FFHWatcher
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Posts posted by FFHWatcher
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Ha - where’s that from?
It's from Seeking Alpha. SA has quite a few SSW followers. J Mintzmyer is a contributor at SA and he seems to spend all or most of his time analyzing the shipping sector. He seems to be a good resource and knows his stuff.
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SSW is doing well.
8)
And I felt so smart (briefly) for lightening up at $11.50!
Thankfully I still have most of my position. Seaspan is the next Brookfield*. You heard it here first.
*This is a joke. Sort of.
I heard it here 2nd...
ieb4
Comments288 | + Follow
i am not in disbelief, management has been saying for some time that they will be diversifying the business while at the same time maintaining dominance in container space and expanding there as well. was the Swiber deal not a hint that this was a path forward? also, it is not as if they are abandoning shipping (witness their two deals in last few months to expand fleet).
but it is clear they want a higher multiple for the stock, going the asset manager route is certainly one way if they execute and make smart, accretive acquisitions. i again point to brookfield asset management and brookfield infrastructure as entities for comparison (although brookfields are not maritime, more railroads, toll roads, data-center, communications etc)
definite fork in the road here...i'm choosing to stay the course and go with management's vision of future, not selling any shares and reinvesting all dividends.
good luck to all who sell.
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Bought some more yesterday. Waiting for Q3 results which may include losses from Hurricane Dorian. Will double down if there is a significant drop.
^^^^^
This.
Not sure about the double down but the Dorian damage was massive in the Bahamas. Not sure of the exposure there. Maybe not statistically significant. In the past, they have pre-announced significant hurricane losses but no announcement here.
On the plus side, SSW investment is looking up. It is a bit depressing to see some of the 'value' industries they have been involved in over the years. Many of these industries have been slowly killed and FFH has been in many. Steel, Paper/forestry, Coal, Newspaper, choosing RIM/Blackberry instead of Apple, Retail Clothing, Retail - Toys (too early?). It is hard to understand their investment decision-making process.
It's almost as if they don't want to put any money into anything if it isn't $100M or more and they don't seem interested in businesses over $1-2B.
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I own a cleaning company. We clean many vacation rentals in SW Florida. It is very seasonal here. One thing that an owner of a vacation rental needs to consider more today than 5 years ago, is regulatory risk. Many communities or towns are passing by-laws that restrict or control short term rentals. Who wants to buy their dream home next-door to a rental that has new guests every 3 days, 5 days, 7 days, etc.? Those tenants tend to really 'enjoy' their vacation and it also puts a lot of stress on the house.
Some by-laws will create short term rental 'zones' that may not permit short term rentals, or none less than 7 days or none less than 30 days, etc. Just something to consider before you buy and something that could affect the value of your investment after you purchase it. Local permanent residents will put pressure on the local gov't to implement and enforce short term rental by-laws. Not many people want their next-door neighbor's house to that will basically become a hotel. For my business, the short term rental market is amazing and the owner always has a spread between what they collect for a cleaning fee and what they payout to the cleaning company/person.
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Bear in mind that on the last conference call Prem stated categorically that the $2bil holding company cash is a defensive posture which may increase over time and NOT excess capital looking for a home.
I take that to mean that the buy backs will have to be paid for out of operating cash flow.....
Yes, the operating cash flow that occurs at the operating companies gets pushed up/dividended(?) up to the Holdco and used for buybacks.
(ie. Crum or Northbridge are not buying back FFH shares but they do pay dividends to holdco who then buyback shares with the excess cash flow)
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As far as I understand FFH and the insurance industry (I could be wrong);
Buybacks can't/won't occur at the subsidiary/operating company level.
Buybacks can't/won't occur with float, as float is at the operating companies.
I assume that with FFH that it is no coincidence that their float is in the low to mid $20B range which matches their cash + short-term bonds.
Surplus at the operating companies are much more long-term in nature and is more available and more suited for long-term equity and investments in associates type investments.
Buybacks have to be done at the Holdco level and then cancel the shares to reduce the s/o. (That would be cool using the float to buyback shares and then cancel them)
Their daily limit of share buybacks is 10,453 or about $6.5M/day
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https://finance.yahoo.com/news/intention-normal-course-issuer-bid-113000070.html
Under its existing normal course issuer bid, Fairfax has purchased 700,539 of its Subordinate Voting Shares, which included Subordinate Voting Shares reserved for share-based payment awards, through open market purchases on the TSX during the last twelve months at a weighted average price per share of Cdn.$667.29. Fairfax has not purchased any Preferred Shares under its existing normal course issuer bid. (Fairfax has spent $467,462,669.31 on share repurchases in the last year)
I can't see that many share purchases on Sedi.ca. How else can FFH repurchase without reporting them on Sedi.ca ? Or am I not seeing them for a different reason?
