Hoodlum
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Posts posted by Hoodlum
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Fairfax is offering $1B in 30yr notes at 6.35%. Is this replacing existing debt or do they have other plans for this?
https://www.fairfax.ca/press-releases/fairfax-announces-pricing-of-senior-notes-offering-03-19-2024/
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Farmers Edge deal will close on Thursday.
QuoteWINNIPEG, MB, March 19, 2024 /CNW/ - Farmers Edge Inc. ("Farmers Edge" or the "Company") (TSX: FDGE) today announced that it has obtained a final order of the Court of King's Bench of Manitoba approving the previously announced statutory plan of arrangement (the "Arrangement") pursuant to which 15635594 Canada Inc., a subsidiary of Fairfax Financial Holdings Limited ("FFHL") will, among other things, acquire all of the outstanding common shares of the Company (each, a "Common Share"), except for: (i) 25,718,393 Common Shares (representing approximately 61.2% of the outstanding Common Shares) held by FFHL, and its affiliates; and (ii) those Common Shares held by the Company's Chief Executive Officer; for a price of $0.35 in cash per Common Share.
Completion of the Arrangement remains subject to the satisfaction of certain customary closing conditions. The Arrangement is expected to be completed on or about March 21, 2024, following which Farmers Edge will no longer be publicly held and the Common Shares will be delisted from the Toronto Stock Exchange.
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Fairfax sweetens the deal for IDBI Bank
QuoteCanadian billionaire Prem Watsa’s Fairfax is back in the fray bidding for IDBI Bank with a sweetened deal.
According to highly placed sources aware of the matter Fairfax seems to have agreed for an all-cash compensation structure to acquire IDBI Bank. In addition, Watsa is said to have committed to ensure that the identity of IDBI Bank will be preserved after divestment.
The revised offer from Fairfax is believed to have been communicated to the government officials about two weeks ago.
“Until now, the bidders including Fairfax were hesitant to offer cash compensation and that was a contentious issue because the government usually doesn’t entertain share swap structures. If this is taken care of, the deal may tilt in favour of Fairfax,” said a senior executive aware of the matter. The improved offer comes amidst political tension between India and Canada and the sweetener extended by Fairfax could once again make it a top contender for IDBI Bank.Revised terms
According to the revised offer, Fairfax India Holding, the Indian entity of the PE major, would bid for IDBI Bank. Since Fairfax is also the promoter of CSB Bank, the former may be merged into IDBI Bank once the deal is sealed, because Indian banking regulations mandate that an investor cannot be a promoter of two banks at the same time. With the market cap of IDBI Bank at ₹90,438 crore multiple times higher than CSB Bank’s ₹5,980 crore market capitalisation, sources say the revised structure would be beneficial for IDBI Bank.
This is a departure from the earlier proposals where Fairfax intended to hold IDBI Bank as a separate entity for a few years post the acquisition and subsequently merge it with CSB Bank. “The Reserve Bank is not keen to allow parallel structures for a common promoter and with IDBI Bank being a very established entity, the government wasn’t not comfortable with the bank losing its identity,” said another senior executive aware of the transaction. Bid from Fairfax India Holding would effectively address concerns raised by the RBI and the government.
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2 hours ago, Viking said:
@Maverick47 I agree. I think underwriting profit at Fairfax is about 20% of its various income streams. I think most P/C insurance companies are closer to 40% or more. So moving forward, a really bad year for catastrophes will affect Fairfax much less than peers. In fact - counterintuitively - long term Fairfax investors should probably be hoping for a really bad cat year. It would likely extend the hard market and Fairfax would likely be a big net winner over time. This is a big difference from 'old Fairfax' and 'new Fairfax.' New Fairfax looks like it is becoming a much more financially resilient company.
In terms of financial stability, Fairfax is getting to a very good place. The different earnings streams are growing meaningfully in size and new streams are getting built out. I think Fairfax has been executing a strategic plan that we are just now starting to fully grasp.
