bearprowler6

I attended the 2014 (May 2014) annual meeting. Bruce Flatt and other senior executives provided an overview of each business line as well as a summary of the significant events that occurred across the business in the prior 12 months. The meeting was then opened up to questions---only one question was asked (very disappointing) so they concluded the meeting. Light refreshments and snacks were offered following the meeting during which time the executives including Bruce made themselves available to the shareholders/other meeting attendees to answer any questions one on one. I spoke with Bruce at length during this time and was able to ask him his views on deflation and its possible impact on BAM's various business (a concern of mine given the levels of debt the company and its subsidiaries have against income producing assets) as well as about the decision to invest a small amount along side Fairfax in the Eurobank capitalization. I found Bruce to be very approachable, extremely knowledgeable and he took as much time as I needed to respond to my questions. I plan on attending this years meeting which is schedule for Wednesday May 6th starting at 11:30 am at the Design Exchange on Bay Street in Toronto.

We do not know whether $10 USD (less underwriter's fees) is still reflective of the current NAV since we do not know for sure whether any investments have been made since the IPO on January 30th. Also---the investment mandate is very wide---not limited to just public or private equities. Public and private debt as well as infrastructure investments are possible investment choices. They can also utilize leverage. They raised USD during the IPO which means that one also needs to be mindful of the USD/India Rupee exchange rate fluctuations. As for the management fees --- these were negotiated on behalf of all investors by Fidelity (one of the cornerstone investors) so they reflect hard bargained market rates for these services. Full disclosure --- I acquired my shares in Fairfax India during the IPO and for my wife a few days after the IPO. I strongly believe buying at even the current market price offers an investor a rare opportunity for significant long-term growth however time will tell on this point.

In addition to the very strong return on their overall investment (Prime/Cara) to date---I believe it is perhaps more important to note that while Fairfax's interest in the overall equity of Cara will drop to 40-41% after the IPO they will remain in control of Cara with 53% of the votes.

Hi Gio, Yes---the NAV at the time the company went public was $10 USD---in late January. The US dollar has strengthened somewhat against the Indian Rupee since the issue date so the "purchasing power" of the funds raised has increased. The investment mandate is quite broad -- giving the Hamblin Watsa team a lot of latitude. Although no acquisitions have been announced publically it is impossible to know at this point whether any of the funds raised have been deployed or fully remain in USD. I would highly recommend a read through the prospectus if you haven't had a chance to do so already. It can be found by searching the company's documents on Sedar. Take care, BP6

Fairfax has also announced a $200 million preferred share deal (with a $50 million overallotment privledge) as well as a $300 million senior note issue! The investment bankers (BMO, RBC and Scotia) are having a nice week! Maybe its time to buy some Canadian bank stocks?

http://www.istockanalyst.com/business/news/7191789/fairfax-announces-c-650mm-bought-deal-financing

Trading in Fairfax India to commence today on the TSX: http://www.fairfax.ca/news/press-releases/press-release-details/2015/Fairfax-India-Completes-US1-Billion-Offering-Comprised-of-US500-Million-Initial-Public-Offering-and-US500-Million-Private-Placements-and-Will-Commence-Trading-Today-on-the-TSX/default.aspx

Fairfax purchases all of Praktiker Hellas to add to its Greek portfolio that already includes exposure to banking, real estate and industrial production: http://www.theglobeandmail.com/report-on-business/international-business/european-business/fairfax-intends-on-being-a-long-term-investor-in-praktiker/article19174631/

For those interested---an interesting and reasonably cost effective way of gaining direct access to the "recovery" taking place in Greece is available via "The Global X Greece ETF "that trades under on the NYSE under the symbol "GREK" offers . A link to the ETF website is provided below: http://www.globalxfunds.com/GREK The ETF holds 22 positions including Piraeous Bank, Alpha Credit Bank, Mytilineous Holdings and Eurobank Properties REIT -- all of which were mentioned in the Stansberry Report.