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4.5M shares traded since March 1, 2018
Looks like they have bought back and canceled approx. 110,000 shares since March 1 2018.
2.4% of the volume is FFH buying back shares.
$706 is the highest price FFH has paid to buyback.
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Here is hoping our friend BB and team have put another $3-4B to work in the 12-24 month space this month.
From where would they take $3-4B? Last I looked, there wasn't a whole lot left in the 5+ year maturity range. I guess they could liquidate that last little bit and move it to short-term, but my sense was that the job was pretty much done. I was a bit surprised about how fast they were.
SJ
Cash/equivalents? I'm assuming most of that is much shorter than 24 months.
Are we not assuming that most of that cash is earmarked to buy-out the minority positions in some of the subs, and this will likely occur in less than a 24 month horizon?
SJ
FFH had $17B in subsidiary cash at the end of Dec 2017. Then FFH had $12B in subsidiary cash and cash equivalents at the end of the most recent Q. So, lots of cash sitting there waiting for a higher yield
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Fairfax has signed an agreement to buy the Toys R Us (Canada).
Yes, but they have only commited to buying it at $300m if there is not a better offer. They would get $9m if a better offer is accepted. $9 million dollar bills don't grow on trees, but for Fairfax, this is pocket change, unless they really buy the asset (which I doubt).
$9M would pay CEO salary for the next 15 years. That's probably Prem's cost basis on his FFH shares
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Close FFH watchers correct me if I'm wrong, (not a close watcher myself) but it seems to me the trade for FFH has been buy at 1.1 or less and sell at 1.4. This has been a regular trade over the last 6 years or so.
I am much less sophisticated than that. The point I was trying to make was that historically, FFH has not been one of those 'buy it now and ignore it for 20 years' type of stocks. While the company has grown significantly in the past 20 years and is a much different company today, historically, it hasn't been a terribly nice stock to buy and hold (except if you have Prem's cost basis and number of shares).
Going forward hopefully FFH has made the necessary changes to get the company on a steadier more consistent upward trajectory in earnings and in share price than in the past (much more of an earnings machine as opposed to a gamble hedge and hope to hit it big every 6-10 years).
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Can you imagine a stock that is $5.50 and then 20 years it is up to $6.50 ?
That's Fairfax if you move the decimal point. Perhaps the next 20 years will be different than the previous years and a lot of great things have happened at FFH during that time yet here we are, 20 years later with a similar stock price. The company is a lot different today, there have been dividends, cat losses, hedging gains, hedging losses, etc. but a lot of people in 1997 and 1998 said the exact same thing you just said (I will hold FFH for a VERY long time).
I also heard the same scenario about 15 years ago that I am hearing today... 'If FFH only invests their cash in bonds at x%, what will be the earnings?' Huge!!
20 years is a long time.
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I noticed a month or two ago that Fairfax updated their website about Ben Watsa. Ben left Lissom and started his own firm called Marval Capital Ltd.
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In TD I received $12.1800
In RBC I received $12.2670
I simply divided the dividend by the numbers of shares.
Both $CDN accounts.
Also TD shows a Settlement date of 2018Jan25 and
RBC shows a Settlement date of 2018Jan26.
$12.325 (1.2325) - Scotiaitrade strike that. That is my projected income. No divi yet. I was wondering why I actually had a good Forex rate. Scotia usually sucks. We'll see
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I was surprised (and encouraged) by Prem's comments after the election. It sounded like and I think most would agree, that FFH was ready to play offense. I don't know the exact numbers but it seems like FFH have added almost NO significant equity long positions to their portfolio's. Portfolio is still mostly cash well over a year later. What gives? Valuation?
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I was thinking more stuff like this...
Seaspan Announces Letter Of Intent For Potential $250 Million Unsecured 5.50% Debenture And Warrant Investment From Fairfax Financial Holdings Limited
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My thoughts are that the excess cash sitting on the sidelines will probably be used for bonds/fixed income investments. I guess they are waiting for interest rates to peak (I have no idea when that will be).
I believe the cash from First Capital will be moved to the Holdco (I think I read that somewhere). Since the holdco already has more than the desired $1B (it was at $1.5B at last look), it is basically surplus. To my knowledge, surplus cash at the holdco has never been invested in Bonds. Heck, they already have $15B in bonds and another $10B in short term investments in their portfolio's at the operating companies. All their major bond moves have been done with the cash that are in the reserves at the operating insurance companies. They have debt at the holdco at 4.5+% or so, so I doubt they will invest in bonds when they are paying interest on them as well. They will likely buy marketable investments or entire companies (like Allied World, AIG Chile, etc.) or do unique lending that has an equity kicker attached to it (ie. lend at 8% to a distressed company and then have equity warrants of some type). I would think they will be targeting something above a 10% rate of return, certainly not 5%.
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Sold OSTK to free up capital to buy Torstar? LOL
(I hope they eventually make us all look foolish arm chairing guessing their stock picks).