But wouldn’t Fairfax’s larger float at least somewhat negate this advantage during a really bad cat year. -
Trading over $1500 cdn for the first time. Next stop is $2000cdn/$1500US, maybe both of these Cdn/US milestones will occur on the same day.
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Some interesting comments from Eurobank on how they plan to use Hellenic Bank for India and Middle East business, once they acquire the Majority stake.
Quote“Under the strategy we are designing and wish to implement, we believe that Cyprus can become the base for developing our operations and cooperation, as a group, with the dynamic economies of the Middle East and India,” said Karavias. “These are economies that in the next few years, the next decades, are expected to have very strong growth rates,” he said, adding that the aim was to turn Cyprus into the gateway for companies from the two countries to Europe.
Rep office opening in Bombay
As part of these plans, Eurobank is currently in the process of opening a rep office in Bombay, which will be headed by Eurobank Cyprus’ CEO Michalis Louis and will promote the group’s strategy.
To this end, Louis and Eurobank’s COO Stavros Ioannou visited Saudi Arabia and the United Arab Emirates recently, where they held significant contacts.
The MoU with NPCI International
Meanwhile, Karavias recently accompanied Greek PM Kyriakos Mitsotakis on a recent visit to India, during which important agreements were signed and new opportunities were identified to further enrich the two countries’ bilateral ties.
Regarding Eurobank specifically, an MoU was signed with NPCI International aimed at creating a strategic alliance in the field of international incoming remittances
According to Karavias, the cooperation with NPCI International is fully aligned with Eurobank’s commitment to become the bank of choice for Indian businesses seeking to establish offices in Greece or Cyprus, and launch operations in Europe.
As he said, it is extremely important that the effort is being backed by the Greek and Cypriot governments, while Brexit has also helped as Indian and Middle Eastern companies are now seeking out other locations for their headquarters so as to continue their European operations.
“We have the advantage that our main shareholder, Prem Watsa, who is the founder and CEO of Fairfax Financial Holdings, is Indian,” Karavias pointed out. “Fairfax has created a subsidiary, Fairfax India, with many billions in investments in India. Hence, this gives us the ability to have a certain access through our main shareholder.”
He added, “This is not an easy effort, but importantly, what’s pushing us to proceed is that there is a will on the level of governments to develop this cooperation. Therefore, it is something that we will invest in in the coming years and we are very optimistic about the outcome”.
Cyprus’ role and its advantages
Referring to Cyprus’ advantages in terms of attracting businesses from India and the Middle East, Karavias highlighted the island’s geographical proximity to them. Also, he said, Indian and Middle Eastern businesses use the English business language. Another factor is that India and Cyprus are both Commonwealth Countries.
He emphasised the fact that Cyprus’ corporate law is essentially the same as that of India, which he said was a very important advantage, while there is also a double taxation avoidance agreement in place.
“Cyprus has very significant infrastructure of professional services, it has the expertise on how to host foreign businesses, while the country now has a strong banking system that is supervised directly by the European Central Bank – which is very important in the eyes of foreigners – that can meet and serve the needs of foreign companies,” said Karavias. “Even if we manage to bring a small percentage of these companies to Cyprus, it will be hugely beneficial for the country’s economy.”
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This was in interesting write up on Fairfax’s Astarta-Kyiv business that they own 30% of.
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I was just discussing this further with my son. He actually purchased 1/2 a share once his broker started offering fractional ownership. He believes that it doesn’t make much of a difference, now that fractional ownership is available. Surprisingly, he mentioned he likes the idea of owning a fraction of a high priced stock rather than seeing the stock being split. So maybe there is some psychological benefit to not splitting. LOL
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I will agree with cwericb on this. My son is in university and had a little bit of spare funds available from his interest free student loan that he wanted to start investing in stocks. He spread it around with just 200-300 in each of 10 different investments.
Initially, he decided not to invest in Fairfax as he didn’t want so much tied up in one company. After about a year he did buy his first share after he saw the growth from my investment but by then it was around $1k cdn per share
While I would agree a lower price would attract more investors that don’t understand Fairfax, it would bring in some younger investors earlier who would gain a better understanding over time. Over the long run this would provide a deeper pool of longterm Fairfax investors.
