Parsad

What was said? Rough version: Called in and told him he needed to step away, he wasn't paying attention anymore, and had lost his touch. Continued by saying that Prem didn't understand any of the companies he was investing in and wasn't doing any detailed analysis on microeconomics, his partners agreed but were Canadian so too nice to tell him, and the bankers were cowards not asking hard questions because Canada doesn't have enough good companies. Sounds like Sanjeev. Kidding!!! Ha ha!! I'm listening to the call now. Let me see who this twat was! Cheers! Don't know who it was, but you could tell that they have very little understanding about how much analysis goes on at Fairfax when selecting investments. I'm probably one of a very few handful of people who has actually seen the internal workings and spoken to all of the analysts, portfolio managers, core group in detail over the years, and does not work for the company. This guy has no idea what he is talking about! Cheers!

Yeah, pretty clear on his position on BB and talking about it. He said they are insiders and don't discuss securities they are buying or selling. The spike happened in Q1 as well, so I suspect if they did anything it will be disclosed in the Q1 report. Cheers!

While they have concentrated positions, that is one of the broadest 13F's I've ever seen Fairfax report. Closer to Markel's portfolio in number of holdings and structure...other than the huge concentrated holdings like ATCO, BB, etc. Cheers!

What was said? Rough version: Called in and told him he needed to step away, he wasn't paying attention anymore, and had lost his touch. Continued by saying that Prem didn't understand any of the companies he was investing in and wasn't doing any detailed analysis on microeconomics, his partners agreed but were Canadian so too nice to tell him, and the bankers were cowards not asking hard questions because Canada doesn't have enough good companies. Sounds like Sanjeev. Kidding!!! Ha ha!! I'm listening to the call now. Let me see who this twat was! Cheers!

Doesn’t matter when it closes. The point is (I think) they’ve locked in that price for a future buyback of 1.4m shares. Edit: what I mean is that when it closes doesn’t affect the profitability of the eventual buyback. If the TRS contract allows the parties to close out quarterly for example, FFH may be limited to a short term window where they can accrue gains on the reference asset (1.4m shares) less the cost paid (LIBOR + spread) for the period. On the other hand, if the counter party can't close out until a specific termination date set in the future, say 1 year from initiation, then FFH has more time to capture upside on the reference asset which is exciting knowing all the tailwinds occurring at the moment (Farm Edg, BB etc, CR's etc ). Paying LIBOR + spread vs. getting upside on 1.4M shares from $443cdn for a few more quarters is a pretty attractive risk/reward with all these tailwinds in mind. I'm by no means a SWAP expert - but that's how I'm understanding this at the moment. Correct me if I'm missing something. If it’s just a financial bet then you’re right. I don’t think it’s a financial bet. I think it’s a buyback. I think once they have the cash to pay 1.4m * USD344, they close out the TRS and buy 1.4m shares, using gains on the TRS to pay for any amount by which the share price exceeds USD344. Thought about that way, it doesn’t matter whether the transaction happens tomorrow or in a decade. I could easily be wrong! Actually, the way it works is that Fairfax pays a fee...usually Libor plus a negotiated rate. As Fairfax trades higher, the counterparty pays the difference between the strike price and market price. At the end of the swap time period, Fairfax gets the counterparty payments minus the Libor plus negotiated rate. It's not a buyback, but they benefit from it as if they bought those shares, paid a fee and reaped the gains. If Fairfax stock falls, then Fairfax pays the difference between the strike price and market price into the swap. Cheers!

I'm wondering if Prem mentioning the total return swaps hinted at what they may have done with the Blackberry spike in January. I hope they locked in some of those gains! Also, as I estimated, I would imagine book value in Q1 presently is around $500 USD...which would justify a price of $600 USD at the end of Q1. Cheers!

I'm calling a market correction some time this year! After reading this article, I'm pretty sure we are getting near a top. I would also rename this article, "The Man No One Will Remember in 5 Years!" Cheers! https://finance.yahoo.com/news/crypto-mogul-bets-meme-investing-220000958.html

For the life of me I can't remember where I saw this little bit, whether it was SNL or Youtube or elsewhere, but a wife is disgruntled with her husband and his gambling ways...essentially he's blown everything the family owns. When the family confronts him in an intervention, he defends himself and says that everyone is blaming him for things that weren't his fault...that people called him a degenerate gambler...he then points out how offended he is by it and smugly states "I work, I work, I'm a day trader!" Cheers!