Torstar looks like one of their buy 10M shares at $10 and buy 10M more at $1. It worked at Int’l Coal. Great timing there!
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Caller on today's conference call to Prem, 'So how is your investment in Torstar going?'
Prem's reaction >:(
Prem actually said they don't comment on specific portfolio investments
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Other interesting change is on pg. 8 here. Cash at holding company. Common stock line item. $635M but with the notation below that shows the carrying value as $2,155.8.
This is at the holdco? What has that carrying value/what is it? (can't be First Capital, can it?)
http://s1.q4cdn.com/579586326/files/doc_financials/2017/q3/2017-Q3-Interim-Report-Final.pdf
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Agree with Dazel, the CR for AWH and Brit were brutal and certainly much higher than legacy units. Hopefully its not a cause for concern and certainly a quarter does not make an underwriting reputation, but it certainly the relaive differential caught ones attention.
Upon reading this and seeing that Allied was responsible for about $400M of the $900+M cat losses, I decided to go back and look historically at Allied's underwriting. It is impressive. They certainly don't look like some of the companies that FFH bought back in the day that were early disasters (but eventually turned out well). $2.2B in favourable reserve development in the past 15 years. Only one year in 15 years that was over 100% CR. They averaged 90.5. Very consistent. Keep in mind their Portfolio is in the $9B range and they had $400M loss. As a percentage basis, they had more than their fair share within the FFH Group, that I agree with.
Take a look at page 18 - "Income Statement"
http://www.snl.com/Cache/1001217885.PDF?Y=&O=PDF&D=&fid=1001217885&T=&iid=4078260
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I received this listing from my broker. I am a Canadian Citizen, I had a desire to both move to the US and start or buy a business. I bought a business in the US, rec'd an E2 Visa and I run the business in Florida, 12 months of the year. It is working out great for me. Great use of my capital too.
Corporate Investment Business Brokers websites:
www.floridabusinessbrokers.com www.businessbroker.com
MLS Services websites:
www.aflbb.com (Alliance of Florida Business Brokers)
www.bbfmls.com (Business Brokers of Florida)
www.ibba.org (International Business Brokers Association)
Additional websites:
www.bizbuysell.com (BizBuySell) is in alliance with http://online.wsj.com/public/us (WSJ)
And National Exposure on 150 partnered websites
www.businessbroker.net
www.businessmart.com
www.buybusiness.com
www.businessesforsale.com/www.businessforsale.com
www.business2sell.com
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I don't think it has been discussed with FFH yet.
In March 2017 FFH participated in a secondary offering of IPI shares.
Intrepid's Potash sales are way down. Looks like they used equity to pay down debt and restructure a bit.
Looks like FFH took about a third of what was offered.
16,666,667 shares. 13% of shares o/s
$1.20 issue price
$20M investment (sprinkled it around to Brit, ORH, FFHL, etc.)
End of Q3 price of IPI $4.36 (Current price of IPI $3.83)
Unrealized gain at end of Q3 of $52M or 2.5x's in 6 months
Someone made a good (short-term) call
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Anecdotal story regarding insurance coverage in a hurricane. Unless you have pretty significant losses, you're pretty much on your own. I was in SW Florida during Irma, I had damage at my house, with my boat, and many friends and customers sustained damage. Your deductible is either $500, 2.5%, 5% or 10% of the insured value of your house. I haven't talked to anyone that has a $500 deductible. I have had friends with $50k+ in damage and their deductibles are $75k (5%) or more, so they are on their own. As Irma wasn't as bad as initially expected, except in the Keys, Caribbean Islands and those parts of Florida that had flooding, so it will be interesting to see the insured damage numbers for Florida.
It seems like the losses will be a big number but the insurance payout on them will be a fraction with the policyholders paying the majority out of pocket. Just like the typical scenario goes, Insurance Companies will do anything and everything to get out of paying a claim. As a consumer that sucks, as a shareholder, it is easier to take. Being a Canadian now living in the US, I find the auto and property insurance not nearly as easy to understand as in Canada. It seems like there is a lot more standardization in Canada (likely through regulation).
The damage over in Houston seems to be much more significant than Florida.
Fairfax2019
in Fairfax Financial
Posted
Fairfax can further monetize the UK runoff, or they can buy it all back. The current mgmt of Fairfax has been public that they are in the 'further monetize' camp at this point in time. I assume they will use this capital to help buy back those minority interests (Brit & Allied) from OMERS that they have alluded to. It sounds like Fairfax is simply rebalancing their ownership into their Primary Insurers by selling off pieces of their non-primary insurers/run-off.
I wonder how this type of deal would come about? Who pitched who the idea? Did OMERS see it and want it or did Fairfax see the asset and pitch it to OMERS? I would assume it was Fairfax's idea to sell it.