Parsad

Float cuts both ways. Catastrophe losses will be magnified within FFH simply because of the asset to equity leverage. So good times...tons of income. Bad times...significant losses. There is no net tangible value of float other than it is a more useful version of debt. Leverage is leverage. In an outlier event, BRK will be the last to fall! Cheers!

Yes, you are partially correct. Huge investments like AAPL do have the opposite effect. That being said, a significant amount of BRK's value will never be valued correctly, thus BRK will almost always be valued significantly higher than book value. That may continue to change under Abel, Todd and Ted if they invest more in public securities long-term. Cheers!

The leverage of float is already accounted for in the portfolio income. I don't give it any additional weight than that, since float cuts both ways. If you are valuing FFH on earnings, then float is accounted in the income/loss statement. If you are valuing FFH on book value, float is also accounted for since it will have both a positive and negative effect on book value depending on catastrophe losses. Float is just a more useful version of debt. There is no net tangible increase or decrease in value from float. Cheers!

Fairfax is tightly held, not unlike Berkshire...from management, loyal shareholders, employees, long-term hedge funds, etc. They've also done a good job reducing the number of shares in the last 7 years. Lastly, the high stock price also puts off smaller retail clients...whereas Berkshire issued B shares which attracted smaller shareholders. Also being listed primarily on the TSX rather than a large U.S. listing reduces visibility and interest. Although I would imagine many loyal shareholders are ok with that last one! Cheers!

I think markets had a pretty good idea book value would be significantly higher, thus the stock had a nice run up. Now it will probably continue to rise moderately as we approach each quarterly report, because the markets know that there will be consistent growth in book value for several years. The bulk of the gains from where the stock hit bottom have happened. Now it will be based on annual growth of book and any market speculation where the multiple of book or earnings might be marked higher. Cheers!

Again that comes back to Fairfax's reporting requirements as a Canadian reporter and Berkshire's reporting requirements as a U.S. reporter. Under IFRS, you are required to mark assets at fair value or comparable value. Berkshire hasn't adjusted See's Candies cost since acquiring it I believe. It's why Buffett says that Berkshire's intrinsic value is far higher than book value. That analogy cannot be used with Markel or Fairfax, where there isn't massive amounts of undervalued assets on the book. While both companies should trade higher than book...1-2 times, Berkshire probably should be trading between 2-3 times book. Cheers!

Stock is up $4.40 so far in Toronto. Cheers!

I'm not sure the fireworks are going to happen...they kind of fizzled from MW's perspective. Cheers!

Is this guy a moron or what? Now he's not disputing accurate disclosure, but why doesn't Fairfax provide enhanced disclosure above and beyond what is required! Cheers!

When you look at adjustments, discounts, calculating fair value, taxation related issues, attributed income classifications, etc...it's the auditors that make these calculations or at the very least review them and confirm them. Cheers!

Headed in the right direction Prem. I'd like to see it between $2-3B. Cheers!

They can do both. Depends on what Brian is thinking. They could buy derivatives that lock in the current bond gains, while still reaping the interest for the next four years and any further bond gains if interest rates fall. They are the best at managing these types of issues on the fixed income side. No one is better...not even Berkshire! Cheers!

Oh, you're still a young one...lots of compounding left to do! It was after insurers suffered huge catastrophe losses from 9/11 and two major hurricanes. Fairfax had bought Crum & Forster and TIG at the time...two very large consecutive insurance deals. At that time, Fairfax was known to buy lesser quality insurers and turn them around...not like the last few years where they pay up for good insurance companies. But after 9/11 and those catastrophe losses, the hits at C&F and TIG were far more than the discount to book Fairfax paid and the reinsurance policies they bought to cover any future losses. So part of this was self-inflicted. What wasn't self-inflicted was the organized way analysts, hedge funds and journalists coordinated their attack to drive the stock price down...using some fact and a hell of a lot of fiction! At that time, a stigma formed around the use of finite reinsurance by insurers, especially AIG and several European insurers. Fairfax like most reinsurers used some finite insurance...basically finite reinsurance is used by insurers to transfer ceded amounts of risk to other insurers. So that way, one insurer isn't on the hook for all of the risk of a huge insurance contract. What some insurers were doing was using finite reinsurance in a way to leverage their book of business, combined with derivatives exposure (AIG), they were creating not only excessive corporate risk, but in some cases like AIG...systemic risk! Fairfax was not using finite reinsurance recklessly. But they had gotten themselves into a pickle with the losses developing at C&F and TIG. The shorts used this to artificially drive the stock down by taking out more and more short positions, much of which should not have existed because there just weren't enough available shares. What they were doing was using the DTC's failure to deliver shares within T+3 days from broker to broker, and artificially creating downward pressure on the stock with artificial shares that did not exist. Rather than delivering shares within 3 days, many trades for Fairfax stock weren't being delivered for months. Anyway, by driving the price down, it prevented Fairfax from issuing more shares to increase liquidity. Because of the stigma around the analyst reports, journalist articles, etc, it became difficult to raise debt at reasonable rates. So they essentially created an artificial squeeze as Fairfax was hampered for liquidity. Now you probably understand my cries for a large amount of cash in the holding company like Berkshire. Fortunately, Peter Cundill, Southeastern Management and Markel invested $300M right during the worst time of the crisis. With that money, plus by delisting from the NYSE where the FTD's were occurring, they were able to slowly right the ship, reduce losses, reduce the huge reinsurance recoverable balance from runoffs and improve the company's position. Then Brian Bradstreet killed it with the CDS during the GFC, and Fairfax was now in a totally different position financially. That was the end of any shorting! The Fairfax lawsuit combined with the SEC prosecutions took out or hampered many of the players. It was an extremely difficult time for Fairfax, its shareholders and even family of the people who worked there...yet not one single employee left the company over those years! A testament to the loyalty Prem garners with the people he works with. Cheers!

