Hoodlum
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Posts posted by Hoodlum
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15 minutes ago, glider3834 said:
it could be coding error
It would need to be a selective coding error, as the below section from the press release did not have the word “never” removed.
QuoteWe have always been focused on building for the long term and have never given any quarterly guidance.
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That is not a good look. I have a hard time understanding how that could have been a typo.
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30 minutes ago, rohitc99 said:
I have held thomas cook and Quess for a long time in india and followed both companies. At a minimum, the argument against Quess is weak to begin with. Quess invested in monster.com and has been incurring losses in this segment for more than a year. this has suppressed their operating margin which should improve by the end of the year as the new segment breaks even. Quess is growing its topline and its operating profit is up 15%+ for the year. The value of Quess is increasing, not reducing
Fairfax invested in thomas cook in the depths of 2020 Covid crisis and the risks were far higher. The stock is up 3X since then and the company is firing on all cylinders in India
The whole report appears like a multiple choice exam where the examiner deducts points for mistakes, decides to ignore all the questions the student got right. totals up the negative points and then fails the student.
If you are going to call out what is carried in excess of market value, then the same needs to be done for all investments where the carrying value is less than market value
The report from National Bank yesterday detailed that the 3 largest investments that would show a gain in market value if marked to market, would offset most of the negative book value that MW found.
As long as there is no material variance in overall book value then there is no need to constantly mark to market each individual investments until there is a material change in ownership. The regulatory bodies have agreed with this approach and that is why there have been no issues with how individual investments are reported by Fairfax or any other insurance business that has similar businesses that are not marked to market.
Unfortunately, many investors don’t understand how the insurance company investment reporting works and MW took advantage of this to try and make a quick profit, although it looks like MW had poor timing and just broke even based on MW shorting on 1/16 and getting out on Thursday.
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3 minutes ago, nwoodman said:
This is partly why the board was scratching its collective head yesterday. My gut feeling is that MW has been “researching” for a while and knew their thesis was about to get run over by two freight trains - Fairfax equity positions and earnings. They dropped the report to get at least some return on their efforts.
i agree. They knew this would be their last opportunity to get out at close to where they started their short. -
I wonder if MW did this report so that their shorts could get back to their cost, allowing them to get out approx. breakeven or a small profit before the financial. This was likely a last gasp chance before FFH took off even further from where they initially shorted.
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15 minutes ago, sleepydragon said:
I have access to short interest data. It seems someone put on big short position after 20231127, and then covered on 20231227. Then resumed shorting (at much smaller size) around 1/17. There’s actually not much shorting now. I suspect MW has a small short position , or if they had a client who co-shorted, that client covered last year.
I wonder if the 30 day period of the initial short is typical. Based on the more recent short, they would cover the morning after the financials are released based on the same 30 day interval.
it is also interesting that FFH is only $20 below where the most recent short was done. LOL
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Bret Horn must be working on his latest update as we speak.
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Fairfax response to this report.
QuoteTORONTO, Feb. 08, 2024 (GLOBE NEWSWIRE) -- Earlier today, Muddy Waters Research issued a report regarding Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U) suggesting that the book value of Fairfax was overstated. Fairfax disagrees with the allegations and insinuations contained in the report, and would like to assure all shareholders that Fairfax has prepared its financial statements and reporting in accordance with all applicable accounting principles.
Through the first nine months of 2023, Fairfax has achieved record earnings driven by record operating income. Fairfax will release its fourth quarter and year-end financial results next Thursday, February 15, 2024, and a conference call will follow on the morning of Friday, February 16, 2024, and the management of the company is pleased to address any questions relating to those results or the report issued today at that time.
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It would be great to see approval for a Go Digit IPO now. A nice valuation would squash this pretty quickly.
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I doubt this will be implemented this year, but it is an interesting development.
