Parsad

To the experienced members on the board: I've only been following FFH since 2005'ish and have been confident in its long term prospects. Was not aware of the valuations prior to 2003. Why did FFH decrease 90% from 1999 to 2003??? Did it have to do with the shorting of the stock by a US hedge fund?? Was a $600/share "fair" value in 1999 or was it massively overvalued from a metrics point of view?? Do current investors need to be worried about a >50% correction in FFH stock price? One of the reasons I got into FFH was the fact that it is a diversified holding that should provide safety, combined with the fact that insurance float is attractive if you have folks who know how to invest $s. No, $600 was massively overvalued in 1999...about 4 times book! 2003 was a completely different matter...fair value was closer to $300 or so, and you had this massive attack by hedge funds and their cronies after problems with TIG/C&F became fully apparent. The company then...even 10 years later in 2013...is very different than the company you have today. The insurance businesses are as good as any other company in the world over all. The company has significant non-insurance investments, and those will grow. The stock is well below fair value today. While they didn't reap the benefits of their stock market investments due to their hedges the last few years, they are now in a somewhat enviable position of having significant dry powder when asset prices all over the world are not accounting for risk. The funny thing about Fairfax is that while the company has always preached a culture of defense first, you can see by their stock chart that they have an incredibly volatile stock price over the last 20 years. Some of it created by others, but some of it their own making. I don't think you go wrong at all with either stock...Markel or Fairfax long-term. On a pure valuation basis, and where Fairfax is now, I think Fairfax is cheaper and will do better over the next few years. Long-term, they are fraternal brothers that will always meet somewhere down the road! Cheers!

Hi bizaro, that is correct! They put the physicians/nurse practitioners on a fixed rate per hour or shift, which is significantly less than what the physicians are billing per hour in patient visits. The fixed costs are the hourly/shift salaries and the expense of operating the call centre. The idea is to break even or generate a slight profit on that as you scale up, but other revenue generation sources (pharmacy, medical records, insurance company fees, etc) pad the net margin. Cheers!

- Patient visits are billed to their respective provincial medical system through a billing code and the patient's care card number...no different than a patient visiting their physician in Canada...fee goes to goevisit, while physician/nurse practitioner is paid an hourly or shift rate. - Non-resident patients pay a $49.95 fee for use. - goevisit receives revenues through every prescription filled through their Canada online pharmacy - goevisit is signing up large insurance/administrative companies as the service reduces medical costs for these companies...they recently signed up essentially the majority of post-secondary institutions across Canada and a deal with the largest insurer of foreign exchange students...some of these agreements have annual fees paid to goevisit or add users to the system. - they are working on a number of other new initiatives that I can't talk about...some revenue generation-related...and a couple that would be completely game-changing! Cheers!

One of the companies Premier has funded is goevisit.com (https://goevisit.com). We own about 28% of the company, which is the only 24/7 telemedicine company in Canada servicing all territories and provinces. If you are a Canadian resident with a provincial health care card, you can use this service from anywhere in North America for free. Non-Canadian residents pay a $49.95 CDN fee for use. Prescriptions can be sent to the pharmacy closest to you or of your choice, as well as you can use goevisit's online pharmacy which will deliver your prescription to your door within 24 hours by Fedex. As my staff know, I caught a nasty cough and cold from my nephew and I’ve been out of the office on and off this week. So I thought I would relay my experience using the service: - Today is Canada Day…try getting an appointment at a clinic, your family doctor, Emergency or any online telemedicine competitor! - Logged in at 9:17am, entered Care Card #, issue and choice of contact (phone, Skype or Facetime)…done by 9:21am and entered online waiting room - Received call from physician/nurse practitioner at 9:40am…again on a weekend, stat holiday…really surprised by the speed! - Discussed what was happening via Facetime…went through a number of questions including symptoms, problems, medications, history, etc. - Because I have developed some wheezing/bronchitis and am traveling on Friday, was prescribed amoxicillin (antibiotic) and a renewed prescription for my inhaler - Explained to me that the antibiotics should take effect within 48 hours…if on Monday/Tuesday I’m not progressing, suggested I then go see a Clinic/my physician/Emergency, so that it does not become pneumonia. - Call ended by 9:50am with my prescriptions sent to the Shoppers Drug Mart closest to my house - Received a call at my house at 10:51am telling me that my prescriptions are ready for pick-up at Shoppers! I was thoroughly impressed! I personally had qualms about how good the speed of service would be at this point until we scale up...and that was even when I had read about all of the good feedback we were getting. But those were laid to rest...it was as good as I could imagine! Yeah, there are some things that telemedicine cannot do…yet...but as technology and innovation improve, more services will add to the desire to use telemedicine, not unlike any other daily service provided online. This saved me not only hours, but possibly days, since the clinics near my home would not be able to take me until at least Monday. My only other alternative would have been Emergency at Surrey Memorial: - how many hours wait would that have been? - how much cost to the system? - how inefficient? - how many more people (in particular weakened immune systems) would I have exposed in Emergency and added to cost to the system? - how uncomfortable when you are coughing up a lung and feel like crap! The convenience factor is huge for parents with children, especially those that have to also work full-time...snowbirds or Canadians travelling...cost savings for employers (one of my staff had two clinic visits this week during work hours)...people living in rural areas, etc. If you decide to use the service at some point, please provide feedback here and I'll be happy to pass it along to the CEO and operations team. Some of you met Liz, Jim & Clay in Toronto this year, but they have a lot more stuff planned for goevisit.com. Have a great Canada Day to my Canadian boardmembers and an early Happy 4th of July to my American boardmembers! Sanjeev

