Parsad

I think everyone here knows I'm a fiscal conservative, but a liberal socialist when it comes to individual rights. But I have to ask my liberal friends, are we going too far in some issues. Now they are banning "Gone With the Wind". What's next, "Forrest Gump?" I knew GWTW was racist when I first saw it as a kid, same with Breakfast at Tiffany's, but are we going to outlaw all movies and books with racist connotations? We would then have to ban books like "To Kill a Mockingbird", which would serve the opposite purpose of the book's moral outrage at racism. Banning confederate flags at Nascar...yes, I think that is very reasonable. But when you start skewing history and censoring information written in a historical context or period, you are actually moving closer to the direction of Nazi's than away. And you are talking to a Indo-Canadian kid born in Canada, whose family is made up of Hindus, Punjabis, Blacks, Chinese, Vietnamese, Italian and English backgrounds! Cheers!

Greg, I don't need a thesaurus to know you are a racist. But just so are fully aware of how racist this word is: "'This word is our N-word': Indigenous teacher asks Urban Planet to drop racial slur" https://www.cbc.ca/news/canada/new-brunswick/offensive-term-remove-urban-planet-1.5305540 Greg, I don't need a thesaurus to know you are a racist. But just so are fully aware of how racist this word is: "'This word is our N-word': Indigenous teacher asks Urban Planet to drop racial slur" https://www.cbc.ca/news/canada/new-brunswick/offensive-term-remove-urban-planet-1.5305540 Wow - now Greg is a racist. This after he is an anti-Semite. Nicely done KC. Unfortunately Greg - you are feeling the Bitter Hostility of the LEFT. When they tire of debate - they resort to call their opponents racist, homophobe, or religious bigot to shut you up and discredit you. Don't let it bother you. It's the standard tactic of the LEFT. Guys be careful that you aren't attacking people! 10 day bans apply to everyone...not just the right-wing guys! Cheers!

I would assume that Prem has about $200-250M outside of his Fairfax stock at a minimum before the stock purchase. He's stated numerous times that 90% of his net worth is in Fairfax...which would be about $1.5B or so before the stock market correction. So in relation to his net worth, it is probably the most substantial purchase of Fairfax stock that I have seen him make...and I'm going back 20 years! It was at 0.6 times book for God's sake. We had not seen that since 2003-2007. Cheers!

Are you kidding me?! The CEO of the company puts $150M of his outside money into Fairfax and you think it's an act of desperation. A bunch of us said that it was dirt cheap back around late March, early April, and we backed the truck up. Now the CEO is telling you the same thing and you still can't wrap your head around it. I would stop worrying about Fairfax's price and go back and read Securities Analysis by Ben Graham. This is a valuation and analytical issue, not a psychological one! Cheers!

Sokol owned Lubrizol before he took it to Buffett. He didn't lie to Buffett, nor did he hide the fact that he owned shares. The BRK Audit Committee says they interviewed him three times, yet there is no record that they did. The SEC investigated the whole matter, with both Berkshire's and Sokol's willing participation, and they did not pursue anything. The only discrepancy in the whole debacle is that Sokol said it was his idea, while the idea was originally brought to him by some Citi bankers. If that was a factor, then why bring it to Sokol? Why didn't Citi take it to Buffett...because they knew that there was a better chance of the idea being pursued if Sokol took it to Buffett. This can't even be construed as insider trading, because he didn't act on non=public information that Berkshire was going to acquire Lubrizol. There was no guarantee Buffett would have found the idea compelling, so his ownership of shares in Lubrizol is a non-starter. Cheers!

