SoonParted

When the US listing is an ADR it can make a big difference whether you buy that or buy on the home-country exchange. That’s because, as I understand, there’s a fixed set of shares bundled into ADRs and the number of such shares doesn’t generally change, so the ADR can be bid up higher, or drop lower, than the home-country price. For example, right now TSM ADRs trade at around 18% premium to the shares in Taiwan (ticker 2330); in recent years the premium has mostly been 5-10%. But FRFHF is not an ADR, it’s just regular FFH.TO shares that have made their way to the US, so no such issue.

TSM AT 4%, ‘cause if not now, when? And I’m still underweight tech.

I have 11% Fairfax (largest position), 2% Fairfax India, in my portfolio of individual stocks. This doesn't include fixed-income holdings or the mutual funds in my 401k.

I'm speculating here, but is there an effect where poor underwriting forces a larger proportion (beyond legal requirements) of low-yielding "safe" investments as a reserve against claims? And good underwriting could allow for higher-return investments with a bit more risk.

Thanks, @SafetyinNumbers. I'm US-based...if FFH income were predominantly received in unhedged CAD, I'd expect the stock price changes in CAD to most closely reflect proper value for FFH. So I might want to partly hedge--usually I'd do it by selling deep-in-the-money FXC calls. But FFH income is not predominantly in unhedged CAD, it seems, so there is no need for that in this case.

Does anyone know, or know where I can find, any numbers on the sensitivity of FFH earnings to the CAD/USD exchange rate, or on the proportion of their earnings in CAD vs USD? Do they hedge currency risk?

OK here goes. I don't feel knowledgeable enough to have large positions--largest single stocks (FFH, BUR) are 6-7%. Brookfield (52% BN, 37% BIP, 11% BAM) Burford Fairfax Financial Holdings Odet Constellation Software Berkshire Thermo Fisher Nelnet Energy Transfer FRP Holdings Grupo Aeropuertario del Centro Norte Apt. Invest. & Mgmt. New England Realty CVR Partners Veris Residential Volkswagen Pfd Basic Fit Avid Biosciences Textainer Monarch Cement KKR Fairfax India Clipper Realty Lumine JD.com Converge Tech. Solut. Mexico Nearshoring Basket (6-7% total: GMexico Transportes, Promotora y Operadora de Infraestructura, FIBRAHotel, FIBRA Mty, FIBRA Macquarie)

Has anyone been able to find out about the currency used when calculating NAV growth? Seems like a make-or-break question. I asked Investor Relations recently, they didn't have an answer(!), said they'd get back to me.

Thanks, globalfinancepartners. The IRS seems to have changed the rules recently on PFIC's in IRA's so that you don't have to file form 8621 and so on, so that helps a lot. The downside is that in an IRA, if there's foreign tax paid (taken out of a dividend), then you can't get a credit for it.

This is a question for American investors in FIH. It was noted earlier in this thread that FIH could well be deemed a PFIC by the IRS. Jurgis commented, "It likely will be [a PFIC] unless it acquires controlled operating businesses fast." So I'm wondering how others are dealing with this issue. Possible strategies: (1) Ignore the risk and hope the IRS either doesn't notice or decides it's not a PFIC. Might work if you're a small shareholder. Huge losses if it doesn't work. (2) Try to figure out the PFIC rules, and go by them. My impression is that the taxes one would then owe would make the investment much less attractive--I think essentially, all unrealized gains are taxed like ordinary income each year. Also it's unclear to me what information is needed for tax filing, and how to get it if the company doesn't help out. I've only owned one PFIC, and the (Canadian) company provided Americans a sheet each year with the necessary information to deal with PFIC filing. Useful link: https://ustaxcompliance.wordpress.com/tax-triggers/a-pfic-primer/

Doesn't the Canadian home of FIH make it a PFIC for US investors? At least, it would seem to be a risk that it could be deemed one.