Hoodlum

Volume buying started picking up this afternoon.

yes, I also noticed the comment regarding AGT having over $3B in revenue. It will be interesting to see what the return on this sale is and what they do with it.

AGT announced the sale of their rail assets to GCMG, while signing a 20 year agreement to continue using this rail system. There are no details of the sale value, but GCMG will need to report it at the time it closes in the next couple of months. I wonder what AGT has planned for this, unless they will distribute a special dividend to Fairfax. https://www.globenewswire.com/news-release/2024/11/20/2984466/0/en/AGT-Food-and-Ingredients-Inc-Announces-Sale-of-Shortline-Rail-and-Bulk-Handling-Infrastructure-Partnership-with-GCM-Grosvenor-and-Mobil-Grain-Ltd.html This sale returns significant capital to AGT, which presently generates over $3 billion in revenue annually. We will continue building on the strength of our partnership with Fairfax Financial Holdings Ltd. in creating a global agriculture growth story, including expanding our global packaged foods business. The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in late 2024 or early 2025.

Those are great rates for Fairfax. I wonder if we will see further bond issues for general purposes. It could see them do that to eventually close out the TRS and purchase those shares.

I blame it all on Muddy Waters.

Fairfax is involved in another Convertible Notes placement for Orla Mining, related to the acquisition of an Ontario gold mine. https://www.newswire.ca/news-releases/orla-mining-announces-strategic-expansion-into-canada-with-acquisition-of-the-musselwhite-gold-mine-817471626.html

With the recent increase in long Treasuries, we may not see the average yield drop much during 2025 with Fairfax being able to continue extending the duration. Fairfax could get another opportunity to extend duration again in the coming months and lock in at favourable rates.

I had not realized that dividend was related to a sale. I will delete this latest post to avoid confusion with others. That does seem like a very low valuation for Rawlings.

Power Corp's financial report from this week has the details on the Peak acquisition. Fairfax owned a similar 43% ownership to Sagard's 42.6%. The $325m sale to Fairfax would suggest a $195m reporting gain in Q4 over the $129m carrying value at Fairfax (this also matches the gain reported by Power Corp). I presume that Fairfax also received the $60m distribution from Peak in Q3 and I wonder who owns the other ~15% of Bauer. So, between the Stelco sale ($366m gain) and Peak acquisition we are looking at a reporting gain of >$550m in Q4, which will likely completely offset the Hurricane Milton losses. Let me know if my calculations are off. https://www.powercorporation.com/media/uploads/reports/quarter/bpcc-2024-q3-eng-web-final.pdf Sagard held a 42.6% equity interest and a 50% voting interest in Peak at September 30, 2024 (same as at December 31, 2023). Peak designs, develops and commercializes sports equipment and apparel for ice hockey and lacrosse under iconic brands including Bauer. The Corporation’s investment is accounted for using the equity method. During the second quarter of 2024, Peak disposed of its minority interest in Rawlings Sporting Goods Company Inc. (Rawlings), a leading brand in baseball. In July 2024, Sagard received a distribution of US$60 million from Peak. On September 30, 2024, Peak announced that Fairfax will acquire Sagard’s 42.6% interest in Peak. On close of the transaction, the Corporation expects proceeds of approximately US$325 million, and to recognize a gain in net earnings of approximately US$195 million. The transaction is expected to close in the fourth quarter of 2024, subject to customary closing conditions.

It looks like Paul Rivett is getting involved with and insurance startup. https://www.insurancebusinessmag.com/ca/news/mergers-acquisitions/western-investment-company-announces-strategic-shift-to-insurance-513872.aspx Western has also forged a partnership with Paul Rivett, former president of Fairfax Financial, renowned for his expertise in value-based float management. Tannas believes Rivett’s experience will support the company’s aim to integrate insurance underwriting with conservative float management, which is anticipated to provide stable, compounded returns. “Float management seems antithetical to most insurance companies,” Tannas noted. “Given their enormous success, it’s puzzling that only a handful of people see that these two separate activities – insurance underwriting and float management – belong in one business. While at Fairfax, Paul was at the center of this approach and their value investing philosophy. He has seen it, knows it, lived it, and succeeded at it.”

Daily volumes have not changed. Maybe there are fewer investors selling in anticipation of the Index add.

For Canada I was only looking at the TSX

Daily trading for Canada and US stock is ~40k shares. So around 400k share over the 10 business days given to index funds to buy shares. If the 900k shares needed for the indexes is accurate then that would be a significant increase in volume, not even accounting for other funds and investor who will buy in as well.

I just don't think we fully understand where the market may go throughout next year. We just need to wait and see.

It will be interesting to see if that position changes during the next 6 months.

In the event of Fairfax being added to the index, I wonder if the bank will keep many of the share for their own index or mutual funds.

While not 100% clear which side required the 2% investment in Dementra, I think we will see some of the remaining 10% of shares involving smaller investors accept the tender offer next year at €4.58

I don’t believe we will see yearly dividend increases. I think the next increase won’t be for another year and that will be at $20. This would be in line with their 15% ROE per year. Fairfax is better off investing their earnings rather than distributing more of it to shareholders.

I found some further details regarding the Demetra Holding acquisition. 77% of Demetra Holding's net equity comes from their Hellenic bank holding. So taking Eurobank's 8.58% stake in Demetra Holdings times the 77% Hellenic equity portion and then multiply by the 21.3% Demetra Holdings stake in Hellenic Equity. That provides Eurobank a tiny 1.4% indirect stake in Hellenic Bank through Demetra Holding, but it does take them to just over 70% total ownership in Hellenic Bank. Maybe that provides Eurobank with some additional reporting benefits. https://www.fxleaders.com/news/2024/11/08/eurobank-posts-15-8-profit-growth-in-first-nine-months-boosted-by-net-interest-and-fee-income/

I wonder what the investment in Demetra Holding provides to Eurobank. Do they get to account on their book somehow for the 21.3% shares that Demetra owns of Hellenic bank? Also, am I understand correctly that they paid €4.58 per share for the other Hellenic shares. That is quite the premium over the currently share price. It looks like they will now do a tender offer for whatever share ares remaining for I presume €4.58 per share.

@SafetyinNumbers will appreciate this. CIBC’s chief market technician Sid Mokhtari has listed Fairfax as one of his top 10 TSX momentum stocks. https://www.theglobeandmail.com/investing/markets/inside-the-market/article-cibcs-chief-market-technician-shares-his-latest-top-10-momentum-driven/

I believe this is the first admission that the book multiple needs to be increased (1.1x to 1.25x). While still a ways off from where I think it needs to be (I am not selling at 1.5x book), I think we will see further increases of the book multiple from other analysts.

BMO Capital analyst Tom MacKinnon raised the price target on Fairfax from $1,850 to $2,200.00 Cdn. Maybe someone can share his report.

@Viking Another great summary as usual. The more I think about it, I believe we may never see the share price of FFH fully reflect its intrinsic value. Most investors don’t spend the time necessary to fully understand how the value is being built. But that is fine as I will continue to hold while averaging double digit returns.

I found this enlightening when I initially read this. I have a much better understanding of how this works and why it was implemented.