No, they were legitimate tools used by reinsurance companies at the time and still are. Basically it allows a reinsurer to know its maximum loss while ceding the risk to another reinsurer. The problem wasn't finite reinsurance, but that no one had a clear understanding of how much risk various reinsurers were exposed to cumulatively. When 9/11 hit, and then Hurricane's Andrew & Hugo, the reinsurance had a massive cumulative loss, and the dominoes started falling. If you did not manage your finite reinsurance risk as the insurer, you may be exposed to massive losses. In terms of the SEC investigation, they came to the conclusion that there was nothing wrong with Fairfax's use of finite reinsurance. But there were a number of managers and journalists who did not understand this and were short Fairfax or pushing a short agenda...one was an analyst for a firm in Australia at the time and now writes a blog...another was an analyst for Morgan Keegan, who was front-running his analyst reports to the short hedge funds...there was this journalist who was constantly sweaty whenever I asked him about his research on Fairfax...a journalist who used to write for the Globe & Mail and went on to bankrupt a magazine he ran while being funded by anonymous Baystreet characters...another was a well-known short fund manager who associated regularly with high end prostitutes...another was a squirmy little hedge fund manager who loved showing off his 23 Bloomberg screens...and finally two well-known fund managers essentially got away with no consequences (although one was restricted to managing his own money for years) until the SEC's sentencing period ended and he is now allowed to manage outside capital. If you can see that there still may be a bit of tension on this issue from me, you had to be there! It's a long story...one that many of us lived through, investigated ourselves and benefited from financially as Fairfax rebounded! I would happily love to beat the shit out of all of the fellows mentioned above, but I don't think I'll ever get that chance. Cheers!

With the debt, float and asset/equity leverage Fairfax uses...$30 USD average earnings is very low...I think normalized earnings based on today's book value and leverage, would be somewhere around $45-65 USD. Cheers!

I'm constantly confused by this comment about how Fairfax's "private" investments have not done well. Before, the criticisms used to be how their insurance businesses were awful...but since they are all writing below a 100% CR, now everybody says how awful their private investments are. Are they great...no...but if you look at the entirety of Fairfax's private investments (including insurance and non-insurance businesses), they have done perfectly fine over time based on the target they are trying to hit on annualized investment return. Cheers! Lumping insurance and non-insurance together merely obscures what Fairfax is good at, and what they're not. Their record on the insurance side is outstanding. They have done wonderfully in Lombard, First Capital, Gulf, probably Digit, and others. This is why I disagree with SJ on the "shithole countries" investments. Brazil in particular may grow to be another home run. In fact if I have any criticism it's that they don't do more - for example I would think Digit's model could be exported to Africa, Latin America, and the rest of Asia, and Fairfax has the footprint to do this. However, their record on the non-insurance side appears to be dire. There is basically no reporting, so it is hard to tell. But in aggregate the private businesses that are consolidated appear to be lossmaking (IIRC they report ebitda and interest costs and they sum to a negative). Past realisations have shown a couple of wins (Arbor, Ridley), but I don't recall anything that really moved the needle. The only big one (APR) was done at carrying value, which I think had been written down a little. I have (faint) hopes for Quantum, Boat Rocker, Praktiker, and maybe a couple of other little things, but I don't see any evidence of progress overall and there may be some real duds. As far as I can tell Fairfax have conspicuously failed to build a third (insurance, float, private) source of cash flows at a reasonable cost, as Markel and Berkshire have done. I would be delighted by evidence to the contrary, but without it I interpret the monetisation plan as an admission of failure. While I like the admission, the failure needs to be acknowledged. Their investment results since inception...from the 2019 Letter: Compound Growth in Average Average Total Book Combined Return on Value per Share Ratio Investments 1986-1990 57.7% 106.7% 10.4% 1991-1995 21.2% 104.2% 9.7% 1996-2000 30.7% 114.4% 8.8% 2001-2005 (0.7)% 105.4% 8.6% 2006-2010 24.0% 99.9% 11.0% 2011-2016 2.1% 96.0% 2.3% 2017-2019 12.0% 99.8% 5.6% Ok, fine...I'll compare both insurance and investments. As you can see, in the earlier years, Fairfax was getting great investment returns but insurance was not profitable. Insurance increased book value and float, but the quality of the insurance businesses needed improvement. Later, as investments didn't do as well, Fairfax had improved their insurance businesses dramatically. So overall, Fairfax's investments have actually done very well...lackluster in the last decade, but really quite good overall. Whereas their insurance business has improved massively and is writing consistent business during that last decade plus. If they keep insurance underwriting where it is and modestly improve their investment results compared to the last decade, they are going to have tremendous growth in book value per share. Cheers!