Totally agree! If everyone was left to their own devices, we would have utter chaos! I'll be 52 in July, and even after everything I've saved and invested, I wonder if it is still enough. I also know that the majority of people my age and those heading into retirement have a fraction of what I have saved. Without CPP, universal healthcare, medicare, etc., there is no way they would be able to live a retirement life with any dignity. Cheers!

Sanj, You did not place a currency indicator in front of the dollar sign. FFH trading at CAD$750 is not so exciting because that is only US$600. Book value for Q4 will be what, maybe US$460? BV should be nicely over US$500 by Dec 2021, unless FFH's BB gains are as ephemeral as many of us fear. If you did actually mean that it will trade at US$750 within the next 23 months, I would suggest that is perhaps a shade ambitious. I'd love for that to happen, but... SJ Sorry! When I talk about FFH, I'm always talking in CDN dollars other than their financials...I'm still pissed over the NYSE listing! :o Yeah, for sure $750 CDN before 2022. I think they've got a 60-70% chance of hitting $750 USD before the end of 2022. Why? Assume book value is at $500 USD now...in this market, 1.2 times book is already $600 USD or $750 CDN. I've been saying that insurance was heating up before Covid, and it took a stellar leap after Covid in terms of premium pricing. They are going to write at 95% or better for the next 2 years. Add a simple 4% return on the portfolio and increase in book value should be roughly $40-60 USD a year. That means book value would be closer to $600 USD near the end of 2022...1.2 times book would be $750 USD or around $930 CDN. Mark my words! Cheers!

Barring a market crash, it will trade over $750 before the end of 2022. And I'm being conservative. Cheers!

But people say that every time. He was bailed out by his friends. He was bailed out by being right on the housing crisis and buying collateralized bonds. He was right because he is being bailed out by a tech bubble. As I said, in June he threw $150M of personal money into his own stock and explained why...that it was cheap. I told you guys why it was cheap even before Prem said he bought stock. A couple of other long-time FFH owners also said the same. There was an enormous amount of capital sitting on the sidelines over the last 3 years. Combine that with massive amounts of stimulus flowing into hands that don't need the cash, but they invest it in the markets, you have capital that was originally flowing into growth stocks now moving into value stocks. The Reddit and millennial bulls drew cash from sideline investors as well...so that had to find a place. This is the normal transition of capital flowing from expensive stocks into cheaper stocks...with the more expensive bubble stocks eventually crashing up to 90% of their value down the road. It's not a bailout...it's patience! Cheers! I have owned this for 13 years now and added materially in 2020. You do not need to persuade me that it was cheap! I did not, however, think they might have a chance to monetise Blackberry at $20, or that Digit would be marked up quite so fast, or that Farmer's Edge might generate a $1-2bn profit within 6 months - and I certainly did not think that all three would happen at once. I have never felt that he got bailed out before, personally. But I do not believe he invested in Farmer's Edge or Blackberry because he saw an epic bubble coming in unprofitable stocks. He thought they were great businesses and, frankly, there is precious little evidence so far that he was right. Even if BB and FDGE turn out to be super-profitable over the next decade, getting the chance to monetise them now at silly prices is transformative to Prem's IRR. That is pure luck. And being able to do it when he desperately needs capital is beyond luck. So no, sorry, he's been bailed out on this one. And I am not complaining at all. It be saying the same thing that Elon Musk was bailed out by an inflated stock price or was simply lucky. While the bubble might be true, it doesn't negate the fact that markets and observers were still wrong on Tesla and Musk's vision. Did Steve Jobs get bailed out because he invented the iPhone? Without the iPhone, AAPL today would not exist in its present form. With investing and entrepreneurship, there is always a bit of luck...but the winners always position themselves to benefit from that luck. If Buffett had not bought Blue Chip Stamps, met Munger, or eliminated derivatives contracts at Gen Re, Berkshire might not be the same either. Cheers!

But people say that every time. He was bailed out by his friends. He was bailed out by being right on the housing crisis and buying collateralized bonds. He was right because he is being bailed out by a tech bubble. As I said, in June he threw $150M of personal money into his own stock and explained why...that it was cheap. I told you guys why it was cheap even before Prem said he bought stock. A couple of other long-time FFH owners also said the same. There was an enormous amount of capital sitting on the sidelines over the last 3 years. Combine that with massive amounts of stimulus flowing into hands that don't need the cash, but they invest it in the markets, you have capital that was originally flowing into growth stocks now moving into value stocks. The Reddit and millennial bulls drew cash from sideline investors as well...so that had to find a place. This is the normal transition of capital flowing from expensive stocks into cheaper stocks...with the more expensive bubble stocks eventually crashing up to 90% of their value down the road. It's not a bailout...it's patience! Cheers!

