obtuse_investor

What a wonderful question! Human beings have tendency to judge the decision process based on the observed outcome. It’s because outcomes are easy to see, while decisions are illusive. Your question decouples those and asks if the decision process is up to speed. https://en.m.wikipedia.org/wiki/Outcome_bias

Great conversation, everyone. Meta thought: I am only hearing ffh bears. No bulls around. I happen to be agreeing with the bears. Maybe it’s just my frustration. Second level thinking: if I am hearing so much negativity about this business, this is probably a better time to buy than to sell.

If the FIH thesis depends on Modi being in power, I’d recommend this not be a long term holding. As far as I know, Modi is mortal. I expect the basket of well bought growing businesses will outlast him or any other politicians. The reality is that Indians have seen and tasted the future. They have tasted capitalistic progress and all the trappings that come with it. Even if the Congress comes back in power I don’t expect India to close its borders again.

I nibbled last week. I am getting uncomfortable with the size of this position for me. I will likely only add if price drops substantially (and value is not impacted).

To all who are disappointed in the buyback volume last quarter: please be patient. Buffett has been playing a multi decade game; and he is still playing it. He isn’t going to let his mortality stop him. I thought the letter was short and sweet. We should get used to that anyway.

In Q4 2018, "short equity exposure" was down $84.9M! I wonder what's in there.

FIH is only listed in Canada. Why would the management have to report to SEC? This is a genuine question. I don’t know what form the US listed entity is. It’s not an ADR. It’s a Wall Street manufactured trading instrument of some type.

Let's use a gardening analogy. From 2010-2016 (7 years); FFH management was getting ready for winter. They weren't planting any new plants. They were hoarding their seeds (cash) and keeping them safe (bonds). They were internally getting stronger (slowly but surely making their insurance operations profitable- lowering cost of capital). This was prudent management consider their weather forecast. From 2017-current (2 years); FFH management suddenly realized that winter isn't coming any time soon. They cracked open their seed vault and started planting. And now they wait for the flowers to bloom, while the weather does it's own thing. I don't want to digress into the validity of their forecast. What I want to point out is that for ~7 years they didn't plant anything new. The meager BVPS growth we see right now is a result of that lack of investment. It takes a 2-5 years for the flowers to bloom, assuming winter doesn't actually arrive (and frost kills off some of those plants even before the buds formed).

Same situation here. I have been owning FFH for years. At this time (timestamp: S&P ~20% drawdown) I am not adding to FFH because relatively speaking, higher quality assets like BRK (and even MKL) are a better buy. I just hope HWC is busy these days, carefully buying high quality assets.

Viking: Good question. I don't know the answer, but this is what I would suggest: invert the line of inquiry. Instead of looking for what could go right over the next few years; look at what negative scenario is being priced in. Another way to say that would be to not look at the upside, but rather the downside from here.

Very timely update on the Canadian housing landscape from Ben Rabidoux. Podcast: http://www.stitcher.com/s?eid=56553986

Interesting... Viking: how do you get inventory numbers for various locations? Is this available to the public?

I think psychology will play a major part. Whoever is going to be at the helm will be rational to think: Caveat: Munger + WEB probably already know this, and may have actively worked out an arrangement to lower the chance of this happening.

Still not at the lowest price to book value it has been at before. It's a good buy if you can convincingly argue that book value is understated. Book value is in US dollars, while earnings are in rupees. USDINR is hitting all time highs lately. Most likely that is not permanent, considering the long growth path the country has.

Interesting development. Roumell Asset Management submits letter to Board of Directors of Dundee Corporation https://www.prnewswire.com/news-releases/roumell-asset-management-submits-letter-to-board-of-directors-of-dundee-corporation-300706238.html

I read this one last year and enjoys it thoroughly. It was quite amazing, at times. Time Travel: A History https://books.google.com/books/about/Time_Travel.html?id=5XfbnAAACAAJ

I try to avoid anchoring on the 1B price tag. The RIM/Blackberry position was made many years ago when the balance sheet was substantially smaller. I suspect as a percentage of assets, the Seaspan deal is in line with their previous large positions.

From what I have observed; Canadian listed entities with low liquidity end up doing a tender offer to draw out the impatient motivated sellers. If the management offers low liquidity as the reason for the lack of buybacks, you can be sure they don't want to buy back shares. Where there is a will, there is a way.

Ok, I won't go into the PC platform cause it's mostly nonsense. You can go through it on digest it on your own time. But about the "animal spirits". In general you are correct that politicians can be full of it and unleash animal spirits - basically people doing dumb things with money. That has been happening for millennia. So it's not an unreasonable premise. However, in this particular case I don't think it will work. Here's why. The main ingredient you need in order to unleash animal spirits, beside bs, is credit. And what regulation B20 does effectively is cut off credit from the animal spirits. You are a someone who makes a lot of money and can afford an overpriced house? No problem, here's a mortgage. You are a Chinese housewife who has a 25% down payment for million dollar home? Sorry, no credit for you. You're just a regular middle class dude that wants to dive in and own x number or properties? No can do. B20 is the massive thing that didn't sink in yet. OSFI decided that the party's over and shut off the credit tap. Game over. I want to see the animal spirits that speculate with 100% down. Disclosure: I know real estate investors that buy properties with 100% cash. But they're about as far from the animal spirit type as you can get. Thanks for your thoughts rb. I agree with you. The supply of credit has "suddenly" dried up and fear has set in. Something major has to happen to reverse that. Ont PC party could reverse some local provincial rules, but OSFI is out of their reach.

Looking south of the border, one can be "full of it" and yet can unleash animal spirits. People just have to believe the narrative and it's off to the races again. Please do elaborate though. Isn't it a possibility? Or is my reasoning incorrect? I don't consume politics on a regular basis. I am not in touch. As for renting, I agree. With the way rental yields are, I am happy to take the other side of the trade. Nothing lasts forever and I am extremely patient.

I was researching Ontario political party platforms last night. Not surprisingly, pc party doesn't have a published platform. Although their public ramblings seem to suggest that they do not appreciate the recent regulation that may have tempered the Toronto prices. They are doing very good in the polls. Could the animal spirits return to Toronto real estate if Ford wins? Or is this price slide caught in the downward spiral? Disclosure: I rent in Toronto. I would like to buy at reasonable prices.

I ran into a writeup about Dundee today from Roumell Asset Management, which is a value shop of the Ben Graham variety. http://www.roumellasset.com/pdf/update_1Q2018.pdf It includes a SOTP analysis and their conservative estimate of NAV comes to about $4.40/share. The writeup is on pages 5 and 6. Enjoy.

By that logic, why vote for Christine N. McLean? She is Prem's daughter.

Dazel: I have been lurking and reading your thoughts on FFH over the last year or so. I appreciate the enthusiasm and the research you have done. I happen to agree with almost all your have said. If you don't mind sharing, what percentage of your liquid net worth is directly associated to FFH? I'll offer mine: It is 19.0%

Agreed- I like the talk about the long term buyback stance. I'd like to see it in action though. Much like the persistent underwriting profit, it will take me a few years to believe that consistent buyback stance actually exists. I just wish Prem would cut down on the marketing and boasting about the company in all his statements / appearances. I fully understand that one of the primary roles of a CEO is salesmanship, but if he really wants the buyback program to work in the long term, FFH needs to be selling at meaningful discount to intrinsic value. More discount the better. He needs to take a few firm steps: 1) Reduce the analyst calls to just one a year, or maybe even zero. 2) Open the Annual meeting to shareholders only. If journalists / analysts wants to come, they should represent at least one share.