I'm constantly confused by this comment about how Fairfax's "private" investments have not done well. Before, the criticisms used to be how their insurance businesses were awful...but since they are all writing below a 100% CR, now everybody says how awful their private investments are. Are they great...no...but if you look at the entirety of Fairfax's private investments (including insurance and non-insurance businesses), they have done perfectly fine over time based on the target they are trying to hit on annualized investment return. Cheers!

Agree with Daphne! You guys need to think about the long-game when it comes to Fairfax...not the short-term. I have no idea exactly what the reasons were behind Paul making this deal and Fairfax supporting it, but I can think of something that would be in the interest of Fairfax shareholders long-term. And Prem would not do a deal if it hurts Fairfax shareholders in the slightest...he just doesn't operate that way, and he has no vested interest to do so. Do you really think Paul would pull the wool over Prem's eyes? Paul would never put himself ahead of Prem either! Here's my view: Paul wanted to slow things down. He semi-retires from Fairfax, but still sits on Recipe's board. He then acquires Torstar with Jordan Bitove, through their wholly-owned LP. Torstar has not worked out for Fairfax. Now Paul and Jordan have to turn it around or play with the underlying assets and gain some value. While presently Nordstar is wholly-owned by the Bitove and Rivett families, does anyone in their right mind here believe that they will never raise outside capital for Nordstar once Paul decides...ok, I've played enough golf and I'm done with family time after 3 months of quarantine...I need to exercise my brain again! Prem is getting older...the Hamblin Watsa old guard is getting older...Buffett made this mistake with the double-T's...good, but not Buffett and not Lou Simpson. Who is going to carry the investment load...most likely Wade Burton and Lawrence Chin. But you could allocate capital to other's you trust over time...Nordstar...Francis via Chou Funds or Stonetrust...Atlas Corp...Vito Maida and Patient Capital...etc. For now, Prem gets rid of Torstar, as they weren't going to spend their time turning it around, plus tax losses to offset gains. Paul turns it around with Jordan, and they have their vehicle. Prem can always consider injecting capital into Nordstar or a turned around Torstar later. You really think Paul or Jordan would reject capital from Prem at some point? Cheers!

Interesting...very interesting! Congratulations to Paul. Cheers!

Sure...he's reminiscent of many flamboyant entrepreneurs...Richard Branson comes to mind as well. I do know that Jonathan Favreau's original "Iron Man" version of Tony Stark, played by Robert Downey Jr, was based on his friendship with Elon Musk. Cheers!

...global insurance industry well-capitalized for Covid-19 losses. https://finance.yahoo.com/news/global-insurance-market-well-capitalized-132205981.html As I mentioned previously, I don't think the large discounts to book that some insurers are marked at will last. Buy'em while you can! Cheers!

Good luck! You know you can also just carve out one-hour a week to read and post. Treat it like any other book, article, show, etc. I know it can become compulsive at times, but that's why getting away from it for a while might be a good idea, and then when you come back, allocate just an hour or two a week at most. Cheers!

