bearprowler6

LONG TERM Closing Share Prices in Canadian Dollars Dec 31/14: $608.78 Dec 31/15: $656.91 Dec 31/16: $648.50 Dec 31/17: $669.34 Dec 31/18: $600.98 Dec 31/19: $609.74 Dec 31/20: $433.85 Mar 5/21: $517.16 TRADING GAIN FROM LOWS OF 2020 2020 Low Price CAD // March 5/21 Closing Price CAD // % Gain 2020 Low to Mar 5/21 Fairfax Financial: $319.37 // $517.16 // 61.9% Royal Bank of Canada: $72.00 // $$112.57 // 56.3% Manulife Financial: $12.58 // $26.79 // 112.9% Brookfield Asset Management: $31.35 // $52.66 // 68.0% CONCLUSION: My conclusion---Fairfax has been a disaster over the long term and absolutely nothing special from the lows of 2020. Nothing in Prem's latest letter suggests anything will change going forward.

Brief history of the Farmers Edge investment: Dec 31/17: 46.1% owned with a Fair Value (FV) of $ 95 million and a Carrying Value (CV) of $88.1 million (the 46.1% interest acquired for $95 million on March 1/17) Dec 31/18: 49.2% owned with a FV of $66.6 million and a CV of $66.9 million Dec 31/19: 50.4% owned with a FV of $43.8 million and a CV of $41.0 million Sept 30/20: 50.4% owned with a FV of $43.8 million and a CV of $41.0 million Note: All amounts in USD. Are you sure you're capturing all of the investment? The investment is via convertibles and warrants. From memory (I need to check the red herring) Fairfax has convertibles worth $220m. I don't think they were written down to $40m but could be wrong. I'm wondering if your figures represent the value of the convertibility feature plus the warrants (i.e. the equity) but not the debt? Is that possible? I'd love to be wrong. Edit: having checked the 2021 thread where this was discussed in detail, according to the prospectus Fairfax has $273m of convertible debentures ($225m principal plus accrued interest). It also has warrants. Were these written down? If not then I don't think the carrying value of $40m can be right. Edit 2: the final prospectus confirms that the consolidation ratio will be 7:1. This means that Fairfax's cost for most of thwir shares will be $2.40 (the conversion price of the debs) * 7 = $16.8. So Fairfax won't make much of a gain on the debentures at the IPO price. They will record a gain on the warrants but they only have about 2.5m of them after the conversion (so a gain of about $40m). Here's another try... Value of Farmers Edge shares held by Fairfax at IPO: US $340.3 million (25.023 shares x CAD$17 x .80 conversion to USD) Investment into Shares: Sept 30/20: Carrying Value of $41.0 million for 50.4% per Fairfax Q3 2020 financial statements Plus another 9.5% acquired immediately prior to IPO from the following: Conversion of Fairfax Debentures and Accrued Interest: US $219.5 million (from final prospectus CAD $274.4 x .80 conversion to USD) Fairfax purchase of portion of shares held by Osmington prior to IPO: US $19.2 million (from final prospectus CAD $24.0 x .80 conversion to USD) Total Investment by Fairfax into Farmers Edge shares prior to IPO: US $279.7 million ($41.0 +$219.5+19.2) Accounting Gain to be Recognized by Fairfax Upon IPO of Farmers Edge: US $60.6 million ($340.3-$279.7)

Brief history of the Farmers Edge investment: Dec 31/17: 46.1% owned with a Fair Value (FV) of $ 95 million and a Carrying Value (CV) of $88.1 million (the 46.1% interest acquired for $95 million on March 1/17) Dec 31/18: 49.2% owned with a FV of $66.6 million and a CV of $66.9 million Dec 31/19: 50.4% owned with a FV of $43.8 million and a CV of $41.0 million Sept 30/20: 50.4% owned with a FV of $43.8 million and a CV of $41.0 million Note: All amounts in USD.

https://www.theglobeandmail.com/business/article-boat-rocker-media-producer-of-orphan-black-files-for-175-million-ipo/ Post IPO----Fairfax will end up with 44% of a company valued between $175-$205 million. Revenue growth has been impressive however bottom line rivals that of Farmers Edge. I do like however that the funds raised from the IPO will be used to pay off the bank line with remainder being available to fund future growth. From the article: “Boat Rocker has constructed the platform for a next generation entertainment company, not out of bricks and mortar, but imagination, creativity and integrity.” Boat Rocker will use capital from the IPO to fully repay the $91-million owed from a $120-million credit facility from Bank of Montreal. The rest will go toward developing shows and acquiring intellectual property that can be developed for the screen. The company forecasts $700-million in revenue in 2021. COVID-19 affected production on several Boat Rocker shows in 2020. In the nine months ended Sept. 30, it had a net loss of $43.8-million on $171.2-million in revenue. The company was also in breach of a covenant on its BMO credit facility because its earnings were below a target. The company received government assistance in 2020, accessing $13.9-million from the Canada Emergency Wage Subsidy. In 2019, Boat Rocker generated revenue of $244-million and saw a net loss of $19.5-million.

