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modiva

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  1. +1. If they do more, such as aggressive buybacks, 50% returns will be in few quarters or even months, and 100% returns will be there by early 2023.
  2. +1. Agree the above actions would be the exact catalysts that Fairfax would need. If not, its a slow grind to the pre-pandemic valuation levels, which might take a few years. Lets hope that Fairfax takes the actions and attracts more investors...including institutional investors.
  3. @Gregmal, if that's the case companies like Microsoft wouldn't exist in their current form, and many shareholders would have missed out on returns up to 10x. Microsoft stock didn't make any money during 2000-2013 for its shareholders. Its 1/3/5/10 year performance was depressing during that period. The following period turned out to be a golden era for its shareholders with 10x returns.
  4. +1. It is ironic that Fairfax business is in much better position now than at any time in pre-pandemic past...but the Fairfax stock is in much worse position now than at any time pre-pandemic past.
  5. Thanks @gilder3834 for the perspectives on PE from earnings (with out investment gains) and its historical contributions of less than 50% of overall gains. So Fairfax is ridiculosly cheap both from BV and PE perspectives. It is getting cheaper with time this year. But, as long as the strong performance continues, the price will correct to > book. Although it is impossible to predict the timing, I think it will correct sometime in the next 3 years. Here are my expectations: BV by Dec 2024: $900 (15% cagr) Net earnings in the next 3 years (2022, 2023 and 2024): $4B (15% cagr) which I hope they deploy to retire debt and stock. Target Price in Dec 2024: USD $1000-$1200 (1.11x-1.33x book) This should be a 3x bagger in 3 years. I am going to be patient unless there is a big mistake or sustained poor performance.
  6. +1. Sum of parts >> Whole. If the situation persists, its not a bad idea to unlock the value by selling some parts. After all, the idea is to unlock the value, isnt it?
  7. Thanks for the insight. I looked at the past press releases and they have made similar authorizations that weren't executed fully. It is reasonable to expect that when such authorizations are made, the majority of such authorization is followed through, if not an update is provided. Berkshire doesn't seem to issue such press releases but they are doing regular, and recently significant, buybacks.
  8. Shareholders get their wishes answered. Buyback up to 10% in the next 1 year. They also bought back about 2% in the last 1 year at average price of C$ 515 (or US$ 405). Fairfax - Fairfax Financial Holdings Limited: Intention to Make a Normal Course Issuer Bid for Subordinate Voting Shares and Preferred Shares
  9. Thanks @Viking for such comprehensive insights. You are doing so much service to everyone else. I have been slowly accumulating.
  10. This is very helpful. Accounting for the significant discounted book value, what is the fair P/B value of Fairfax? I.5x? 2x?
  11. The low interest rate environment doesn't explain the high P/B values of other similar companies. For example, Markel trades at 1.3x book. The lack of trust in management also doesn't explain the low P/B of Fairfax as it was trading at 1.2x book in 2018. Unless some big unfavorable incidents happened or uncovered after 2019 which doesn't appear to be the case. So it's hard to explain. But it's also hard to explain why so many stocks trade at significant discount to their intrinsic values. Sooner or later the market will re-rate as long as Fairfax continues to learn and executes to its stated goal of 15% book value growth every year. And the patient investor will win.
  12. In 2018, Fairfax was trading at 1.3x. What is it that made the market to discount 50% now, when it was trading closer to fair value 3 years ago. It is ironic that the situation vastly improved in the last 3 years and some corrective changes were announced (e.g., no more shorting).
  13. The biggest question is what is the discount for a) past mistakes and b) lack of current visible corrective actions? Is it 50%? Or is it 5%? It is trading at 50% discount now and isn't it too steep? The book value is ~$600 USD (including Digit's gains to be added in Q3/Q4). Industry peers are trading at ~1.4x and a case made that it should trade at 1.5x -- fair value is $840-900 USD. Fairfax is not just an insurer and investor, but are also becoming a disruptive tech VC with big successes like Digit.
  14. Most financial analysts tend to make safe calls by following crowds and markets. Very few make the right calls. While these upgrades are certainly encouraging, they are safe. In this era of zero interest rates, most financial firms are trading over 1.5x book value. It is not a surprise that not single analyst calls target of CAD 1125 or USD 900. That's what it should be trading now at ~BV USD600*1.5. Markets obviously discount based on perceptions and past history but a >50% discount is too steep. Agree with @Parsad that this is craziest disconnect.
  15. I am new to the forum and am an investor in Fairfax. It has a huge potential with 2-3x in 2-3 years. But this is realized not just by great execution but also by creating right perceptions that show that the company cares about shareholders.
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