Feeling better that I am not alone watching my FFH holding melting ;) You aren't alone. FRFHF is my largest holding, followed by WFC. I’ve still managed to break even over the past year due to large positions in mining stocks such as NG (purchased in early 2019 and sold recently for 150% gain) and SGGDX (purchased throughout 2019 and up 70%). Now, I’m trying to figure out where to go from here. I’m tempted to keep averaging into my losing positions but am afraid that I’ll box myself into becoming too concentrated. The bearish arguments provided by Viking, Bearprowler, and others are very compelling, and would probably be enough to convince me to sell if I didn't think that the things they point out (terrible investment results, low interest rates, etc) are already factored into the price. Those would have been great reasons to have already exited (as Viking and Bearprowler did I believe, at much higher prices), but they may or may not be good reasons to sell going forward. I've followed Fairfax for about 15 years and have never seen sentiment as negative as it is now. While it could get worse, I wouldn't want to bet on it getting worse, not at these prices. If you ask me - and I am a newbie - I give lots of weight to Parsad's comments. Maybe it is some confirmation bias, but it is appealing to me, credible, and make sense when you have a long time horizon. I do trust they have a great safety net with their valuable assets as Parsad commented. That alone should calm us down a bit and allow us to see the big picture. This company isn't going bankrupt tomorrow. A comment that was also made today is to trust a guy that has built a multi billions dollars company; I also buy that one. Yes, our bearish friends also have valid comments, but I am convinced Prem and his team are working hard to weather the storm and head in the right direction on solid ground going forward. They aren't going to stand still here. I value different opinions and the beauty of it is that is generates a debate of ideas like this one. You then have the information you need to make your own decision. Mine is to hold and maybe add a little as it gets closer to 300 although I hope not ! Parsad said it all when he said it will eventually revert back close to BV. I can afford to wait. I am happy with 2 years ( or a little more!). Always make your own analytical decisions about investing. Doesn't matter what I say, what Prem says or even Buffett! Doesn't matter what we do either. The easiest way to go broke as a value investor is to simply follow what others are doing instead of doing your own research. And if you can't stand behind your own research, buy ETF's and dollar cost average in over time. What I can provide you is perspective, my rational assumptions and how I came to my conclusions. Yes, I've seen this rodeo before...including with Fairfax. Amazing what 22 years of investing teaches you, especially over this last generation where we've incredibly seen compressed cycles of 50% drops in the market 3 times...1999/2000, 2008/2009 and 2020/2021. You generally get one of those cycles every other generation...we've seen three in one generation. Is that due to the internet? Computer trading? ETF's? Massive amounts of competition by hedge funds, private equity, pensions, etc? Recklessness in financial instruments, by the Fed, IMF? Distortions in monetary policy? Maybe a combination of all them! All I know is that I've been given 3 massive swings at the bat in one generation...300% gains over several years. This is probably the last one before I retire, and I'm going big! I expect the stuff I'm buying today to be up 300% or better from my current cost over the next 5-7 years. While I mourn for the personal losses...we've had 4 people we know die from Covid-19 now...the other part of me like Buffett has always said, welcomes this moment of uncertainty and crisis. These are the times that the true value investor benefits from the normal transfer of wealth, because everyone is afraid...including the institutions, hedge funds, private equity guys and general market. Have we seen the bottom...probably not...I would imagine it will hit in the 2nd or 3rd quarter. And then the locked up, pent-up consumer frenzy in subsequent quarters will end the recession and breath new life into a new bull market next year. We'll then face the consequences of all of this loose money flying around. At some point, I cannot imagine how we will avoid some sort of inflation...as good as governments have become at quantitative easing and tightening. Government debt will undoubtedly be of concern at some point...not necessarily the U.S., but probably Europe or South America. Until then, enjoy these prices because this bear market won't last forever...even though they seem like they've been coming fast and furiously! Cheers!

Pedro, you hit the nail on the head. Today, no one wants Fairfax or its businesses at 0.6 times book...yet a couple of years ago, Mitsui paid 4x book for First Capital. Like I said, I don't care if Fairfax goes down another $100, just as long as they sell off their assets at 1.5 times book or better in the future. Partner Re just sold for $9B US...I would imagine Odyssey Re would get at least 4.5B-5B US...that's over 75% of Fairfax's entire market cap right now alone. Back in 2003, Fairfax couldn't sell it's insurance businesses because no one would buy them then when they were running at 105% per year. If Fairfax needs money, they have tangible, quality insurance assets, alongside their non-insurance assets they can sell. Heck they, can just dividend up surplus capital if they need it. They could not do these things in the past. Cheers!

