Hoodlum

it looks like Atlas has locked in additional lease agreements for 19 ships. It will be interesting to see how this impacts their earnings going forward. During the three months ended June 30, 2025, the Company entered seven vessel financing arrangements for 15 containerships ranging in size from 11,400 to 17,000 TEU and four PCTC vessels ranging in size from 7,000 to 10,800 CEU for aggregate proceeds of $2,778,682,000 of which $775,432,000 is denominated in RMB. The sale-leaseback financings have terms ranging from 9 to 17 years and the Company has fixed rate purchase options on all 19 vessels some of which can be exercised immediately after delivery of the vessel. In addition, the Company has purchase obligations for five of the 19 vessels. Lease payments are based on fixed rate or variable based on a benchmark rate plus a margin adjustment.

According to Q2 13F, Fairfax sold $6M shares of BB. It looks like they are finally unwinding this.

I also thought it was revealing in February, when Peter Clarke announced the $10M donation at Huron University. In the past Prem would have made these type of announcements. I felt this was another step in having Peter become the face of Fairfax.

By coincidence, the next quarterly review of the LSE100 index will occur the first week of September. Metlen is certainly large enough to qualify. It is just a matter of when.

I am thinking Allied, as the option to purchase that minority interest expires in 12 months. I don’t think there is any large share purchase planned as Fairfax slowed down on share purchases during q2. They could take out some of the TRS shares. Fairfax likely won’t follow through until Q4, after hurricane season.

Fairfax is securing another $700m in debt at very favourable rates I wonder what they have planned for all this cash. https://www.globenewswire.com/news-release/2025/08/12/3131383/0/en/Fairfax-Launches-C-700-Million-Senior-Notes-Offering.html

While totally unrelated to Fairfax, Sunlife reported they would miss their 2025 Earning Estimate due to Medicaid changes in the US. Sunlife shares dropped 8%. Whenever other financials drop, Fairfax will usually get lumped in as well. That could be part of the reason.

It looks like he is in a time warp from 10 years ago and is unable to escape from it. At some point he will need to change his position and it will be interesting to see how that occurs. I suspect there will be no reflection on prior analysis when that does occur.

Fairfax now owns 11.9M shares of Metlen (9.25%). I looks like this was reported by Fairfax on Aug 1st but there was a delay in Metlen getting this out. So these shares were added before this week and the latest 10% runup. https://www.mononews.gr/business/metlen-sto-925-i-symmetochi-tou-prem-watsa-pano-apo-119-ekat-metoches

Thanks @Viking for this great summary. I am in general agreement with your conservative approach to EPS especially as it pertains to any Mark to Market equity, due to possible overall market headwinds in the coming months. I do think your ‘excess of FV over CV’ increasing $10/share is a bit low considering how much Eurobank is already up since Q2. I think we could also see a sizeable increase in FV for Poseidon when 2024 YE results are released.

RBC Analyst upgraded Fairfax to $2200US. “Q2/25 Operating EPS was ahead of both our and consensus forecasts driven by investment gains (primarily Total Return Swaps),” he said. “Underwriting results were ahead of our expectations driven by a lower combined ratio and we believe worker’s comp (Zenith) is turning a corner after years of declining premiums. Balance sheet remains strong with $3B of cash and a 26-per-cent leverage ratio. We continue to believe FFH stock is overly discounted, trading at 1.4 times P/B.”

QE did eventually helped push up inflation towards the end of Covid, but QE did work ok for a short period during a low inflation environment but now we have higher inflation and tariffs will pressure that even further. Trying to implement QE now, will drive up inflation quicker and much higher than before. The market will not act kindly to another round of QE.

We are in an interesting period of economic Tug of War between a slowing economy and inflation, which we haven’t experienced in decades and is unknown territory for most investors. Neither one had taken hold yet, but it looks like Fairfax is preparing for either scenario. If inflation takes hold then long treasury yields will increase. If the economy tanks then there will be opportunities for higher corporate bond yields. Both Berkshire and Fairfax seem to think we are close to the point where one or both will gather steam.

I don’t think replacing Powell will change rates as much as we think in the medium term. If the bond market thinks inflation will take hold then long term bond yields will increase, which increases the cost of renewing long term US debt. Th US government has tried to avoid this, which is why they pulled back on the suggestion of replacing Powell now. But we will see more volatility in the bond market as the new Fed tries to drop rates quickly and then need to pull that back quickly after the bond market responds. We can forget about the normal schedule for rate adjustments as the government will do this through trial and error. The US government will soon realize that their trillions in debt along with their tariffs will limit what they can do.

This is where I will leave it to Brian Bradstreet and his bond team to determine when to sell or lock in long bonds. They may even exit the 5 and 10 year treasuries at some point, and I would be fine with that as they likely see a better opportunity. But it will be interesting to see if further changes to the bond duration mix occurs during Q3. That could be a leading indicator as to where Fairfax see the opportunities in 2026. Berkshire had already exited all of their long bonds, so Fairfax would not be on an island if they did the same.

