bearprowler6

More on Farmers Edge: https://farmersedge.ca/farmers-edge-announces-c75-million-loan-from-fairfax-financial-holdings-limited/ https://farmersedge.ca/farmers-edge-announces-increase-in-credit-facility/ Not sure about you but I would not have increased the credit line to Farmers Edge; instead I would have looked at all the possible ways of reducing it.

Crip, Yes my comments were somewhat of an overstatement however I made them for a reason. Has Fairfax really changed? Yes they have locked in higher interest and dividends for the next 3-4 years. That is as much a function of the higher interest rate environment we are in as it is a statement on Fairfax's prowess. Bradstreet has always been great so really no change. Better underwriting resulting in a very good combined ratio. Insurance underwriting has been very solid for several years now so in my view they are simply benefiting from the recent hard market without any real change on their part. The concern has been and still is on the equity side of things. Some good signs for sure but then we wake up to the news of Farmers Edge buyout and an additional purchase of Blackberry shares. Its not the fact that both are small amounts---yes the additional Blackberry purchase was less than $500K. its the fact that these purchases are still being made at all that justifies my statement "nothing has changed----same old Fairfax". Let me ask you....as you manage your own portfolio....have you not attempted over time to eliminate any mistakes by selling them off and improving the overall quality of your portfolio by doing so? I know that's what I have strived to do. Everyone makes mistakes....some big some small. Admitting those mistakes and moving on from them after a sufficient time period is the key. Fairfax/Prem struggle to do this? Several members of this board express their anger at the analysts who don't seem to understand the "new" Fairfax. Maybe those analysts see something those of us to have been around Fairfax for decades do not or at least are unwilling to admit? BP6

Just when you thought that a buyout of Farmer's Edge represents a new low; this gets reported: https://finance.yahoo.com/news/prem-watsa-bolsters-stake-blackberry-200329382.html Nothing has changed----same old Fairfax..... Seriously, Farmers Edge and more Blackberry??

More news...this time concerning Recipe Unlimited: https://www.newswire.ca/news-releases/recipe-unlimited-enters-into-letter-of-intent-with-fairfax-887927427.html

Well said @cwericb! The attached article should be helpful for those wanting a quick refresher on the Fibrek/Watsa saga: https://financialpost.com/news/fp-street/watsas-mindboggling-reasoning-in-takeover-prompts-court-award I lost faith in Prem's approach to business a long time ago and reduced my investment in Fairfax accordingly. I have been much better for it! We all have our breaking points. Mine just came sooner then others however I firmly believe that everyone will get there eventually. It just takes a little longer for some. For those investors still trusting in Fairfax/Prem it may be worthwhile remembering the old saying.....when someone shows you who they are....believe them the first time.

I could not agree more SJ. Sadly however I sense that ATCO is just the beginning as I believe that FFH/Prem will be taking the same approach with Stelco. Simply replace Sokol with Kestenbaum wash, rinse and repeat.

A few updates on Farmers Edge: https://www.farmersedge.ca/farmers-edge-reports-fourth-quarter-2021-results/ https://www.farmersedge.ca/wade-barnes-stepping-down-as-farmers-edge-ceo/ https://www.farmersedge.ca/farmers-edge-announces-c75-million-loan-from-fairfax-financial-holdings-limited/ All the talk about how the team at Fairfax has learned its lessons and is new and improved and then they throw more good money after bad towards Farmers Edge. More of the same if you ask me. Very disappointing.

This question needs to be put to Prem at the upcoming annual meeting and we should insist on a clear/detailed response. Good luck with that. One answer provided on here that made some sense is that the comments about the subs having adequate capital was made when interest rates were trending upwards and before the equity markets collapsed at the beginning of covid. This may explain things but it is a classic example of how Prem communicates. He says/writes something definitively and is taken as such by certain investors yet situations exist which could potentially derail what he has said. I have come to label this as "Prem speak". He either does this purposely or is blind to the risks of saying something with such certainty that could be proven to be inaccurate. Either scenario is not good!