I suspect we will have one more down swing here through the 2nd quarter...from the posts above, we are getting closer to capitulation, as the bears are all growling and even some of the bulls are getting frustrated. You've hit bottom when people just give up...probably around high 290's. - People are complaining about Fairfax India and Fairfax Africa...one has been about 5-6 years and one has been about 2-3 years. Do you know how long it took Fairfax Asia to become the fantastic deal it was when we sold...13 years! - I hear complaints about Eurobank...but we saw the same thing with Bank of Ireland which was a winner. - Whining about insurance...we're writing at 96% across the board for several years...do you guys remember when we could barely break 105% for 8 years! - We have a ton of bonds and cash, while debt to equity is below 35%...about $1.5B in the holding company...do you remember when we borrowed $300M from Cundill, Southeastern and Markel?! - While Seaspan is breakeven right now, can anyone deny that this going to be a winner 10-15 years from now? - Yes, we are having challenges with BB, but this is a business that for all intents and purposes should have been bankrupt already...if the board had listened to Prem and hired John Chen in the beginning, BB would be sitting on another $1B in cash and wouldn't have wasted 18 months since Fairfax originally bought the stock. Yeah, they should have avoided it, but shit happens...at least they dealing with it! - You have a young portfolio team but with alot of experience, and you still have the old dogs like Brian and Prem paving the way...I think non-bond investments will do better this decade than last! - It's trading at 60 cents on the tangible dollar...yet people are scared it might go down to 50 cents on the tangible dollar before it eventually goes back to par...that's the psychology right now from you guys! As a distressed value investor, I'm almost always early in and early out...that's just the nature of the beast. So I don't care if Fairfax falls another $100 in the next 6 months...as long as it's back at par 2 years from now! Cheers!

Hi Xerxes, my comparison was how Fairfax is different than the Ford and Eatons...not similar. The Ford and Eatons slowly lost control and ownership. Cheers!

The only one of most concern is Prem...he has 90% of his net worth tied to Fairfax. But pretty much all senior management holds significant amounts or did own significant amounts (they may be selling in retirement or for estate planning). Francis Chou has held all of his Fairfax shares since he got them for $3 and has never sold a share. The Watsa family has no intention of selling their stake either other than for charitable contributions/obligations a la Buffett. As long as the Watsa family controls the votes, the dividend policy won't change. It was controversial when it was implemented and it will remain controversial with some shareholders today, but Prem thought it was the most equitable way for him/family/charities to meet their financial obligations over time, without having to sell shares and give up control like most family-controlled companies...think Ford, think Eatons, etc. With many long-term Fairfax shareholders hitting retirement, including former employees, the dividend gives them additional retirement income without selling their shares...I suspect they will vote with Prem on this one, so those against it should just suck it up. Otherwise buy Markel or Berkshire! You can always take your total dividends and just buy Fairfax shares on the open market...probably at a better price than Fairfax could each year as they have certain requirements on buybacks. Cheers!

