Parsad

I was listening to the 3rd Q conference call, and Prem made an interesting statement regarding monetizing assets within Fairfax, including taking public certain private businesses within Fairfax in 2021. What businesses do you think he was referring to and what type of valuation do you expect? The closest three guesses...both company and valuation...will each win a gift basket prize next year. The winners will be selected based on net value they expect from the transaction and getting correct which private business...myself and two other moderators will pick the winners. Selection(s) need to be posted before December 31st, 2020, and the winners will be announced at the end of Q2 2021. Cheers!

Large scale renewals will happen in Q4 and into Q1, so you should see a significant bump in premiums relative to the three previous quarters. Cheers!

I have noticed this for years. Doesn't happen every time but more often than not, especially if there is good news. Who needs a crystal ball? Probably buybacks kicking in after the blackout period. Although, I hope it's just a rational market moving capital to undervalued entities. Cheers!

Strata insurance jumped 100% to 700% in British Columbia...auto insurance increased last year by 25%, but will see a slight decrease this year (BC auto insurance is for the most part a public entity). Cheers!

Fairfax from this base forward will probably do better than Berkshire long-term. Just based on the discount it is trading at, and the size advantage it holds in terms of the universe of investments it can look at. I think WFC will do nearly as well over the next 4-5 years as FFH. Cheers!

What the heck are you talking about? They just went through the pandemic, plus a fairly high catastrophe loss season, and the insurance operations still hit a 98.5% CR. They have tons of cash to deploy, debt/equity is very manageable and they can issue a few hundred million in new long-term debt at cheap rates to repay the revolver if they need to. The shares they are buying back are accretive when bought under book value, and if they achieve a 3% return on their portfolio plus a return to book, you are looking at a 150%-175% return over the next 4-5 years. Cheers!

No. I would 100% be shocked if the dividend was cut or not paid this year. I think insurance results will be good. Cheers!

That list isn't truly accurate. Vancouver is one of the most desirable, livable cities in the world...constantly ranked in the top 5, let alone top 10...and it sits 69th. Banglore is much cleaner than Delhi, more modern and is the high-tech hub of India. Cheers!

Domestic flights are returning somewhat to normal. So they hit 70M users a couple of years later than expected. You lose 2 years of profitability, but that airport is state of the art, with fantastic retail space, and Fairfax has the rights to develop the land around it. I've seen the airport and toured it first hand...it will prove to be one of the best investments Fairfax made long-term. And Banglore as an IT hub isn't going anywhere...it's also become one of the more desirable cities to live and work in...not dissimilar to San Jose. Cheers!

Article on value stocks: https://www.marketwatch.com/story/value-stocks-worst-for-100-years-11603116927?siteid=yhoof2 Cheers!

I said it would be gone in the new incarnation of the site...which is taking alot longer than I expected. I think it's only fair now to continue running the Politics section until a week after the election is over. I expect the site to be ready for December 1st, so that would be about right to let people finish venting. You won't see it again once the new site is active, and all politics chatter will be removed. Cheers!

Hahaha he has my vote. Great story SD! +1! Cheers!

Succession planning is something Fairfax gave much more thought to than Berkshire did at their relative ages. Fairfax has always been a company run by committee...Berkshire until very recently, was always Buffett & Munger...and then really just Buffett. Ben & Christine aren't being groomed as Prem's replacement, just like Howard Buffett isn't Warren's replacement. They are there to maintain the culture their father instilled in the business, like Howard is there at Berkshire to do the same. And everyone is talking about Fairfax 10-15 years from now. How about Fairfax as an investment until it simply reaches fair value...I'm talking 2-3 years? If Fairfax just recovered to book, plus 5% growth a year, that would be about $700 CDN in 3 years or around 23% a year. That's as far as I'm looking like any of my portfolio holdings. Cheers!