QuoteThe Insurance Regulatory and Development Authority of India (IRDAI) on Friday proposed removing the need for Indian insurance companies to seek prior approval from the regulator before listing on stock exchanges, subject to compliance with specified conditions.The suggestion is made based on recommendations from the Regulation Review Committee (RRC) that consolidated existing regulation into IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Indian Insurance Companies) Regulations, 2024. The recommendations are expected to help enhance ease of doing business while ensuring protection of customer interests. -
National Bank mentioned a few of the driving factors for stock price increase this year. It looks like analyst are starting to catch on to what has already been mentioned here.
QuoteNational Bank analyst Jaeme Gloyn once again named Fairfax Financial Holdings Ltd. his top pick for 2024 in his Diversified Financials coverage universe.
The Toronto-based holding company was also selected a year ago and saw its shares jump 52 per cent in 2023 (versus a gain of 9 per cent for the S&P/TSX Capped Financial Index).
In a report released Friday, Mr. Gloyn said he picked Fairfax based on three potential catalysts:
1. Operating Income guidance upgrade.
“In the first three quarters of 2023, Fairfax hit their annual operating income expectation of $3.0-billion,” he said. “We expect management will raise the bar on this outlook to upwards of $5-billion.”
2. Valuation.
“We believe consistent low to mid-teens operating ROE [return on equity] performance will drive a re-rating of the shares,” he said. “At the current trading valuation of 1.05 times, the market is pricing FFH like a 7-per-cent ROE business. We expect interest and dividend income ALONE to drive 7-percentage-points of ROE. FFH peers such as MKL and BRKa also trade at higher valuations of 1.4 times to 1.5 times P/ B.”
3. S&P/TSX 60 Index inclusion:
“FFH is top candidate for inclusion in the S&P/TSX 60 Index, which could drive estimated demand equivalent to 6 days of FFH average daily volume,” he said. “This will turn an under-owned financial into a core holding.”
Mr. Gloyn also sees the property and casualty (P&C) insurance sector remaining “well-positioned for 2024, regardless of a soft landing or changes in interest rates.”
“What if interest rates move lower? Lower rates could be neutral/positive for FH,” he said. “First, Fairfax’s extended duration of fixed income assets protects them from a near-term decline in rates. Second, Fairfax has the ability to purchase higher yield corporate debt. Third, lower rates drive gains in fixed income assets, flowing to net income, ROE and book value growth.
“What if the insurance cycle softens? We don’t see a softer insurance market as a significant concern because; i) Fairfax has proven its ability to deliver mid-90s combined ratios in soft market conditions, ii) Fairfax has the ability to release recently built up excess capital at subsidiaries, iii) underwriting income represents 20 per cent of our operating income forecast in 2024/2025.”
Maintaining an “outperform” rating for Fairfax shares, he hiked his target to a Street-high $2,000 from $1,800. The current average is $1,648.87.
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This may explain some of the rise this week in share price. I expect we will see increases in target price from others over the next month.
https://www.marketbeat.com/instant-alerts/tse-ffh-analyst-earnings-estimates-2024-01-24/
Of course these are in Cdn dollars.
QuoteEquities research analysts at Cormark increased their FY2023 EPS estimates for Fairfax Financial in a report released on Monday, January 22nd. Cormark analyst J. Fenwick now expects that the company will post earnings of $254.77 per share for the year, up from their prior forecast of $227.84. The consensus estimate for Fairfax Financial's current full-year earnings is $186.80 per share. Cormark also issued estimates for Fairfax Financial's Q4 2023 earnings at $89.13 EPS, FY2024 earnings at $189.16 EPS and FY2025 earnings at $211.65 EPS.
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13 minutes ago, Viking said:
In the next four years, we are likely to have a recession in the United States, resulting in corporate spreads widening, allowing us to extend our maturities further.”
I think this last sentence is important because if we do see a sizable drop in interest rates, then that would suggest we are in a recession and allows them to move to longer corporate bonds with higher interest rates. This would allow them to extend the duration further for higher yields.