India story seems to be a mirage. Though we have heard many plausible explanations on why India is what China was 20 years ago, the ground reality seems to suggest a very different picture. In fact this is self-explanatory when one looks at the last 10 years, both in terms of the growth of the economy as well as the market returns. The S&P dollex 30 has given less than 20% total return in last 10 years and almost negative since the current government came to power 7 years ago. So much for the supposedly "world's fastest growing economy" !! This performance is with the fantastic global tailwind of low oil prices, low interest rates, flood of cheap money apart from the usual demographics, large market size etc that people talk about. There is no change in the modus operandi of buying political votes by distributing free money at the cost of investment in infrastructure, health, education or other economical development. India continues to run twin deficit, have high unemployment, has trade deficit, saddled with bad loans in the banks/NBFCs, poor infrastructure, heavily dependant on imported oil/gas etc and we don't even want to discuss the poor corporate governance, weak judicial system, bureaucracy and red-tapism etc. I can give concrete examples of industry after industry that are getting killed due to bad policies. Sorry to have side-tracked this post which was about Prem's letter and Fairfax. You may be right, you may be wrong, or it may end up somewhere in the middle. I'm guessing it will be one of those three! :o That being said, I cannot help but wonder what India will be like when true financial services become widely available to the populace, as it has been to most developed countries for the better part of the last century. They have the youngest population in the world, a rapidly growing middle class, and mobile penetration is in the 94-95% range...including villages! I see a company like Quess, IFIL or an airport like BIAL...I think, wow this young population is now getting access to the things generations in our country had. The simple fact that Modi has registered all citizens, opened some 300M bank accounts, and expanded insurance/financial services/capital markets in a dramatic fashion...yes, miles and miles to go, but they are taking that step forward that only Gandhi and Nehru could have dreamed of. Corruption will never disappear...it hasn't disappeared in the U.S., why would it disappear in India. But it can be curtailed...the graft culture and thought process can be changed over a generation if the young people want and demand it. It will be interesting to see how this experiment unfolds! Cheers!

I think this is absolutely right. But I would love to know how you came by the information about Ajit Jain? I spoke to Ajit and I spoke to Prem. Incidentally, I think Ajit would have made a superb replacement for Buffett...genuinely a nice guy, but can be tough like Buffett as well. Cheers!

Maybe RBC was the outfit that extended the $2B revolver to FFH? ::) SJ Interestingly, the author of this report was also pro-Fairfax back in 2006, but working out of a Washington DC firm: Mark Dwelle. Normal to have the same guy following/ promoting FFH over the years....? I have some investigator DNA. Maybe overthinking ;) January 2006 https://www.theglobeandmail.com/report-on-business/rob-magazine/short-shrift/article702684/ "The third quarter served as a real-world 'field test' of the financial strength of Fairfax, a test the company comfortably passed," says Mark Dwelle, an equity analyst with Ferris, Baker Watts, Inc., a Washington, D.C.-based investment bank that has long rated Fairfax a "buy." Fairfax was at $175 when Dwelle wrote that report...Fairfax hit over $700 pre-pandemic...300% gain from 2006, through 2008-2009, all the way to the end of 2019...not 15%, but 11.3% annualized over those 13 years from 2006 to 2019. S&P500 did around 7.7% annualized during that 13 years. And that is with alot of bungling by Fairfax...insurance wasn't running smoothly until 2012-2013...the purchase of BB...lack of investment in equities during the bull market...taking the hit on swaps...purchase of mediocre businesses/cigar butts, rather than the best in class businesses you all complain about. With those mistakes, Fairfax with it's bond portfolio, insurance business and the picks they did get right, combined with their float and leverage, managed to still do reasonably well. I hope Brian teaches Wade and Lawrence everything he knows, because I think the day we lose Brian, it will be nearly as painful as losing Prem. That being said, I think Wade and Lawrence will do better on the equity side long-term. Cheers!