Fairfax will only get more challenging over time for younger investors to start investing in. Fairfax could become a $5000cdn/share in 5 years just based on current growth a a 1.5x book value. At some point they will need to review this .
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Is there any black out period before the release of the Annual Report?
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19 minutes ago, StubbleJumper said:
This might present an interesting opportunity. A guy could go (or remain!) extremely overweighted in FFH until the end of May or early-June with the hope of catching lightning in a bottle from this IPO. And then whether or not the IPO triggers a price response in FFH's share price, a guy could dump his surplus shares in mid-to-late-June before the hurricane season begins in earnest. With FFH trading at 1.1x BV, that strikes me as a "heads I win, tails I probably don't lose" type of proposition.
In my case, it would be a "remain extremely overweighted" because I seized the Muddy Waters opportunity three weeks ago. Basic risk management dictates that I should probably give my position a significant haircut, but perhaps it's worth letting it run for another 4 months.
Wouldn't be the first time that I did something dumb in pursuit of money that I didn't really need!
SJ
MW is currently well under water with their current short position. It would not surprise me if they initiated another Smash and Grab next week before the Annual Report is released, in order to limit the losses on their current short position. I don't think they can wait too long with the share price continuing to rise. -
Additional confirmation of Go Digit IPO approval.
QuoteMUMBAI, March 1 (Reuters) - India's markets regulator has given Digit Insurance the go-ahead to launch an IPO after multiple compliance issues delayed approval for the deal originally planned in 2022, according to a letter seen by Reuters.Digit, last valued at $3.5 billion, filed for an initial public offering in August 2022 but its plans were halted twice by the Securities and Exchange Board of India, which raised concerns over the legality of some share issuances, Reuters reported.After addressing the issues, Digit, which operates in the general insurance sector and counts Canadian billionaire Prem Watsa's Fairfax Group and A91 Partners among its backers, refiled its IPO papers with SEBI last March, which the regulator has now approved."The proposed issue can open for subscription within a period of 12 months," said the letter sent on Friday to Digit and its IPO advisers, seen by Reuters.The letter doesn't specify earlier compliance issues or SEBI's position, but two sources familiar with it said the go-ahead means the regulator is satisfied with the IPO application.Digit declined to comment while SEBI did not immediately respond to a request for comment.Digit now plans to market its IPO to prospective investors over the next month and targets a listing by May, said a person with direct knowledge of the matter.It plans to raise 12.5 billion rupees ($151 million) through its listing in addition to an offer for the sale of 109.4 million shares, its prospectus shows.Digit's listing plans coincide with a record boom in India's stock markets and public listings, and bankers expect 2024 to be one of the country's biggest ever years for IPOs, Reuters earlier reported. -
7 minutes ago, gfp said:
Well not that it matters much but the newswires are showing that both RBC and BMO have increased their "price targets" for FFH.
RBC from $1085 -> 1200 ( I assume this is CAD and they aren't very bullish)
BMO from C$1550 -> C$1650
The RBC Target is in US$
RBC Capital Markets analyst Scott Heleniak continues to see shares of Fairfax Financial Holdings Ltd. (FFH-T, FFH.U-T) as “attractive at current levels” following “solid” fourth-quarter results that saw “one of the company’s better underwriting results in recent quarters as well as strong dividend and investment income.”
“Reserve releases were above normal in Q4 at a time when some peers are seeing weaker reserving while core margins remained healthy,” he added. “Overall premiums were down albeit this was impacted by a few large non-renewals. Affiliate income was lower than in recent quarters. Share buybacks picked up in Q4 and the company recently raised its annual dividend.”
On Thursday, the Toronto-based firm reported net earnings per share of US$52.87, which exceeded Mr. Heleniak’s US$30.70 net estimate. He estimated Fairfax earned US$31.15 per share on an operating basis versus his US$27.70 forecast, citing its combined ratio as the main source of the upside.
