hardcorevalue

Can you walk me through the $AVGO thesis a little bit? I struggle with it at 41x 2025 earnings.

Ha ok thanks, I guess I just think really long term here so it doesn’t seem like a huge drop!

What does this mean? I don’t get it.

It’s Alo! but should do fine even with it

Let’s just all agree that if this company was called "Sleep Country USA” Fairfax would never have touched it... It’s not the best use of shareholder capital in my opinion but doesn’t change the FFH thesis over the long term.

Only 29% more drawdown to go I guess That would certainly fine tune some of our thinking!

Ha don’t count me out. I’ve been adding too!

I think there were a lot of people that were long Fairfax for higher rates. That trade is dead now and then you have Prem go buy a mediocre Canadian mattress chain right before a potential recession. I think there are some flashbacks to previous rough times and people aren’t waiting around to find out. I’m a long term bull on rates going on higher so I’m ok with it but a bond portfolio matched to their liabilities would have worked out a bit better with rates falling.

Good short term but pretty bad long term if we are headed lower on rates. They probably should have locked in for a bit longer in hindsight

The better part of a decade with a discount will do that to you

I don’t Prem would be selling for anything less than 2.5x book value. So unlikely to happen, he’s having too much fun painting his masterpiece.

I think the fear is not this quarter’s earnings but what happens in 3 years when their bonds mature. I don’t think we go back to 0 or 2% rates but that’s the bear case.

i can’t imagine selling something that’s undervalued because it’s an ugly chart or vice versa that’s what makes a market i guess. I should celebrate more people doing it, more money for me if i’m right.

Technical analysis is tarot cards for men. Save your mental horsepower for actual analysis!

Not my favorite deal here, would love to be wrong but I wish they could have bought back their own stock instead or just kept increasing the balance sheet of the subsidiaries. The whole sales model of massive ad spend and we cut you a deal in store seems weak to me in 2024, although that is personal bias. Sleep Country feels like a share loser to Ikea, Costco and speciality stores over time. Hopefully we don’t go into a recession I guess.

Explain it to me like I’m 12 why this makes more sense than buying back their own stock...

You kind of need a bad season every once in a while or you get a ton of new entrants.

yes ffh swaps still in place (which makes sense to me)

color me not surprised hah

I feel like the bagholder the longer I hold this lol! (and keep paying fees!). Getting smoked by the NSE for a while now. The discount to NAV (and I think the airport is undervalued) Doesn’t sound like the IPO is anytime soon though. Love the airport asset, just kind of crazy that this is down by 25% over the better part of a decade. Hard to keep being a cheerleader even with a lower cost.

I’d really love to hear if anybody has a better idea than Fairfax at this price. 1x book value and 7x earnings in a market that is 27x, that’s hard to beat. The other aspect that I like is their portfolio is positioned for adverse case scenarios due to their high quality bonds. Yield spreads are the tightest in history so if there was some market dislocation, black swan, they could redeploy into higher yielding securities. Anyways, I’m all ears but so many pitches are 20x earnings for some great compounder or 7x earnings for some economically sensitive stock. I too see the chart and want to sell but the numbers on FFH are just so attractive. It feels like this could be a berkshire type situation where the hard part was just holding on.

emails are landing but not being answered, i keep writing to him though lol

from our stock pitch event (just audio) $BTI $BATS https://www.youtube.com/watch?v=-5lP1qv-4IY

ha yes that was me! thanks! Weird seeing my name in the transcript as I go through it now

I recorded the audio and will post it with the slides this week on our substack and in this thread it’s about 12 minutes long https://tidefall.substack.com