https://privatecapitaljournal.com/fairfax-controlled-boat-rocker-media-files-for-ipo-on-tsx/

As for the quarter....yes the underwriting results were strong which is always welcome however the interest/dividends earned was down from prior periods reflecting the lower yields available overall in the market. This is a concern that has been expressed on here many times. Prem's style of responding simply does not work in today's modern investing world. At best he comes across as evasive and secretive. The guy who went off on him was clearly frustrated and expressed his opinion. I give Prem credit for letting him finish what he was saying. Having said that... I can't say that I disagree with everything the man said. The answers on Blackberry were simply inadequate. Others may disagree but that is my view. I personally was also frustrated by Prem seeming to imply that taking some private investments public was the same as monetizing them. The response concerning Lace/Burton selling vs Fairfax inself sitting still was also maddening. Their sales may pass all the legal scrutiny but it doesn't pass my personal smell test. Furthermore, if Fairfax is truly constrained by insider rules which prevent them from selling even a portion of Blackberry in these circumstances than we really need to understand what the exit strategy is and how it will be executed. On this point all we have is crickets from the maestro at the top on all these points which simply does not fly.

Refused to comment on BB, several questions on it. All shorts closed. Doesn't this seem like a completely unreasonable stance? I haven't heard the call but how can you refuse to comment on something so material to the company?? The worst was that Prem seemed to be playing dumb when one of the questioners asked how it was that Roger Lace and Wade Burton were able to dump their personal BB shares, but FFH was seemingly unable (or unwilling). To a large extent, that furnishes Wade Burton's opinion of the BB valuation. So, we know what Wade likely wanted to do with FFH's BB position, so who made the decision to stand pat? <==rhetorical question! SJ +1

Here's the press release for the full year 2020 results: https://www.fairfax.ca/news/press-releases/press-release-details/2021/Fairfax-Financial-Holdings-Limited-Financial-Results-for-the-Year-Ended-December-31-2020/default.aspx

https://www.fairfax.ca/news/press-releases/press-release-details/2021/Fairfax-Announces-Conference-Call/default.aspx

Would increasing the size of a short position go against Prem's "promise" to not short ever again? Or have you found him another loop hole to exploit? Prem speak knows no limits..... My recollection is that he promised not to short indices, not stocks. A portion of the transcript from the Q3 2020 conference call was posted a little earlier today by Wisowis. In that post Prem clearly states that no further shorting of either indices or individual stocks will be done. At least that is my read and understanding....however I am not an expert in "Prem speak" so please review yourself and let me know how you interpret Prem's word from the Q3 2020 conference call.

Would increasing the size of a short position go against Prem's "promise" to not short ever again? Or have you found him another loop hole to exploit? Prem speak knows no limits..... Didn't GME and friends start spiking very recently? Wouldn't this "one name" be more likely some high-flier like TSLA, if they've been covering and covering...? (Also bad news of course, but no GME.) Fair point...Tesla is more likely but since its Prem we are dealing with than GME is not out of the question. And yes...if it is Tesla we are in for some additional bad news on the short side!

Would increasing the size of a short position go against Prem's "promise" to not short ever again? Or have you found him another loop hole to exploit? Prem speak knows no limits.....

Below is from the last conference call in October. If FFH has short exposure after saying this... Prem's comment from the last earnings call should not give you any comfort. He left himself enough wiggle room by not specifying a time period by which the last remaining short would be closed off. In his words: "I just don't want to fix a time, but relatively soon." Classic Prem speak if you ask me. Prem speak has been covered on this board numerous times before so no need to elaborate any further now. "Relatively soon" in Prem speak is different from what most of us on this board would suggest is meant by the time frame. I have also also worried about Fairfax's short exposure during the last few weeks. Worse care scenario....the last remaining short is GME and it has not yet been closed out!