Right after that comment they mention the current Q2 average yield and duration. We saw the duration drop to to 2.4 years this quarter, due to the sale of 28-30 years bonds. That could be the risk they wanted to reduce. As far as the TRS goes, I hope they do gradually buy back these shares. Although I do believe the risk is minimal even with a $500 drop in the share price

@Viking. I really like the simplified structure of Recipe now. I suspect they have plan for growth with the Keg. Recipe has also committed to open 30 additional Olive Garden restaurants over the next 10 years. https://www.nrn.com/casual-dining/darden-seeks-to-spin-off-28-unit-bahama-breeze Cardenas said Darden also “signed a definitive agreement to sell the eight Olive Garden locations in Canada to Recipe Unlimited, the largest full-service operator in Canada, and we are on track to close that deal soon.” Recipe Unlimited has agreed to open 30 more Olive Garden units over the next 10 years, he said.

The Keg Royalties Income Fund unit holders voted 99% in favour of Fairfax’s acquisition. In the Q2 report Fairfax mentioned that this would close in Q3 if approved. https://www.globenewswire.com/news-release/2025/08/01/3126151/0/en/The-Keg-Royalties-Income-Fund-Obtains-Unitholder-Approval-for-the-Transaction-with-Fairfax.html

The following update on the Berkeley acquisition by Vacatia looks promising for this Fairfax investment. Certainly a good start. It’s early days in the timeshare investment, Berkeley, run by Caroline Shinn, but so far, it has exceeded expectations. Berkeley has approximately 125,000 available room nights per month. They started the year at virtually nil occupancy for overnight stays. In month one, Caroline brought that number to 10%, the next month 20%, and the third month 35%.

I noticed that as well regarding the long dated bonds. While a smaller percentage of the bonds, it would have a notable impact on the average duration due to the very long term.

I couldn't make the call, but according to online transcript Wade had mentioned the following. Not sure if that was not transcribed correctly or referring to something different. We have weathered the tariff situation well so far and monitor it closely. We continue to look for ways to benefit and protect our float as events evolve. We ended the quarter with $49,000,000,000 in fixed income investments. The yield is 5.1, and our dividend and interest income run rate is a healthy $2,600,000,000 per annum. Our duration is 2.4 years, including $11,000,000,000 in cash and short term treasuries.

I am surprised they didn't close off some TRS through share buybacks. Book value gained by $78. Otherwise, no big surprises. I wonder what they have planned for the additional debt?

@Viking the Keg Royalty Income Trust vote is expected to take place tomorrow. We will find out then if it goes through.

I wonder if Fairfax Digital Services will help to drive these AI initiatives within Fairfax. https://www.businesswire.com/news/home/20240220139123/en/LTIMindtree-and-Eurolife-FFH-Sign-MoU-to-Setup-Gen-AI-and-Digital-Hubs-in-Europe-and-India LTIMindtree, a global technology consulting and digital solutions company, today signed a Memorandum of Understanding (MoU) with Eurolife FFH, a leading insurance company in Athens, Greece powered by Fairfax Digital Services, to establish first-of-its-kind Gen AI and Digital Hub in Athens and dedicated facilities in Poland, Europe and Mumbai, India As a part of this association, Eurolife FFH will set up Generative AI and Digital Hub in Athens to develop innovative solutions for insurance businesses in Greece and LTIMindtree will provide deep domain expertise and support from its dedicated facilities in Poland and Mumbai. Professionals from both the companies will jointly undergo specialized training in Generative AI and Digital Transformation to develop cutting edge products and services that will enhance customer experience and operational efficiency for businesses across insurance, banking, shipping, and manufacturing industries. Alexandros Sarrigeorgiou, CEO of Eurolife FFH, said, "This partnership is aligned with our ambition of leveraging the power of advanced technology to deliver innovation for our customers and partners. Our goal is to innovate; specifically in the insurance space, and push boundaries to create solutions that meet evolving needs of customers across various other industries. This collaboration is a step towards a future where Gen AI and digital innovation will drive business success and enhance customers’ experience.”

National Bank analyst, Jaeme Gloyn, has upgraded Fairfax from $2700 to $3000. “Fairfax has also delivered strong performance. Fairfax returned to our top picks list as we maintained the view that Fairfax’s operating income guidance was too conservative. We believed Fairfax would deliver consistent results and deploy excess capital to drive ROE accretion, ultimately, sustaining operating ROE in the mid-teens that warrants a valuation re-rate. So far, this view has played out as expected. Fairfax upgraded their annual operating income expectation to $5-billion (up from $4-billion), and we continue to see consistent underwriting results across the business. Additionally, with $2 billion in cash at the holdco and $3.0-billion in excess capital at its insurance subsidiaries, we expect FFH to complete more ROE accretive transactions in the near term. We believe that while FFH historically traded at a discount to peers BRK and MKL, it is actually FFH that deserves the premium valuation given the company’s outperformance on BVPS growth and average ROE over the past five and 10 years.”