Invest along side Fairfax in the new Fairfax India Fund: http://www.theglobeandmail.com/report-on-business/streetwise/fairfax-india-to-expand-after-bjp-election-victory/article18735019/#dashboard/follows/

BV has increased substantially since the end of the Q1 given the movement in the bond market combined with the sell off in the Russell 2000! Market is likely reacting to both of these along with the increasing threat of deflation in the Eurozone!

Al, of course he has his inconsistencies! Yet, he is the one who created an $8 billion company from scratch. Not me, neither you, nor anyone on the board (at least that I know of!). Therefore, the real question is: has he lost his mind? From a first class entrepreneur, has he suddenly become third tier? Gio He has not adapted to having large amounts of cash available. It is all back to the argument you had on the other thread. If they are gojng to be in the insurance business they need to invest for cash flow, not lumpiness. If they are going to be a PE shop then this is fine. The high debt, and poor cash flow of this style is damaging the insurance operation. Again, I repeat: 1.4 billion could have generated a lot of cash flow directly to Fairfax. 150 to 250 million per year. instead it was thrown away on a speculation. Think about that while you defend them Gio. Where are you finding these businesses with sustainable cash flow yields of 11-18% in this environment? I want in on that action. In defence of Prem (and of Gio)---I believe it is unfair to dismiss BB as a "speculation". FFH was not the only investor in the recent convertible offering. Have Markel; Mackenzie, Brookfield and Canso all lost their minds? I sincerely doubt it! BB is restructuring! Restructurings are complicated, stressful, difficult and not for the faint of heart. They do not occur at a measured pace. Ideally the restructuring should occur out of the glare of the public markets however for a number of reasons that could not happen in this case. Having "effective" control of a restructuring is the best way to protect your position. Prem has done that. John Chen appears to be the "real deal" and is comfortable in these type of situations. Time will tell---patience is required on this one!

I have read this discussion with much interest...it reminds me of a true story from several years ago when I was very early on in my career.... A successful small business owner was being encouraged by his advisors to make "better use" of the cash he had accumulated---$2 million (a lot of money at the time). They could not understand or accept why he would only invest his $2 million in 30 day t-bills earning about 4% at the time (yes it was a long while ago---mid '80's). They were frustrated by his unwillingness to invest his cash more tax-efficently or into vehicles that would allow him to achieve a higher rate of return which would of course allow him to grow his money at a faster rate. At the end of one meeting during which time the advisors had offered up several suggestions for the money---the business owner reminded them of something very important ---something that put all of their advice in context---he reminded them that he was the one with the $2 million! From that point forward the matter was never discussed again.

Mr Market may be starting to consider a deflationary scenario and therefore is placing value on FFH's deflationary bet -- we don't need deflation to set in --- all we need is the expectation that it might. Also--the US 10 year hit 3%+ a few weeks ago -- now trading at 2.50% -- given their deflationary view--- is it possible that Brian B loaded up on US government bonds at the 3% level?

Back to BBRY for a moment---I would suggest that yesterday’s move on BBRY was more defensive than offensive---done to protect/salvage FFH’s existing investment in the company. Only time will allow us to know whether the move is ultimately successful or not. While the list of recent equity investment “failures” (Torstar, Abitibi, Canwest) is long so is the list of recent mega hits -- Bank of Ireland, Mega Brands, the Brick and J&J to name just a few. It is also worth mentioning the almost flawless execution around the management of FFH’s fixed income portfolio. The frustration surrounding FFH and Prem seems to be at an all-time high---however those who are patient and focus on the long term will stand to benefit the most. For the record---I still believe that FFH will realize significant gains from both its deflation bet and equity hedges however I understand why not everyone holds this view. For these individuals; investments other than FFH may hold more appeal.

A simple case of selling out at the top (Canada) and buying in at the bottom (UK).