It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share. It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose. If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years. Cheers! The question then becomes is Prem expecting a 15% return a good predictor of future 15% returns. ...and one to ask: ''is 15% a realistic expectation?''. I am approaching a decade of holding FFH and I am seriously wondering if this is a realistic target as recent shareholders (10 years or less) are yet to benefit from such appreciation. It sure attracts new ( and naive) investors. I am tired of hearing the 30 years track record and while I focus on the last 10 years, I can only come to the realization that shareholders fell short of expectations. yeah , yeah ... I am still around and will for quite some time, but I needed to vent and share ;) Even during the depths of the hedge fund crisis, when Fairfax stock fell to $53 USD, I don't remember Prem buying shares in such a significant amount. Frankly, I'm shocked that he put $150M of outside capital into Fairfax...that would be a decades worth of dividends for him. And if he didn't borrow the money, I would imagine that's probably half his net worth outside of what is held in Sixty-Two Corporation. Then again, I've got half my net worth outside of Corner Market Capital in Fairfax and Atlas Corp right now, so maybe I shouldn't be surprised...and I'm very comfortable with both and think both have 50-100% upside over the next 2-3 years! Cheers!

Yes, we owned quite a bit of JEF in the fund before Covid...we sold about half when BAC fell to $18 and bought that. We still own the rest of our JEF...it was bought around $18 as well a couple of years ago. Like FFH, I think JEF is in great shape now, and has turned the corner. Both should be trading at book value or better. Cheers!

I decided to sell most of my position. I still have Fairfax India and willing to give that more time. Seems like they have a little more preference for quality assets in that portfolio, and I like India's 5-15 year growth potential. The irony is that Fairfax owns a good chunk of Fairfax India, and more importantly, generates really nice management fees and performance bonuses from Fairfax India. If Fairfax India does exceedingly well, Fairfax will benefit handsomely. If Fairfax India does average, Fairfax will still benefit from the fees. I would rather own the asset manager! Cheers!

It's one of the lowest valuations of the business in a non-distressed period. It was lower after 9/11, Hurricane Hugo/Andrew, but it was a distressed business...insurance business was extremely stressed and cash was low. The reverse happened during the financial crisis, because Fairfax had a ton of cash and credit default swaps. This is one of the only periods in the last 20 years since I've been watching and been a shareholder, where Fairfax is not distressed, insurance operations are humming, cash is ample, debt is very manageable, and portfolio positioning is still mostly defensive...yet it is trading at 0.6 times book. And I think that has alot to do with the complexity of the investment portfolio outside of the fixed income portion that is very long-term, distressed value. Completely out of favour! Cheers!

Buffett's investment universe is 1/15th the size of Prem's. If Buffett's universe comprises 200 public and private companies worldwide, Prem's universe has 3,000 companies to look at. Combine that with the competition from large pension funds, private equity, hedge funds and ETF's, who do you think can continue to grow at 15% a year or better for longer? Cheers!

You have time. About 2 weeks away from Beta testing. I would say October 1st is more realistic. Cheers!

What the f**k! You're a frickin' engineer and you've made investments in cryptocurrencies! Pot calling the kettle black. Cheers!

John, stop being a twat! ;D Cheers!

Writser, that's kind of an asshole comment! The Martingale strategy works for small amounts and durations. If EV is 50/50, and you have very high table limits and a large bankroll, a gambler on a run could easily take down a casino. That's all I'm saying. I didn't say that the Martingale strategy is foolproof, but that a conservative, patient gambler, can make money from it without wiping out their bankroll...in particular on a European table. I also said that even with 50/50 odds, why would anyone take the risk when they can invest in stocks and have a 55/45 advantage or better. Cheers!

