Parsad

Due to all of the comments about how Fairfax invests in nothing but POS businesses, especially BB, let's put together the worst investments ever made by Fairfax without a commensurate return long-term. We've seen them make these distressed investments in cigar-butt companies before, but somehow they manage to walk away from most relatively unscathed...often selling a chunk or receiving return of capital equal to their investment, while retaining the original investment position...and we are left scratching our head wondering how they managed that. Also, let's exclude the short positions they've had as they were almost entirely a macro bet. Cheers!

The irony is that even with the Delta variant, the economy continues to recover quite dramatically, as people fear more lockdowns, etc. I see the Delta variant having some impact, particularly on the unvaccinated, but I don't see things going back to how it was last year. Cheers!

British Columbia has extensive data available that covers months and months of data. All data currently points to that the majority of covid cases and hospitalizations occurring from the Delta variant. 75% of the cases are in unvaccinated people and 95% of the hospitalizations are in unvaccinated people...slide 5 in the link below: http://www.bccdc.ca/Health-Info-Site/Documents/COVID_sitrep/2021-08-05_Data_Summary.pdf Extensive data available on Covid in BC: http://www.bccdc.ca/health-info/diseases-conditions/covid-19/data Regarding the article referenced by Muscleman in the Journal of Infection...they do state that it was done using modelling, and not actual data or clinical testing. I agree with their suggestion that ADE exists within vaccines, but the actual hospital data shows that vaccinated people can still get the Delta variant (and probably other future variants), but have an extremely high rate of surviving the infection. Whereas most of the current deaths are occurring in unvaccinated people. Like the flu virus, Covid will become an annual vaccine for those that want it or are vulnerable. Cheers!

Largest Hack in Crypto History...$600M: https://www.cnn.com/2021/08/11/tech/crypto-hack/index.html Still no Bernie Madoff, but how long before someone walks away with $60B, instead of $600M? Untrackable...untraceable! Cheers!

More crypto coins than U.S. listed stocks now...me thinks crypto investors are due a correction of epic proportions...probably as big as the tech wreck in 2000! Cheers! Crypto Coin Listings Exploded in 2021 - CoinDesk

I think there have been a handful of CEO's who have bought back more in recent history (between the financial crisis and the Covid pandemic) with their own personal capital...pretty much all in the U.S. I'm almost certain Prem's buyback with personal capital was the single largest in North America during the pandemic. I have heard of several CEO's who bought back $20-$50M (Jamie Dimon, the CEO of Prospect Capital, Gary Schiffman, Dustin Moskowitz (Asana), Robert Duggan, Whitney Wolfe Heard) in the last 18 months...but none were anywhere near $150M. Cheers!

I would actually argue that Fairfax's group of insurance companies and their underwriting are now as good as any of their peers. Dare I even compare them to Berkshire's group of insurers excluding National Indemnity and Geico. Cheers!

Again, you are viewing Fairfax in a vacuum. How many insurer stocks dropped from $600 to $60? Fairfax's did when it was under the short attack 17 years ago...thus the high volatility. The question isn't what Fairfax did in the past, but what it will do in the future? Cheers!

I'm not sure we are actually disagreeing here. Like I said, I look at every investment based on opportunity cost and whether it is discounted to intrinsic value. That not only applies to FFH, but even BRK. I'm a huge proponent of no "forever hold" stock. The reason the board is called the Corner of Berkshire and Fairfax isn't because of Berkshire or Fairfax's performance. It has to do with the lessons learned from Buffett and Prem during my life...about developing an intellectual framework, integrity, life lessons, how to treat people, etc. Prem may have his faults as some on here state, but even the biggest hater has to admit that at least he puts his money where his mouth is and attempts to be transparent, fair with shareholders and try to do the best that he can. It's easy to post stuff about people under anonymity (not you), because people know that their own faults and failures will never see the light of day. Everyone is Tom Brady until they actually have to throw a real ball against a charging Khalil Mack or JJ Watt! Cheers!

I'm not sure comparing Fairfax to the greatest investor of all time and arguably the greatest company of all time is fair. Now if you ask me which has the better prospects going forward for the next 2-3 years...MKL, RE, WTM, Y or FFH...my money is on FFH. Cheers!

I think you're looking at Fairfax in a vacuum...since it has underperformed for the last decade, it means management will underperform for another decade. MSFT was stagnant from 2000 to 2015. Assuming MSFT was the same company in 2015 under Nadella, because it underperformed from 2000-2015 under Ballmer meant you missed one hell of a ride from 2015 on. It's the same view people had when I was talking about JEF. Since Handler struggled after taking over from Steinberg & Cummings, meant JEF would continue to struggle under Handler. Again, people missed a great opportunity to own a terrific investment bank at dirt cheap prices. I see Prem making similar "simplification changes" at FFH, that Handler did at JEF...streamline, get the core working optimally and go back to what we do best. Doesn't mean I'll hold FFH, MSFT or JEF forever, but all three had very opportune moments to invest, and many people missed all three. Cheers!

Agree! Look at everyone who has tried to predict the markets since the internet bubble. They may have gotten the 1999 bubble right, and then the 2008 housing bubble correct, but everything else wrong since then...or they may have gotten those two wrong, but were correct on the current bull market. No one has been 100% right predicting markets since 1999, and if they were lucky to get a couple right, they got one dead wrong! I haven't seen one investment guru, analyst, money manager, poster, economist...anyone...get it correct since 1999. That being said, my cash hoard is building! Cheers!

+1! You guys had to wake up the analysts. Cheers!

Lawrence Cunningham is interviewed by Consuela Mack: Cheers!

If you have a 80% chance that the stock rises and 20% chance the stock falls, would you not take that bet every time? And if it does fall, would you not simply double-down? No zero, double zero popping up! Cheers!

