To me there have been many strange decisions but somehow it is the way they feel at ease managing the equity portion and their track record has been very good. So that's fine for me. On the bond side there is not a lot to do these days, but volatility will come back which is what they are waiting for. Many people on this board seem to think that FFH is defensive because they have hedged their equity positions. I don't agree. If you want an insurer which is not tied to the stockmarket, buy WTM or HCC, but don't buy FFH. FFH is a market neutral hedge fund (at least regarding the equity side). They have mainly hedged with the Russel which is less correlated to their positions. They are not just hedging, they are taking a very active decision, selling what they think is expensive and buying what is cheap. Just look at what happened this quarter... I understand that there are risks and that they are not perfect, I just would probably be more at ease if they could just accept and say that they were completely wrong about their hedging. I would never invest in GLRE. Just look at the management fees they pay Einhorn's hedge fund! This is just a way for Einhorn to have stable capital. Unless you have no problem with 2% and 20% fee structures...

Antwerp, Belgium.

THX!

Does somebody know if FFH is planning to post the slides of their presentation? Are we able able to find them somewhere else? Thx!

Dont Corporate profit margins and Corporate profits as a percent of GDP go hand in hand? Sales in the economy overall do not change dramatically and tax rates have been stable so I would think that they tend to track pretty closely. Vinod I do understand that in the long run corporate profit margins have to revert to the mean, this is economics 101. I however do not agree that corporate profits as a percent of US GDP have to revert to the mean. US companies are exporting much more than before. Many companies do nowadays 50% or more of their business outside of the US. They report these profits in the US, but these have no relation with the US GDP.

Hey Racemize, I completely agree with you. I never dared to say it, but reading 'margin of safety' was a big disappointment for me. I probably expected too much...and I thought it was just another average investment book.

Fairfax seems to attract a lot less of interest on this board. What are the reasons? Better alternatives (BAC, AIG), their equity hedge or just not cheap enough? With the markets where they are and with Blackberry rebounding nicely, Fairfax, not too far from book value, seems like a very good risk-return proposition.

I would buy: USA: BRK/FFH/AIG/ENH/GLW/JNJ/MDT Europe: CIR/Duro Felguera/Bijou Brigitte/Binckbank/Unilever Asia: Hengdeli/Chow Sang Sang/Toyota Industries Have a nice day!

I have held a portfolio tracking the Magic Formula stocks for 5 years. in the end the results were quite similar to the S&P 500, but with huge volatility. Just to give an idea: the first 8 month the underperformance was 16%! So, all in all, I am not convinced. 5 years is statistically significant and although Magic Formula probably outperformed 70% of the time, 2 short periods of significant underperformance made it an average investing strategy.

Thank you Parsad for your confirmation. I was a bit surprised when I called Fairfax and asked them what kind of proof (that I am a shareholder) they needed from me to be able to attend the shareholders meeting. They told me that my ID was good enough to attend the meeting??? I am coming over from Europe, and here you have to be able to identify yourself as a shareholder to be accepted at shareholders' meetings. What is your opinion?

Hi, I am new on this board. Is it still possible to get tickets for the Dinner?