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1 hour ago, gfp said:
Fairfax re-opened December's 10 year note offering and borrowed another $200m on slightly better terms, FWIW
https://www.fairfax.ca/press-releases/fairfax-declares-annual-dividend-01-09-2024/
(no clue why this is the file name, but it is the correct link to the note offering announcement)
Likely done to cover the additional $5/share dividend.
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In the official press release from today, Fairfax plans to buy the remaining 10% of GIG in Q1.
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1 hour ago, Xerxes said:
funny how sometimes there is a press release for completely inconsequential dollar amount invested. Other times there is nothing for very large investments.Fairfax passed the 10% ownership threshold in Canada for reporting and had to issue a press release.
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This was an interesting read on the impact of losses from Severe Convective Storms (SCS) on reinsurance losses. SCS losses have increased on average 7% annually over the past 30 years and have a record $60B loss ($50B of which was in the US) in 2023.
While more focus is placed on the one time events of Hurricanes and Earthquakes, it was interesting to see how these these storms have been adding up to a more significant portion of Property losses and continue to grow a a high rate, helping to extent a hardening of the market.
https://www.globalreinsurance.com/home/swiss-re-scs-losses-reach-record-60bn-in-2023/1447322.article
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DBRS Morningstar just upgraded Fairfax Financial from BBB(high) to A(low). Unless i am mistaken, I believe this is the first rating agency to rate FFH at A(low).
https://www.dbrsmorningstar.com/research/424865QuoteDBRS Limited (DBRS Morningstar) upgraded Fairfax Financial Holdings Limited’s (Fairfax or the Company) Issuer Rating to A (low) from BBB (high). DBRS Morningstar also upgraded the Issuer Rating and the Financial Strength Ratings (FSR) of Fairfax’s subsidiaries Northbridge General Insurance Corporation (Northbridge) and Federated Insurance Company of Canada to A (high). The trends on all ratings were changed to Stable from Positive.
KEY CREDIT RATING CONSIDERATIONS
The credit rating upgrades reflect Fairfax’s consistent and improving underwriting profitability particularly at Brit, the Company’s UK subsidiary where Fairfax has curtailed risk and improved results. Moreover, better overall results have also improved earnings metrics and modestly reduced leverage. Demonstrating improved execution through both acquisitions and organic growth, the reported gross premiums written for YE2022 have more than doubled over the past five years to $27.6 billion (from $12.2 billion in 2017).The credit ratings and Stable trends reflect Fairfax’s resilient, diversified, and growing franchise, including an expanding market position as a major international Property and Casualty (P&C) insurance and reinsurance group. Higher interest rates have increased risk-adjusted investment income substantially. The Company maintains ample liquid assets at both the holding and operating companies, as well as access to committed lines of credit. Its subsidiaries maintain appropriate regulatory capital ratios with buffers above required solvency levels, allowing Fairfax to handle adverse events.
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Now that the US is involved and have linked their assassination attempt to Canada's assassination, it will be interesting see how this plays out. It looks like the US undercover officer who was acting as a hitman in the US received a video of the Canadian assassination the day after it took place. This was the proof the Canadian government had on India. The key will be connecting these people back to the Indian government.
QuoteA criminal indictment unsealed in New York Wednesday says a man accused of arranging the killing-for-hire of the U.S.-based Sikh activist told an undercover officer less than two weeks before Mr. Nijjar’s death that there was a “big target” in Canada. He is identified as Indian citizen Nikhil Gupta.
This court document, which alleges an Indian government employee was helping direct events, includes intercepted conversations talking of three such assassination plots in Canada to kill Sikh activists.
The indictment does not name the American target but the Washington Post quoted a senior Biden administration source as saying the target was Gurpatwant Singh Pannun, general counsel for the New York-based Sikhs for Justice, a group that is campaigning for the creation of an independent Sikh state called Khalistan.