“Fairfax’s Q4 P&C combined ratio was 89.9 per cent, its best combined ratio all year,” he said. “Reserve development for the quarter (2.7 points) was above the recent run rate with OdysseyRe, Northbridge, and Zenith National each generating double-digit reserve releases. NWP declined 5.5 per cent due to non-renewals at Brit and OdysseyRe. Fairfax is still seeing mid-single-digit insurance rate increases in its insurance book, which we believe is still outpacing loss cost trends. On the Q4 call, the company refuted the Muddy Waters short report and specifically took time to defend their stance on topics such as their investment in Digit Insurance, valuation methods for Level III investments (specifically for Recipe, Exco, and Quest), third party transaction protocol, and IFRS 17. We thought management did a solid job of addressing these topics.”
Maintaining his 2024 forecast, Mr. Heleniak raised his 2025 net EPS estimate by US$2 to US$152.00, citing “slightly better” premium and combined ratio assumptions. That prompted him to raise his target for Fairfax shares to US$1,200 from US$1,085, maintaining an “outperform” rating. The average target on the Street is $1,744.76 (Canadian).
“We believe the new price target is warranted considering our constructive underwriting and net investment income outlook for 2024 and given favorable multiples for P&C insurers in the sector,” he said.
“Fairfax’s underwriting units continue to deliver impressive results and its investment portfolio has likewise begun delivering improving returns as some of its associate/affiliate holdings are monetized. We would look for these things to continue as Fairfax’s insurance companies are well positioned to capitalize on improved P&C pricing and have a track record of opportunistic growth in such environments. Our thesis is that Fairfax’s long-term track record of double-digit book value growth will continue and the current valuation provides an attractive risk-reward entry point for those willing to back the company’s long-term investment track record. Fairfax has a deep cash position and ample access to capital, which gives it the flexibility to be opportunistic as well as patient.”
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With Quess hosting an investor meeting on the 21st to discuss the demerger and the Greek PM visiting India this week along with a business delegation, I wonder if Prem will be in India this week.
https://www.ekathimerini.com/opinion/1232110/greeces-gateway-to-asia-indias-gateway-to-europe/
It is also interesting to note that Greece’s most important long-term foreign investor is Indian-Canadian billionaire Prem Watsa, founder and CEO of the Fairfax Financial Holdings. Mr. Watsa often states that “Greece is still by far the best European country to invest in.” With knowledge of both countries, he has been a steady promoter of Greek-Indian business cooperation.
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Here are some more details behind the Quess decision. There is an investor meeting on Wednesday where more details may come out.
“Finding a strategic investor will be related to the opportunity to bring with them and not for the sake of the money that they bring because we are sufficiently capitalised, we have Fairfax is an investor, got $90 billion of assets under management, promoters own 57% of the company. So, it's unlikely that we need cash,” Issac said. He added that if there is a principle of additionality and something that investors can bring to the table, then the company would be open to discuss but not otherwise.Based on the demerged entities, Quess Corp will contribute 68% to the consolidated revenue of the company, Digitide will contribute 14%, while the remaining 18% will come from Bluspring."This proposal should help the company compare on comparable metric with listed players, which might be welcomed by investors," brokerage firm Motilal Oswal said in its note.Quess Corp will hold an investor meet on February 21 for the same. -
6 minutes ago, SharperDingaan said:
It's way more lethal when 'institutions' are mocking you. MW has erred badly, and it has entangling them in a growing tar baby. They have a weak hand, their network is reassessing them, time is ticking, and they need a way out (Reddit). There is a much higher risk adjusted payoff to simply staying put.
The smart thing would be for MW to cut bait, and fold. Question is, does their network let them?
Bought the popcorn, expecting a show.
SD
I know MW says they are still shorting but I wouldn’t trust anything they say. Do we know they didn’t cover over a week ago? Maybe @sleepydragon is able to see that. -
Here is the full press release from Quess.
https://www.quesscorp.com/wp-content/uploads/2022/11/demerger-release-16022024.pdf
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With the Digit IPO likely happening this year and now the splitting of Quess into 3 public trading companies, MW’s report is becoming thinner than it already was.
