obtuse_investor

I’ll be there.

You’re probably right. I don’t follow the Indian market. And trying to attribute reason to some of mr market’s actions is not really worth the time. I happily used this buying opportunity to substantially increase my exposure.

No idea. I assume since the Indian composite index dipped a little, fih fell too.

Hobbit: how do you figure that? Q3 bvps was 13.54. Current price is 14.78 Book value would have grown over 10% in q4 alone for FIH to be selling at below book value.

FIH is scraping 1.1x Q3 book value once again. It is looking interesting again.

We all heard it. He said “everything’s fine”.

This is a typical NCIB announcement. It gives management the right to repurchase stock, should they choose to exercise it.

I think you're right. If this continues (if history is any guide, there is a long way to go) the public is going to start looking for someone to blame. The articles are already coming out about the "greedy realtors" and alleged fraud they conducted. When that happens, I hope government will be able to grow a backbone and push back to make the real estate market more transparent. There will be other people sought out to blame for this. We have already seen "foreigners" being named as one of the parties. Another would be the banks-- I am sure banks are already working on their defence. Another party to blame would be the government policies themselves, especially the CMHC; where the taxpayer directly insures the mortgage lenders. That time will likely come in the next couple years. Sadly, everyone who has participated in this mania had a role to play. But human beings being who they are, would rather look for a scape goat than take a cold hard look at their own actions.

I find it amusing that the headline stories lately are about just three data points. Current month, last month and last year. And all of them stress how the year over year number is largely positive. It's sad that this light weight data passes along as a major news story in popular media. Hardly any of the stories mention that any recent buyers that had less than 10% of down payment are now officially under water. They can't sell and move without taking a large blow to their personal net worth. This is going to be brutal and I think it has just begun.

Any disclosures or estimates on the pro-forma book value now that the deal is closed?

We currently live in a low return environment. Trying to extract high returns from the market in a low return environment is precisely how permanent loss of capital is achieved. As a Fairfax owner I am quite content seeing them increase their float (by acquiring profitable insurance operations); and investing it in a prudently and carefully in the low return environment. The management seems to be doing the former. I'd like to see them start the latter as well.

Interesting development... Now the 50% of the hedges come off. Fairfax Financial Holdings Limited: Reduction in Defensive Equity Hedges TORONTO, ONTARIO--(Marketwired - Nov. 11, 2016) - Fairfax Financial Holdings Limited (TSX:FFH)(TSX:FFH.U) announces that after considering the effect of the recent U.S. elections and the potential for changes that may dramatically impact the U.S. economy and, therefore, the U.S. equity markets, the company determined it was prudent to significantly reduce its hedge of its equity investment exposure immediately. As a result of this action, equity hedges currently represent approximately 50% of the company's equity and equity-related holdings (a reduction from 112.7% at September 30, 2016). Fairfax will continue to evaluate the post-election U.S. economic indicators and may determine to reduce those equity hedges further. "We hedged our equity investments to protect our shareholders' capital from exposure to the impact of deteriorating economic fundamentals," said Prem Watsa, Chairman and CEO of Fairfax. "We constantly monitor these hedge positions relative to economic fundamentals. We believe the U.S. election may result in fundamental changes that may bolster economic growth and business development. As a result, there is the potential for a longer term rally in U.S equity markets that reduces the need for the capital preservation protection of equity hedging." Source: http://www.fairfax.ca/news/press-releases/press-release-details/2016/Fairfax-Financial-Holdings-Limited-Reduction-in-Defensive-Equity-Hedges/default.aspx

To be frank, the only thing I find bizarre about this sale is the date. It all happened on one day-- yesterday, the day of the Q3 results. This is too much of a coincidence. Something doesn't smell right. That's all.

From the Q3 report... ??? ??? ??? Full news release: http://www.fairfax.ca/news/press-releases/press-release-details/2016/Fairfax-Financial-Holdings-Limited-Third-Quarter-Financial-Results/default.aspx Evidently, they sold them all today (hours before the Q3 results) :o From the MD&A

True; MKL got sold off for showing solid 9% book value growth over last 9 months. However, one thing that has been working against MKL market price is the high valuation it has been trading at lately. FFH hasn't had that sort of (mis)fortune. Last 5 year P/B ratios: FFH vs MKL

A toll bridge purchase. Wonderful!

2015 Annual Report and Shareholder Letter is out http://www.fairfax.ca/financials/annual-reports/default.aspx

Yes, it is: http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00002458

They aren't buying puts. I don't think VIX / Vol really impacts the cost of TRS. The bigger factor in TRS is market liquidity and the size they are doing. Pretty sure you can get off a few hundred million in TRS shorts without needing to pay much premium beyond the implicit borrow rate of the underlying indices you are shorting. Not defending that shorting in Q1 was or was not a good idea, just clarifying that their positions aren't bad timing because of VIX, it's essentially irrelevant. Ben, I didn't mean to imply that they are buying puts or VIX options. I was mentioning high VIX as merely a sign of expensive insurance premiums. Although, I did assume that the price of TRS would be hugely impacted during this time. Thanks for clarifying that that it doesn't move in a huge manner. I am certainly not an expert on the internal mechanics of a swap instrument. Looking beyond the equity hedges, the underwriting profit has been exceptional. Recall, that is two years of record breaking underwriting profits. This is highly encouraging. As years progress, I want to see them maintain this sort of underwriting discipline.

Increasing short exposure from 88% to 100% in the first 45 days of 2016 was certainly quite bad timing-- short exposure has been quite expensive to purchase with the VIX spiking. They seems to have bought additional flood insurance when it started to rain a little bit. I am sure that flood will come; just not sure when. And this expensive additional policy will dilute the eventual payoff.

Very interesting discussion. One observation I made is this fixation with 2008/09 market crash, and this almost uniform belief that we need to do things to not relive the pain of 2008/09. This pure and simple recency bias. The next market crisis will not be like 2008/09. It will be something quite different. I can guarantee that.

An article on US Inflation in the latest Economist. The lowdown Persistent low inflation results from more than cheap oil and a strong dollar http://www.economist.com/news/united-states/21669952-persistent-low-inflation-results-more-cheap-oil-and-strong-dollar-lowdown

I increased my position by 20% today.

I suspect all those folks that bought shares from the bought deal got spooked and are selling. As a shareholder, this is good news. Fairfax sold shares at high p/b ratio and now is our chance to purchase those units at low multiples, thereby negating the dilution from the bought deal earlier this year.