Hi MMM20, no names. Keep it general unless they were actually fined or prosecuted. Cheers!

How frickin' old are you? And exactly how old do you think we are?! I can't even begin to explain how bad it was in 2003. Nothing like this...this is a nothing burger other than a firm trying to make a quick buck. 2003 and the attack back then was just devastating and extremely well coordinated. The stock fell from $260 all the way down to $57 USD on the NYSE. We were getting people joining the message board and trolling the members daily with information about FFH...then a few days later, journalists (three primaries...one who started running a church, another worked for the Globe & Mail, and another one who also no longer writes) would put out articles using the exact same information the trolls were spreading on here. Every month, John Gwynn an analyst from Morgan Keegan would write a really negative report, but was sending it out to large hedge funds including Kynikos, Exis Capital, Third Point, SAC, etc before the report was actually released by Morgan Keegan. There was another analyst who worked for a large Australian hedge fund that was the primary culprit behind all of this...in my opinion, he was the guy who started it all...he now writes a blog. If I ever see him, I'm going to put him on his ass! John Gwynn died before testifying in Fairfax's lawsuit, and we still don't know the cause of death. I know fund managers who were Fairfax shareholders were getting calls by other fund managers and journalists involved in the short telling them to sell the stock to drive the price down further. Prem's executive assistant was being followed from the office. The pastor at Prem's church received letters saying that Prem was stealing money and would bankrupt the church coffers. I was told by a well-known manager (no, not Mohnish) to be careful because the people I was dealing with were connected. The shorts hired a notorious private investigator to plant and attack Prem's character, who subsequently went to prison. While Fairfax's lawsuit was somewhat unsuccessful other than against a couple of the hedge funds, the information gained in discovery was used later by Preet Brahara when the SEC went after all of the same people. Other than a couple of them, the SEC was able to shut down, sanction or fine almost all of them including sanctions against Morgan Keegan and SAC Capital. Exis was essentially shut down. Kynikos and Third Point escaped without anything happening to them. This was one of the biggest such lawsuits in SEC history with such big players. Nothing like what we are seeing with the Muddy Waters report. This is like I said, a nothing burger! Cheers!

100% agree! They'll tell you that they have access to the revolver, but I would be much happier if they just kept $2.5B in the holdco. No one is going to sink that boat if they have $2.5B in there. Either that or reduce the debt by $2B. Problem is that in a scenario like yours, even reduced debt won't help if liquidity is really strained in the system...you're seeking the kindness of strangers, and in a global economic catastrophe, strangers usually aren't kind! If you need to come up with $1B suddenly, borrowing might not be an available option, or the rate might be through the roof. Cheers!

Might be right. Buffett has had a couple of meetings with Jane Fraser, CEO at Citi. Cheers! https://www.reuters.com/business/finance/warren-buffett-tells-citigroup-ceo-fraser-keep-going-with-overhaul-source-2024-01-20/

LOL! It must be some sort of trick. Such a devious character like Prem Watsa, would never be so transparent! Cheers!

LOL!! Fairfax has a direct number on their Contact page. It's also pretty easy to figure out the email address of anyone you want to reach at Fairfax: Basically, first letter of the first name + last name @ fairfax.ca . But that would be far too difficult for any CPA, CFA, analyst or head of a hedge fund to figure out! Plus, you know how Fairfax likes to inflate their email addresses. Cheers! Cheers!

https://finance.yahoo.com/news/maersk-had-more-cash-knew-120000731.html Not the way to spend a $41B windfall! Hopefully, Poseidon/Atlas has been more prudent with their income on their long-term contracts. Cheers!

No one ever thought Morgan Keegan was involved in anything until it was proven they were and John Gwynn was fired. We still don't know how John Gwynn died. Cheers! https://www.wsj.com/articles/SB122110590390722731

Here's the actual Globe Newswire press release, so you know they didn't make a mistake. How does Morningstar get this wrong? This is not cut and paste. The whole press release comes as is...there is nothing to adjust, cut, copy, etc. Cheers! https://www.globenewswire.com/en/news-release/2024/02/12/2827434/0/en/Fairfax-Responds-Further-to-Short-Seller-Report.html

Episode 5 of "True Detectives: Night Country" was just really damn good! Recommend this year's series. Cheers!

Prem doesn't do that. I'm not sure they were that pissed off with the shorts this time as they were back in 2003. They know the situation is different. They are in far better shape fundamentally and have enough cash flow to power the ship for years. Back in 2003, catastrophe losses and the size of the reinsurance recoverable portfolio left them vulnerable, especially when listed on the NYSE and there were massive FTD's. Totally different situation this time. The shorts were in it for a quick gain to reduce their short losses...unlike in 2003 where they wanted to run Fairfax into bankruptcy. 2003 was a very coordinated fraud on a massive scale...you had analysts, journalists and huge hedge funds coordinating their attack over a fairly long period of time. This time it was a minor smash and grab...petty theft! Cheers!

Mostly by plane, but there was some train too. They had it arranged perfectly, but we were busy every day from 7am to 10pm. Cheers!