Sometimes reputation gives you the opportunity to make a ton of money because markets/analysts ignore a company regardless of fundamentals. The three companies I've made money on over and over at different times without holding the stock through dead money periods are Overstock.com, Fairfax Financial and Biglari Holdings (and its predecessors) in order of magnitude return. Notice anything similar between them? Misunderstood or eccentric CEO's with businesses that were not completely easy to understand. And they went through several periods of challenges (self-made and otherwise) where markets discounted them significantly and there was an opportunity to buy cheap, and then sell again as markets recognized fundamentals were improving. I'm not saying hold Fairfax forever...but it was dirt cheap last March/April and into the winter of 2020, remains significantly undervalued as fundamentals show dramatic improvement, and will end up above book at some point in the next year or two, where I will cut my position in half or more depending on how high it is valued. Cheers!

Yeah, this makes zero sense to me. After Berkshire bought GenRe, Berkshire's earnings were killing it for the 1st year...even excluding GenRe...yet the stock traded at the lowest P/B in its history. That's when I first bought Berkshire. And guess what, the stock didn't move until the tech bubble ended where it went on a tear. Fairfax has been here before. Just because it didn't move on a good earnings report, doesn't mean the stock is dead money. If you are a value investor, you know that at some point in time, the market will eventually reduce the spread between market price and intrinsic value. IT ALWAYS HAPPENS! ALWAYS! The emphasis is that this contraction is as consistent as gravity. Sometimes it happens as a company performs poorly, and intrinsic value decreases to where market price is. Often, it's the reverse, and completely out of favor stocks with good fundamentals find their valuation increasing closer to intrinsic value. We saw this in the fall/winter of last year and into spring of this year. It wasn't simply Reddit investors, or millennium money, but investors rotating to undervalued stocks...sometimes well exceeding fundamentals and intrinsic value. The market does this. It is efficient over time, but extremely inefficient during shorter periods. When people were buying earlier last year, you said that FFH was a dud. Then it ran up a bit and earnings started to prove real. Now you are saying you almost bought now after the earnings release. Please don't buy once it is over $750-800 CDN, because that would be the wrong time to buy and add a position! Cheers!

This is astonishing. The share count was diluted by ~10 million shares. It translates to ~$5B dilution or ~50% of the market value. Imagine what it would do to the share price if there was a buyback vs. dilution of the same. I think this is one of the biggest reasons for underperformance over the last 10 years. I hope the situation reverses in the coming decade. There was a lot of dilution at Berkshire when GenRe was acquired...about 25%! And GenRe was not a good investment for a few years, whereas Allied is double the size since Fairfax acquired it and writing good business. While the Fairfax shares weren't overvalued in the Allied transaction, they were also acquiring a good insurer at fair value. After years of shareholders complaining about Fairfax buying shitty insurers and trying to turn them around, once they actually pay fair value for a good insurer, you guys complain about dilution! Cheers!

When the largest shareholder is the CEO, dilution is always going to be of paramount interest to him/her. There were some shares issued for the Allied purchase and then there were some incentive shares issued for employees, as well as a slew of new directors added to the board. I'm pretty certain the board and Prem is careful about this stuff. Cheers!

Due to my sheer laziness, I don't bother doing these calculations! They are aiming for 15% ROE annualized...I assume in a bad decade, they hit 10% ROE annualized...$546 USD book value...$55 USD per share earnings. Simple and easy! No fuss, no muss! If I can do 10% ROE with no leverage in my sleep, Fairfax should be able to do 10% ROE with a leveraged, conservative portfolio and good underwriting. Cheers!

One caveat: The industry will start to fail on #1 probably some time late next year around when renewals start. You will see insurers start writing lesser quality business to make up for low rates, and to beat topline returns year-over-year. It always happens. Thus the growth you are seeing at Fairfax. They will write massive amounts of business relative to their size and their peers, but will slow when prices aren't as good. With Andy Barnard at the helm, you won't see Allied or Brit fall into this trap going forward. They will not write bad business to retain business. Other Fairfax subsidiaries have already proven this in the past two cycles. Cheers!

It was Alan Parsow who asked the question. His family has known Buffett for decades...Buffett used to buy his suits from Alan's dad at their store. Alan has also known Prem for a long time. So he asked what all shareholders wanted to know! I don't know who that guy from the Q1 call was, but he was an ass! Cheers!

I would imagine if you believe assets are overvalued and rates won't stay low for much longer, you will get to deploy capital/float at much better long-term investment terms. If they were only writing short-tail business like a general insurer, yeah it wouldn't make sense. But Fairfax writes a ton of long-tail insurance where they will have that float for 10-20-30 years. I remember Francis telling me a long time ago, "People don't understand how much long-tail insurance Fairfax underwrites." Cheers!

Nice take away...that's about what I got from hearing the call. Regarding the hard market, they expect double digit growth into 2022. It was clear from the conversations between management, what we've read from CEO's of other insurers, this hard market has real legs. They also pointed out that their portfolio is well-positioned to capitalize on rising rates without rising rates having any significant negative impact. Cheers!

I have a feeling BB will be taken out, and Fairfax is waiting for that type of opportunity to monetize it. They've never been the type of company to cut bait and run. They are going to see the process through. But from what we can see with other assets, they are trying to monetize what they can. I suspect they are waiting for someone (perhaps OMERS at some point or someone else) to make an offer for BB and take over the reins. Rather than simply sell the shares and leave John Chen and BB to fend solely by themselves. As a shareholder, it is hard to watch and see them forgo an opportunity to capitalize on the BB price rise, but at the same time, the integrity is why I like the company and management, and people want to do deals with them. Cheers!