Parsad, I have a ton of respect for you. Both Casinos and Gamblers are subject to variance and gambler's ruin, no doubt there. From a purely mathematical point of view, the strategy in the you outlined still has a negative EV since Roulette is designed with a house advantage. Each spin is memoryless, so even if the preceding 100 spins were red, the probability of the next spin being red/black is still 48.60% and green 2.70%, which is the error in your statement. Any winnings you have are due to variance (and I suspect, as we are human, due to a biased memory). I'm not doubting you made money, but as your number of bets increases, your winning % approaches the true probability, and you will lose money. In real life however, there may be some tricks? In Thorpe's autobiography, he tried to create a machine to calculate final ball position based on starting position and velocity. There may be table defects as well. If you find such a table, I suggest you abandon the double down strategy, choose a consistent bet size to minimize risk of gamblers ruin, and ride out the winnings :) Edit: I'll throw in a little more. Changing bet size works only if the odds are shifting. When counting cards, you have someone bet a low amount until the count in the deck is high (signalling a higher player edge), then you signal someone to come over to bet with a much higher amount. In roulette, the odds do not change, so there is no advantage to any type of double down strategy. Each spin is memory less and your odds are 48.60% on the next spin, but the odds of red or black coming up consecutively is 0.4860 x 0.4860 x 0.4860....! Cheers!

I can assure you with 50/50 odds, mathematically your EV is 0. Blackjack without counting and perfect play is like 49.5 / 50.5, so you still have a negative EV, no matter how you "double down" or choose to take your profit. Actually with 50/50 odds, the casino would go broke on roulette. I've turned $50 into a couple thousand dollars numerous times in just a few hours without losing my bankroll in roulette...but you have to have high table limits and low minimum bets, and ideally either 0 or 00, but not both. European roulette only has 0, while American roulette has both. If you can find European roulette tables...play them instead of American. Why only a couple thousand dollars? Because the table limit at the casinos I've played is $500 or $1000. You start at $5 and double down on either red or black after a run of at least 5 reds or 5 blacks...so you have to be patient. Every time you win, you start at $5 again. Every time you lose, you make sure you double down on the subsequent bet. You'll only be able to double-down 5 or 6 times before hitting the table limit, so you only bet once you see 5 reds or 5 blacks in a row. Yes, yes, your probability of winning on any single spin is 50/50, but the probability of 7,8,9 in a row of the same color becomes less and less likely. This takes time, because 5 blacks or 5 reds in a row only come up every 20-30 minutes or so. I used to do this in my 20's and often it would take 5-10 hours of patiently playing. But I never lost my bankroll, and I did it at least 25-30 times, usually turning a $50 bankroll into $900-$1500. Often you would win small amounts until your bankroll increased in size, eventually allowing you to take slightly larger initial bets of $25-50. But the number of times you double-down would decrease whenever you were wrong. On the rare occasion 0 would show up and you start over at smaller bets...on rare occasions, you would have lost all that you gained that day and walk away with your $50 bankroll. I've never played roulette in Vegas, but I hear the limits are around $10-15K per bet. When I started investing after learning about Buffett and value investing, I promised myself that I would never gamble again, and I haven't. I understand that there are online roulette games with very high limits. I haven't tried them, nor have the urge to try them. You have less than 50/50 odds playing roulette...American or European. Going back to Mohnish's example, if you are right about your stocks even just 55-60% of the time, and you can choose your punches, why do anything else! Cheers!

Pabrai is effectively saying that he is 80% directionally right on each investment. Now the comparison does not hold fully when you consider varying time horizons. But that would be the gist. I still don't get it. How is he able to calculate with any degree of precision that a stock has a 4 out of 5 chance of going up? What would such a calculation even look like? He's not calculating the probability of the stock going up or developing some calculation for that. What he's saying is that 4 out of 5 times, after he analyzes a business and invests in it, the stock will eventually move closer to intrinsic value 80% of the time. And he will be wrong roughly 20% of the time. Cheers! If you are suggesting that he is extrapolating from his past experience as an investor to come to that 80% figure*, then he is just making a basic logical fallacy. Surely that isn't what he means? * "80% of my equity investments in the past have been successful, therefore 80% of my equity investments in the future will be too." If Buffett has historically over 60 years picked 95% correctly, you don't think he's going to be close to that percentage in the next 10 years? It's not a guarantee of any sorts, but unless he is suffering from some sort of mental handicap or completely changes his methodology, you don't think he would be close to that percentage going foward? That's not a logical fallacy...that's reality! He's not rolling dice...he's developed an advantage through his methodology. Cheers!