Article on how 28% of American's bought one the hyped Reddit stocks: https://finance.yahoo.com/news/gamestop-amc-reddit-investing-213609595.html Sad! Also margin lending versus GDP is at a historical high now. That doesn't bode well! Cheers!

Never bizarre. How many times have we made money when Fairfax was undervalued? Or Northbridge...or Odyssey Re...this is the gift that keeps on giving. As long as you understand the business and can value it properly. Prem bought $150M of stock in the depth of the market with his personal money. Not hard to figure out the stock might be cheap and eventually would be priced properly by Mr. Market! Cheers!

Food for thought, Ben Watsa's Marval Capital was up 25% in 2020. He owned iRobot at an average cost of $46 and sold during the whole AMC/GME Reddit bubble at $167. If Ben sold his iRobot position, hopefully Prem was able to monetize the Blackberry position in some manner when it was crazy too. This is one FFH quarterly report and conference I am looking forward to in a while...should be very interesting! Cheers!

Chen has a fiduciary duty to do what is right for his shareholders. Doing a giant stock offering is not in those interest, agreed, but i think there is happy medium where he can re-fuel his capital allocation tank and that would serve his shareholder and himself just fine. And that would greatly benefit Blackberry, its sets of optionality, and by extension its long term holder. At current valuation of $7 billion, he can raise $1 billion or less at current price. That would ~60 or so million shares. I think BB outstanding shares is 562 million. So 622 million post offering. 10% dilution for additional optionality is worth it. Money needs to be raised when you don't need it (And i think BB needs it) and when cost of equity is lower, ... not when you really need it and desperate for it. If the latter, than Prem Watsa is going to get more good deal with more convertibles. That would make me, a FFH shareholder and no longer a BB shareholder, happy, but at the same time there is limits to that, given that Prem is also a long term owner of the common shares as well. And if he really believes in that, his intention shouldn't be extracting more cash flow in interest payment to the detriment of Blackberry. There is a point i think, the long term ownership comes into conflict with short term ownership. And I think we saw that when the convertibles were re-priced/re-structured in 2020. Long point made short, and quoting Buffet (perhaps butchering a great quote}: "[bB] should be so well capitalized that it shouldn't even rely on generosity of friends [FFH], let alone strangers [sharks] in times of need" PS: I think the current support on BB shares are encouraging in the market, assuming it is not a short covering. +1! Whether they raise capital at BB or Fairfax monetizes the asset in some way...certainly a better position for Fairfax than 3-4 months ago, let alone back in March of 2020. Cheers!

Even if Fairfax doesn't do something directly, BB can do a raise of $1B or something and secure their balance sheet. That would also help Fairfax indirectly. Cheers!

If the bio-terrorist attack would have the same ultra low death rate? I sure hope they'd be debated. It is a war alright. An (mis-) information war on the populace and "the good guys" are not winning. Hardly surprising but still very disappointing. We can debate the merits of being too cautious or opening up the world to normal business and letting the chips fall where they may. That's easy to say if your health isn't compromised or you're over age 75. We can also compare other parts of the world that simply let the virus spread and create herd immunity early, but you can easily show how isolated regions like New Zealand, the Caribbean, PEI, etc were able minimize infection thanks to their isolated locations. The irony is that those complaining about closed businesses now, weren't complaining about closed borders a year ago...so which is it? There is no true right or wrong answer. It's easy for us all to be Monday morning quarterbacks, and I don't blame either administration for tackling a problem that they've never faced, were unprepared for and hit the entire globe. And who exactly are the "good guys"? My family has lost three people to Covid-19 that normally would not have died if it was simply influenza. I have four friends who have lost family members. It's ultra low only for the majority of people, but extremely deadly for a minority. Cheers!

Who else in the Fairfax sphere owns BB shares? Some management, directors...Francis has some BB in the Chou Funds...maybe Vito Maida at Patient Capital...University of Waterloo's endowment...Huron University's endowment...OMERS? The volumes seem to allow Fairfax's position to be covered...we'll have to wait till the conference call next week to see if they were able to take advantage of this juicy gift! Cheers!