Somebody pointed this post out to me, and I had not seen it. My responses in "red" after each point. Points I took away from FFH 2019 Annual Letter: 1. The letter lacks integrity. Starts with 2019 was a great year for FFH and continues mostly with unbridled optimism throughout. Reality is shareholder return for 5 & 10 years have been terrible - he doesn't openly admit it and doesn't admit frustration with it and lay out a plan to change it. If one cares for their shareholders, he would be more contrite about the returns he has delivered. I think Prem laid it out clearly as he always does. They did well on insurance which was a good year, but their investment process...the value investment process...has been out of favour or touch for several years. And they aren't the only ones...even Buffett (the master) has struggled. But is should also be noted that Wade Burton's selections did well, and he will probably be the one leading Hamblin-Watsa for the next 10-20 years. 2. Ends letter with : "Over our 34-year history, we have always operated at Fairfax with a small team which, with great integrity, team spirit and no egos, protects our company from unexpected downside risks and which takes advantage of opportunities when they arise". Well, after reading a decade plus of his annual letters, I've changed my mind - he's not showing integrity/honesty and his writing has consistently exhibited egotistical behaviour and FFH has not been able to take advantage of opportunities like others have. Does Prem have a healthy ego? You bet...and like Buffett it is tied directly to his company. Every great leader or CEO has an enormous stake tied to their business. Is Prem egotistical? I honestly cannot say that is even remotely true. He's genuinely one of the nicest people you will ever meet and one of the most supportive, encouraging figures I've ever met. Do you wonder why people like Francis Chou are extremely loyal to Prem? Why someone like Brian Bradstreet never left his side? Or why Ajit Jain has enormous respect for him. He's hands down one of the great business leaders in Canadian history. 3. Insurance business is doing very well, has improved significantly and is successfully generating no cost float and is the jewel of FFH Yes, agree. And we've seen that over the last several years since Andy Barnard began to oversee all insurance operations. 4. I’m glad that he has openly admitted that BB, Exco, and Resolute were mistakes – he is more open about this today than in the past You have to understand. Fairfax will never be Berkshire in terms of buying only those high quality businesses. Fairfax's core is deep value investing or distressed investing. Even guys like Wade Burton and Laurence Chin cut their cloth at Cundill...they will never fully leave Ben Graham's ideas of distressed investing. They will buy good businesses and investments, but they will also buy the cigar butts...that's their ideology and nature...you cannot simply discard it. 5. Believes, “India is the best country to invest in long term”. OK, but no explanation as to why. Not genuine. He's given significant reasoning around this belief. There are a ton of books out there that you can read on why this MAY be true. I've seen the companies we've invested in, and what is happening in India, and it is eerily similar to China 15-20 years ago. I think executing will be a bit more difficult than China, simply because the Communist government said we are going to do this and did it over 20 years. India will have similar success, but I suspect it will come with more challenges. 6. Believes Modi re-election will turn around Indian economy. Again, no explanation as to why especially given that was the thought at time of Modi’s first election and it didn’t come to fruition. Again not genuine in his writing. Again, plenty of comments by Prem in the past and present, and alot of books. I agree with you, this is arguable though, as Modi's tenure is not guaranteed over the next 15 years...only for the next 5 years. 7. Over 5 years intrinsic value has compounded by <5%/yr & share price <1%/yr. Over 10 yrs: IV - 3.2%/yr & share price at 5.2%/yr. Prem’s only comment on stock price is : “In last 4 years stock price has not gone up with intrinsic value, but it will happen again” - with no explanation. What about the fact that IV is only up 3.2%/year over 10 years? Too much focus on macroeconomics and not enough focus on simply investing and deleveraging instead. They spent the first half of the rebound on defense, and then got hit in the 2nd half once they went bullish. Shareholders have a right to be upset on the investment process here, but many value investors were guilty of this after 2008. I think things will be a bit different with more input from Wade. 8. On investments: “shows that Fairfax’s investment results have been consistently very good since inception, with the exception of the 2011 – 2016 time period, when we treaded water” - how can he say “consistently very good” as investment returns over 33 years have been 8%/yr and over past 10 years have been <5%/yr ? Isn’t the point of his investing prowess to do better than the index? How can he say “very good”? Yes, a fair gripe and I think overall they understand it. Most of the underperformance came from the defensive position and a couple of large distressed positions like BB, etc. I think everyone will agree that the bond side killed it during almost every 5 year period since inception...so you have to look at the portfolio in aggregate. Again, I think shareholders have a gripe here, but I don't think things could be as bad every again with the defensive stance after 2008 and then going bullish after Trump looked like he was going to win. I think we can all agree that they should just focus on investing and not focus on macroeconomics. 9. “So when the correction happens (and it may be happening as we speak), we expect value stocks to provide better protection on the downside”. A week after the report comes out, we are in a correction. From what I see, when there is a correction, everything goes down – BRK & FFH are down just as much as tech stocks. He's talking about his actual positions...not Fairfax stock itself. He has no control over that. Fairfax's equity was down 8% in the first quarter...Berkshire's was down almost 12%. 10. Committed to buying back shares over next 10 years Companies should only buy back shares if they are at a significant discount to intrinsic value. I don't think they should buy back their own shares except when they are below 0.85 of book. Being optimistic is one thing. Not being in touch with reality and getting people to invest in you/your business by shrilling dishonest optimism is getting to be on the Ponzi scheme side of things. As a long term shareholder, I am so disappointed in this man. Don't agree with this sentiment. I think Prem's comments have always been forthright with shareholders. Sometimes outcomes aren't in line with expectations or management gets it wrong. But Fairfax has always operated with integrity and the best interests of shareholders. @Sanjeev: You have been a big supporter and believer in Prem Watsa’s honesty and integrity. This website's name is in homage to FFH. Watsa has shown his belief in you and invested in you. I’d appreciate your thoughts to above comments. Would also love it if there was a way to get FFH to reply. I generally don't own any one stock for the long-term. I buy when it is trading below intrinsic value and sell when it is trading well above intrinsic value. I never fall in love with a stock or company, even though I might love the management, culture and long-term objectives...including Berkshire and Fairfax. Yes, my family has held Fairfax in certain accounts for the long-term, and I have held a little Fairfax in my taxable accounts for the long-term. But the majority of my stocks are held in non-taxable accounts where I will buy and sell them around their intrinsic value. I think long-term shareholders will do better than the S&P500 holding Fairfax...simply because of the leverage and float. But we are talking about a 20 year time line. Thus the reason why I buy and sell investments in my non-taxable portfolios. Presently, Fairfax is once again one of the largest positions in my non-taxable portfolios. Cheers!