I am glad we can agree there is a cost. Until SJ raised this issue it had not been discussed and I for one am pleased that we are now doing so. Bad on me for using the words "accrued interest". The preferential dividend payments are a cash outflow that would have otherwise accrued to Fairfax and now must be paid to OMERS/AIMCO/CPPIB. Essentially, Fairfax gets the "use" of the funds up front (to assist with the closing of the Allied World acquisition or to buy back its own shares in the case of the Brit/Odyssey transactions) but loses out on preferential dividends paid out over time. You raise another concern with these transactions---we truly do not know whether Fairfax is able to buy them back at "fair value" or not? For example, the hard market had not yet started when the Allied World acquisition was undertaken. Presumably Allied World is much more valuable now given the impact on the hard market than at the time of acquisition. Who gets the benefit of this additional value? We simply do not know because of the lack of transparency surrounding this deal. It is amazing to me that with all the eyes on Fairfax on this board that no one truly knows how these "OMERS/AIMCO/CPPIB" financing deals work. We are simply to trust that it will all work out best for Fairfax and its shareholders. While this is good enough for many on this board it is not for me. I simply do not buy the traditional value investor view that all one needs to do is buy under book value and everything will work out in time. The long time under performance of Fairfax's share price suggests that many investors share my views and concerns.

SJ, Do you look at the financing provided by OMERS, AIMCO to close the Allied World (AW) acquisition in the same way? I believe they provided $1.5 billion at the closing 5 years ago and continue hold 29% of the AW shares. With accrued "interest" the cash cost to purchase the OMERS & AIMCO stakes in AW would now exceed $2 billion and counting. Adding the AW $2 billion to the $1.275 billion you noted above we have a situation where Fairfax would need to set aside almost $3.3 billion and counting to repay its funding partners (OMERS, AIMCO, CPPIB) over the next several years. If Fairfax never intends to acquire the minority stakes in AW, Brit and Odyssey then this discussion is moot however I suspect they want to own 100% of these entities at some point in the future. If this is correct then the cash cost to do so needs to tracked and factored into any assessment of Fairfax's future potential value. BTW---before the Fairfax fanboys over react---I am not suggesting that it was not prudent for Fairfax to work with their partners (OMERS etc) on the AW, Brit and Odyssey transactions. In particular the recent raising of funds by selling off small portions of Brit and Odyssey provided the capital needed to repurchase Fairfax shares well under book value. A very good move! I am however suggesting that it comes at a cost and I do not believe that the cost has been adequately factored into the very optimistic future valuations for Fairfax being discussed on this site. BP6

What about Allied World? This was purchased 5 years ago with the help of our "friends" at OMERS, AIMCO et el. Now 5 years later and Fairfax continues to own only 71% of the shares of AW. I would assume that Fairfax would also want to own 100% of AW at some point? At the time of purchase, OMERS provided $1 billion and AIMCO $500 million of the cash needed to close the deal. Assuming Fairfax wants to buy out its minority partners than it will need to come up with an additional $1.5 billion plus the cost of financing which at 9% would represent $135 million per year or a further $675 million and counting.

I agree totally.....as a result I continue to own NTR (Nutrien) and also staying long SU (Suncor).....

That kind of negativity won't be tolerated on here @nwoodman! Despite how accurate the statement is! CPPIB even wanted in on this deal...in fact it was the CPPIB Credit Investment unit within CPPIB that funded their portion of the deal. "Credit Investment Unit" not the equity investment unit! That should say it all! Prem was clearly feeling the heat for the underperformance of the stock and finally capitulated! Sure today's news will move the stock up in the short term but at what cost to the remaining shareholders? Once again the lack of details around the OMERS and CPPIB provided funding is noteworthy! Having said that, I for one wish Prem would "sell off" whatever portion of Odyssey or whatever asset he chooses to once and for all clean up the balance sheet --- eliminate all the outstanding debt and expensive preferred share financings, buy out the minority shareholders of Allied World, Brit etc. The stock price seems to be catching a bid in the pre-market! Should be a fun day. Do the long suffering shareholders sell or continue to hold out for the long term?

Well that (Fairfax's own stock decline plus BB's decline) accounts for $200 million of the $442 million. Another $242 million to go.....

Here you go: https://finance.yahoo.com/news/fairfax-financial-holdings-limited-financial-210200147.html Not surprising Brit continues its ways however more disturbing it seems Odyssey is now following Brit's lead Unrealized losses on the Long Equity Exposures of $442 million? How is this possible?