That's not difficult to understand. If you had 1M people carrying the virus 5 months ago, and you have 3M people carrying the virus now, you are going to have a proportionately higher number of deaths. It has nothing to do with masks, vaccines, business or anything else. If they didn't take steps previously, you would have 5M or more infected now and even a higher number of deaths. So let's stop hashing discussions around health officials taking "precautions" during a pandemic. It's a war...these measures would not even be debated if we had this many deaths by a bio-terrorism attack from another country or group. Everybody would be on the same side! Cheers!

They disclosed the Ensign TRS purchase 5 days after the initial transaction, likely because they were a 10% holder of Ensign and obliged to do so. I see no reason why the same disclosure rules wouldn't apply to direct or indirect actions with respect to BB. I think we'll either see a disclosure in the next day or two, or we'll be hearing on Feb 11 about the long-term economic value of those BB shares. Along with Wade puking in the background. I really respect Prem and know he's orders of magnitude more financially astute than me, so my fingers are crossed for a surprise extra-dimensional chess move. But if there's no pending disclosure then Occam's razor points to a dementional lack of action. Wade is one of the core six now with Paul Rivett gone, Sam Mitchell and Francis leaving years ago. The long-term health of the portfolio is in Wade and Lawrence's hands now. If Wade had any opinion on selling Blackberry or buying puts, etc, to capitalize on it...it would be given significant weight in the room. Also Wade is no light weight...he and Tim were Peter Cundill's main guys, and he essentially led the team when Mackenzie bought out Cundill...now he works with Prem and Brian, and they are expecting him to lead. Cheers!

From the volumes of various BB puts that traded in the last two weeks, I could see them covering 40-50M of the shares. 100M might be tough. I still think they found some way to lock in a significant amount of the gains. Someone would have underwritten the risk that the price could continue to get squeezed while FFH locked it in at say $18-20. The underwriter would benefit from the increase above $18-20 and probably offset their short position. Fairfax has enough connections whether here or abroad to find someone to take that bet. Again, I would be hugely disappointed if they didn't capitalize on this somehow...they must have made or locked in something! Cheers!

Robert Kiyosaki seems to be pushing it pretty hard on Twitter! I liked Kiyosaki's first two books...Rich Dad, Poor Dad and Cash Flow Quadrant. They were a couple of the earliest investment books I read after Peter Lynch's Beating the Street...which was a terrible book to learn how to invest in the stock market. But over the years, Kiyosaki's gone stir crazy...he's pretty nuts now! Although I would still recommend his first two books to new, young investors. Cheers! A little of topic but how do you mean terrible book? 'One up on wall street' is one of my favorite books and was planning to read 'Beating the Street' one day. There was no intellectual framework in how to select stocks. It was full of discussions about how Lynch selected individual stocks, groups of stocks...alot of it based on "buy what you know". When I tried to invest using his methods, it was pure luck...half the time I made some money, half the time I lost money. It worked for him, but none of it could be duplicated! I finally woke up when I read Buffett's Letters, "The Intelligent Investor", and finally "Securities Analysis". That's when my batting average finally started to improve and the fundamental way I selected stocks was consistent, methodical and would work for the rest of my life. I got far much more value out of just reading 10-Q's and 10-K's in my first six months, than I did from Lynch's book. Kiyosaki's books were good in just changing my mindset in how to invest, why buy businesses, and to create passive income. But Ben Graham's books and Buffett's Letters changed my life forever! I will be eternally grateful to them! Cheers! I agree very much on the Buffett and Graham aspect and learned a whole lot more from them than from Peter Lynch, but I read 'One up on Wall Street' after I already got the "value" part of investing. I think it is a very insightful book after understanding the value aspects of businesses. I also think Peter assumed the reader already knew how to value a business in some way and that the book should be a follow-up. He himself uses the value part also, only growth and 'buy what you know' was maybe his number one. Still one of my favorite books. The other issue is who the hell can invest like Lynch did. At the peak of the Magellan Fund, he had like 3,000 investment positions...that's probably double the size of my circle of competence, let alone the universe of stocks I could invest in. He also would never recommend holding a portfolio with less than 50-100 stocks. I'm lucky if my portfolio has 10 stocks...and in actuality, if I've got 10 stocks, then I'm not that sure on a couple of them. I've been most certain about my portfolio when I hold only 4-7 positions. I just didn't gain any real knowledge or ability from his book. It was a good read, but that's all I got out of it. Not to take away from the brilliance of the man and investor...but it just didn't do anything for me. Cheers!

I think they bought put options. That way they don't sell the position, aren't tripping any clauses in their standstill agreement, and would benefit from any correction in the BB stock price. No way they didn't capitalize on it somehow. Even I would be greatly disappointed if nothing was gained! Cheers!