I would to understand what investors on this board are thinking in the event that we find out that Fairfax has not done anything to monetize the recent increase in value in Blackberry. I have been very critical of Prem and the overall management of Fairfax for the last several years. My concerns have been expressed on here numerous times. I have been a long term shareholder of Fairfax having bought my initial position in Nov/1999. In the last several years I have gradually reduced my position and then significantly cut it at the outset of the pandemic. I continue to hold a small weight in the shares. Although I understand the excitement around the hard market and rebound in the values of their equity holdings I have resisted adding back the shares I sold because of concerns I still hold about the way that Fairfax is managed overall. I view the recent run-up in the value of Blackberry as literally a gift from the investing Gods. A gift that I believe Prem and his team would be foolish not to capitalize on. So as a result if Fairfax has taken no action to realize the sudden (unwarranted) spike in Blackberry's stock price I have decided that I will sell off my remaining position in Fairfax and never re-enter the shares again as long as Prem is involved as such inaction will have confirmed my greatest concerns about Fairfax once and for all. I would like to have a serious discussion here about what others are thinking on this point. Thanks

BB's price advance continues: NYSE: $24.84 USD TSX: $31.67 CAD The run is not over yet. Need to stay strong and hold! Prem will know when to sell!

The famous scene from the Big Short comes to mind...."We aren't giving out any lifeboats. I say when we sell. No one is acting responsible. We will wait, wait, wait until they feel the pain. I say when we sell". Is this scene playing out in the offices of Hamlyn Watsa as we speak?

Well...Prem has blown through the $21 USD level and quickly approaching $30 USD. Stay steady...dont get scared away....Prem sure isn't!

The question becomes....how will shareholders feel about Prem if he does not capitalize on this parabolic move up in Blackberry? What will you do if the Blackberry price retreats and we find out that Fairfax did not lock in any of the gains? As SJ correctly points out....a $1 billion unrealized gain on the convertible debs alone? Only of value to us if Prem acts to lock in those gains. Would you be okay if he does not act? If he lets this opportunity pass us by?

No room for weak hands on this one. Gains are just getting started. The key....do not try to support the move up with fundamentals. Just ride the momentum higher. Long suffering Fairfax shareholders are finally being rewarded for their faith in Prem. Stay strong and most importantly stay long.

Weak hands! Continue to hold like Prem for the long term!

Not likely allowed with Prem on the Blackberry board?

Perhaps the others are overvalued and BB is valued correctly? There are many threads on this site that go to great length outlining how many companies in the tech sector are overvalued and how the growth managers guys are wrong and the value managers are correct. Now we are to believe that BB (a value stock?) will reach the heights of the other tech/growth stocks that it compares to?

We don't know if the stock is moving on momentum, or perhaps there is something in the works. Let's leave it up to the investment team to decide what to do. Because if something is happening, they would have a better idea of the upside. Either way, things look a lot better now than they did six months ago. Cheers! Seems senior Roger Lace (a senior member of Fairfax's investment team) thought it best to take some of his own money off the table: https://www.smarteranalyst.com/new-blurbs/the-senior-officer-of-blackberry-bb-is-selling-shares/ Hopefully, the same prudence is being applied to the BB shares held within Fairfax!

Ok, wow... I did some searching and found this. Absolutely bizarre. Don't click the link if you're epileptic. ;D There's more, this is just the first one I clicked... Holy Christ. I am absolutely gobsmacked to see a thread like that. Will FFH's BB investment be rescued by the sudden appearance of a collection of "greater fools?" I guess if you have a choice between being good or being lucky, you'd be well advised to choose the latter... SJ So which one of you planted this thread in Reddit 8) It wasn't me. But, now that you mention it, I am considering the possibility of starting a new thread on this new outfit that I heard of which is likely to skyrocket. It's called the Resolute Forest Products Information Technology Systems corp (you would rightly refer to it as RF-Pits). They have an innovative product called e-paper which will be used by all electric car companies and is already in heavy use at Apple and Amazon... SJ This could explain the move up in Blackberry: https://www.docketbird.com/court-cases/BlackBerry-Limited-v-Facebook-Inc-et-al/cacd-2:2018-cv-01844 Typically a court action of this nature occurs before a settlement between the parties is announced. In this case the settlement would involved FB paying an amount to BB for damages without admitting blame or responsibility. In any case, it seems that BB is posed to continuing ripping higher today based on trading in the pre-market. Another 20%+ day here we come! Maybe Prem has finally learned how to play the game?

Update: The Barstool Fund has now raised more than $18.7 million and provided financial assistance/lifelines to 79 small businesses from across the country. The Fund and the efforts of Portnoy and the whole team at Barstools was covered this morning in a segment on The Today Show: https://www.barstoolsports.com/blog/3226614/thank-you-to-the-today-show-for-covering-the-barstool-fund I would encourage each of you to watch the videos submitted by the small businesses that have been helped by the Barstool Fund to date and then to contribute to this very worthwhile cause so that more small businesses can be supported: https://www.barstoolsports.com/the-barstool-fund How does this all relate to a value investing board? The Barstool Fund was created by Dave Portnoy and his team at Barstools Sports which is owned by Penn National Gaming (PENN on the Nasdaq). It has been a winning ride for PENN shareholders over the last several months and with today's announcement out of New York State it seems that PENN will likely continue its winning ways for some time to come.