A few days before Mr. Nijjar’s death, Mr. Gupta told the undercover officer – whom he thought was a criminal – that “we will be needing one good team in Canada,” according to the indictment filed by U.S. prosecutors.
Mr. Gupta later told the undercover officer that Mr. Nijjar was “#4, #3″ among the targets in Canada and the United States. After Mr. Nijjar was killed, he sent the undercover officer a video clip that showed the body slumped in his vehicle and he said there was now no need to wait on killing Mr. Pannun.
Two days after Mr. Nijjar’s slaying, Mr. Gupta directed the undercover officer to move quickly on the American target and that by June 29 “we have to finish four jobs” – understood to mean four targets in total, including the U.S. one and “three in Canada.”
U.S. prosecutors allege he was working with an unidentified Indian government employee (referred to as CC-1 in the indictment) who was working with others in India to direct the plot.
The Justice Department said Wednesday that the Indian government employee agreed, in a deal brokered by Mr. Gupta, to pay $100,000 to a “purported hit man who was in fact an undercover U.S. law enforcement officer.”
On June 19, one day after Mr. Nijjar was slain, Mr. Gupta told the police officer, whom he thought was a hit man, to proceed with the New York killing, saying that both Sikhs were on the same list of targets, U.S. prosecutors said.
Mr. Gupta also told the purported hit man to expect the victim – identified by the White House as Mr. Pannun – to be more careful in the wake of the slaying of Mr. Nijjar. “He will be more cautious, because in Canada, his colleague is down. His colleague is down. I sent you the video. So he will be more cautious, so we should not give them the chance, any chance,” Mr. Gupta said, according to U.S. prosecutors.
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Foran mining has raised $200 through a private placement at $4.10/share. I wonder if Fairfax is participating to increase their equity.
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55 minutes ago, LC said:
Assuming the issue is supply - should we be looking at Canadian homebuilders and the associated ecosystem?
This will be a big challenge. Like homeowners, the builders have been conditioned to ever increasing new home prices over the past 30 years in Canada. Any land purchased in the past 5 years would have been based on this continuing trend.
New home builders are generally slow in reducing their prices or starting new developments, which is not going to work during this high demand period. I am not sure how to work around this as there are many challenges. Home builders have to pay more for borrowing and if they start building on their land for less than they anticipated, the banks may ask for more money down once the land value falls below the cost of the initial estimated value. So basically home builders will try to wait this out hoping for lower interest rates and the return to “norm” for home buying.
We also have the added complexity of working from home which is helping to drive both the upgrading of homes along with empty towers. This added mismatch of markets makes a solution even more complex.
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Brett is doubling down on his analysis.
https://www.morningstar.com/stocks/fairfax-earnings-positive-momentum-continues
QuoteFairfax FFH continued its recent string of good results in the third quarter. Book value per share, adjusted for dividends, has grown 16% year to date, which gives an indication of the winds the company has had at its back this year. While we appreciate the positives the company is enjoying right now, its historical performance has been increasingly hit or miss over time, and we don’t expect this to change long term. We will maintain our CAD 970 fair value estimate for the no-moat company and see shares as a bit overvalued at the moment.
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The first early estimate of insured losses fromHurricane Otis is $3-6B. This range will narrow over the next couple weeks as more data comes in. Does anyone know approx what Fairfax's share of this would be.
https://www.reinsurancene.ws/verisk-estimates-3bn-6bn-of-industry-insured-losses-from-hurricane-otis/QuoteGlobal data analytics and technology provider Verisk, estimates industry insured losses to onshore property for Hurricane Otis, the strongest hurricane ever to hit Mexico, will likely fall from MXN 50 billion to MXN 110 billion (~USD 3 billion to 6 billion).
Fairfax 2024
in Fairfax Financial
Posted
I do wonder how much longer this will continue with the US debt rising at a faster pace than most other countries.