The company’s largest shareholder, Fairfax Financial Holdings chairman Prem Watsa said each of the new entities would be a market-leading player with the ability to leverage opportunities that come its way through its renewed focus.
“From the time we initially invested in Quess Corp Ltd., in 2013, the company has become one of the largest domestic employers in India and has the potential to develop as a significant business services player on a global scale.”
“We are confident that this strategic initiative will benefit all shareholders and ensure that the management team gets the support to achieve the set-out goals from the demerger,” Watsa said. -
The Globe provided some of the detailed quotes from today's conference call.
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Jeffrey Stacey from Stacey Muirhead Capital Management discussed the Muddy Waters report on Fairfax and commented on a few of the transactions in particular .
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17 minutes ago, glider3834 said:
so appears no questions on Digit or IFRS 17 from what I can see
That is interesting as Digit had by far the greatest gap between the book value of $3.5b and their estimated value of $1.5b from their initial report.I suspect the report from yesterday that the Go Digit IPO was approved gave them some pause as they didn’t want to give Prem any ammunition in his response in case he was able to comment on the IPO.
I hope Prem is able to discuss the IPO and does bring it up during the response to these questions. GO Digit made up a large share of MW’s book shortfall.
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As long as we have a hard market and the share price is below intrinsic value, then I would want them to keep the TRS position in place as is. Any available cash would be best spent on expanding the insurance business. The TRS can be closed once the share price is much close to the value of Fairfax. It would be better to buy back shares during a softer market when share price is down from the peak.
Also, I don't think that using cash from selling some TRS to buy shares would be the best way to use the funds, as the TRS provides leverage for share price increase which has a ways to go.
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16 minutes ago, SafetyinNumbers said:
I think we know why FFH owns gold stocks. It reminds me of back in the early 2000s when gold multibagged in a short period of time. This time, however, the gold stocks are much cheaper.If anyone is interested in gold stocks, please allow a brief plug that I’m on the board of Sailfish Royalty (FISH.V) which owns a royalty on Mako Mining’s (MKO.V) project in Nicaragua and owns a royalty on a gold development project in Nevada called Spring Valley that is controlled by Waterton (a PE firm). The Spring Valley project represents the majority of the NAV for FISH.
Both MKO and FISH are controlled by Wexford Capital which initially controlled and brought Diamondback Energy (FANG) public in 2012. This week FANG announced a deal to create a $50b company. FANG has CAGRed at 22% since inception. MKO is Wexford’s gold vehicle hoping to create a lot of value during the pending gold bull market through intelligent acquisitions and superior capital allocation. The stock has not done as well as multiples have contracted in the space and trades at just over half the price where Wexford bought stock on the last equity issue in 2020 at C$4.00.
Most investors have a heuristic against investing in mining and gold in particular but as MKO is now strongly FCF positive they have capital to invest in an industry where the cost of capital is astronomical. That bodes well for strong returns going forward as a business owner even if the market doesn’t appreciate it right away.
I think for any given gold stock, a 1% position max, is appropriate. Mining is risky after all. Clearly, I’m breaking that rule with my own positions.
That could explain why Fairfax started buying Franco Nevada during Q4.
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Nice timing. Here are some additional details.
https://www.magzter.com/stories/newspaper/Mint-Mumbai/GO-DIGIT-IPO-GETS-IRDAI-GOAHEAD
The company is now waiting for approval from the Securities and Exchange Board of India (Sebi) for the initial public offering (IPO), the people cited above said on condition of anonymity, adding that they expect approval soon enough.
In November, Digit General Insurance, which runs Go Digit, filed an addendum to its IPO documents, stating that Irdai had issued it a showcause notice related to its "non-disclosure of change in the conversion ratio of the compulsorily convertible preference shares, issued to Fairfax." The company is likely to go public in the first half of 2024, one of the two people cited above said.
Fairfax stock positions
in Fairfax Financial
Posted · Edited by Hoodlum
Someone needs to ask Prem at the AGM about Micron as an AI play.