Hi Racemize, I don't pay attention at all to whether or not insiders are buying or selling...or other managers for that matter. I bought BAC and AAPL before Buffett on both occasions and I've never owned BB even though Prem does. Remember when David Einhorn was buying up New Century Financial as a director and head of the audit committee! Ha, ha! 100-1 leverage and he was instilling confidence by buying stock as a director. I learned my lesson early over 18 years ago, when I bought a specific stock because Baupost was buying it. I got burned and I've never paid attention to what any manager buys...not Buffett, not Prem, not Mohnish, Francis, or even insiders. But if you are asking me whether I think the preferred are cheap...yes, they look cheap to me as well. Especially if you want to earn secure dividend income with some upside on the preferred price. Cheers!

Paul's departure had nothing to do with anything like that. He was 100% a team guy...worked his way from chief legal counsel to head of Hamblin-Watsa, VP of operations and then finally President. I don't know of anyone who worked harder and bought into the system and culture at Fairfax. He always thought it had the potential to be a mini-Berkshire and thought they were on that trajectory. I don't know exactly what the reasons were, but I would imagine it had something to do with family. If I emailed Paul at 1:30-2am (I'm a nightowl), I would get a response...remember I'm in Vancouver and he's in Toronto...so it would have been like 4:30-5am Toronto time. That type of dedication to a company, to staff, to colleagues, to shareholders...it can take a toll over time. While externally he still looks the handsome, dashing guy he's always been...mentally and physically it can be a grueling workload. I think he just needed to slow things down a bit for himself and his family after like almost 18 years of 24 hour a day dedication. Cheers!