obtuse_investor

Maybe we are witnessing Computershare’s float in action.

Agreed. I put the back of the napkin aside and did some real math on the BVPS annual return since very first filing. The return has been 11.3%. Note that this return is after fees to FFH. For comparison, stock has returned about 3% over that same period. Buyer from 2015 IPO (with cost of $11) lost about 8% each year on multiple compression. Full disclosure, I am not planning to tender my shares. And no, I fortunately didn't buy at IPO.

I could see the book value rising at a reasonable clip, like it has. Can’t predict if it would be at 25. What do think has to be true for it to trade close to book value per share? Multiple compression has been the biggest detractor of return for security holders since 2015, while book has grown at about 10% per annum.

Interesting development! Fairfax India Announces US$105 Million Substantial Issuer Bid https://www.fairfaxindia.ca/news/press-releases/press-release-details/2021/Fairfax-India-Announces-US105-Million-Substantial-Issuer-Bid/default.aspx Curious timing. FIH stock was down 5.3% today. This press release came out after market close today.

I expect they did something with their BB position, but it was probably something complicated and too smart. I miss the time when Prem and team only stepped over 1ft hurdles.

There was a disturbance in the space time continuum when that BB rip happened. Bloomberg caught it.

This is standard annual filing. Fairfax financial did a similar one at the same time.

Very lacklustre on repurchase front. This will disappoint the market. I am not surprised though. I have long maintained that Buffett is playing the very long game (which will long surpass his own expiry date). While market has basically discounted COVID-19 already, Buffett is likely thinking much longer term. Almost all scientists agree that we are in for the long haul of virus induced disruption. Market isn’t discounting that (yet).

What's your estimate for the current book value though? I don't have any fancy models. Two of their biggest assets are the airport and IIFL (finance & banking). Both these are going to get hit severely due to COVID, but we also know that the impact would not be forever. People will fly again and use their financial institutions again. Do a DCF of a sample company... even if first two years there is zero earnings, the value drops much less than 30%. If I simply assume that their Q4 book value has dropped ~30% similar to overall Indian stock market, then it will be around 11.8/shr. As of this writing FIH is selling at P/B of 0.57. If the underlying businesses return nominal 10% p.a. then at current price buyer is earning ~18% p.a.

Of all the things I own right now, FIH certainly looks the cheapest right now. If the book value growth is about 6-8% per annum for next 10 years, with current discount to book you can lock in a very healthy rate of return even after fees. Book should grow at a higher rate than that.

TD allows it too. ••• I wish it didn’t. In May 2009, I bought small bit of Harley Davidson puts in my TFSA thinking it was a false rally since March. Rest of my portfolio was long. No leverage. The puts went to zero in 3 days with no capital losses to show for it. I recently calculated what that cash would have been worth today if it was invested long as rest of my portfolio. The answer: about $50k.

Lol! There is so much truth in that. FFH’s business returns are highly variable year to year. Over medium (3-10yr) term they can range from terrible to outstanding. Effectively, as a long term shareholder you’re in for a ride. It will occasionally move like a rocket and other times it is a dud for years. The only reason to stay attached to the business is trust in management, which itself ebbs and flows. Frankly, I don’t know why I do it. :-) I also know that when I feel incredibly down about this firm it’s a time to buy rather than sell. In short, I don’t do a DCF on this firm because I am not smart enough. It would be garbage in and garbage out.

Technically, you’re right John. However, I would be very surprised if his suggestion wasn’t accepted by the *board* without question. He makes a suggestion because otherwise it would make him a hypocrite in the eyes of everyone who sees Buffett as a beacon of corporate governance. I am sure the irony isn’t lost on Mr Buffett.

I am wondering what the market sentiment for FIH is. As of this writing it is selling at 0.76 times year end book value. The assets are earning cash and are profitable. Whenever there is a relevant transaction they get marked to market. So the book value is likely a good approximation. Why the discount? No faith in management? Fees do not justify the discount. Is the market thinking that Indian assets are overpriced on the books? I am incredibly patient. Just wondering what the narrative is to justify the large discount to book.

As value investors we know that Mr market has his mood swings. Head scratching moments are the precise opportunities to make money. Good for you for taking advantage of the situation! :-)