My friends Andrew Wilkinson and Chris Sparling, who founded www.metalab.co, put together this amazing animated video of Charlie Munger's speech on "The Psychology of Human Misjudgement". Enjoy! https://www.youtube.com/watch?v=7-fe01CA3vc&feature=youtu.be Cheers!

I suspect the interest rates are the main reason. It's both...the number of shares that will need to be issued for Allied and the fed raising rates slightly. Funny thing is that Fairfax has over $10B cash in the portfolio which is sitting in 75% cash and bonds. It doesn't matter what Fairfax's price does as stocks fall or rates rise...they will be able to buy when everyone else is selling and looking for cash. As PI said, you are essentially buying Fairfax at nominally higher than book value now. Their insurance businesses are now world-class and fully profitable across the board. The number of non-insurance businesses has increased dramatically and by region. Like Berkshire, as they add better and better insurance and non-insurance businesses, intrinsic value will start to increase faster than book value due to GAAP and IFRS. It is already a business that should be valued at 1.5 times book based on the cash flow of the underlying businesses and return on the investments per share. The one area that I think they should remain cautious is their debt load. While still very manageable and staggered well, I hope they remain conscious and vigilant on this front. One of Berkshire's advantages is that they are beholden to none. I really would like Prem and Fairfax to follow that culture and model. Cheers! Would Watsa consider a share buyback? If FFH has >$10B in cash, is looking for opportunity to deploy and it's own stock is trading at a substantial discount to where Parsad says it should be trading at (1.5x BV), does it make sense to do a buyback/set a floor on the stock price? It is important not to confuse the FFH holdco cash with the operating subsidiary cash balances. FFH holdco doesn't have $10B cash. The cash is at the operating insurance subsidiary (ie. C&F, Northbridge, Odyssey Re, etc.) and those funds are part of the insurance reserves. It's not like FFH has that $10B of their reserves (future claims) to buyback their own stock for investment purposes. Holdco usually has about $1B which is what FFH basically considers as their minimum desired amt of Holdco cash set aside for financial emergencies/flexibility. So they basically have minimal liquidity that they want to readily part with unless they continue to lever up. More likely $20M here and $20M there, as they flow excess reserves from operating subs to holdco. In the past, they have said they generally leave excess funds at the operating subs so they can write additional premiums when the time is right (a hard market). What's to stop the subs from buying FFH's stock on the open market? As far as I can tell, the major subs are all overcapitalized and could buy holdco shares without drawing down their reserves excessively. Presumably the regulators have authorized far more dividend capacity for those subs than FFH has actually used? SJ They could. You have to be careful though. If in some circumstance, FFH's stock falls further (two large catastrophic events), then the ability to write business by those subs decreases substantially. Also, some credit agencies may have a problem in such an event where a sub holds a significant amount of FFH and losses are enormous. The simplest way for them to buy back a large amount of stock would be to issue $1-2B in notes and buy back shares. I don't think they would do it unless the stock was trading at 0.8 or less of book value. At that price, buying back their stock is much more attractive than much of what the market offers. Cheers!

I suspect the interest rates are the main reason. It's both...the number of shares that will need to be issued for Allied and the fed raising rates slightly. Funny thing is that Fairfax has over $10B cash in the portfolio which is sitting in 75% cash and bonds. It doesn't matter what Fairfax's price does as stocks fall or rates rise...they will be able to buy when everyone else is selling and looking for cash. As PI said, you are essentially buying Fairfax at nominally higher than book value now. Their insurance businesses are now world-class and fully profitable across the board. The number of non-insurance businesses has increased dramatically and by region. Like Berkshire, as they add better and better insurance and non-insurance businesses, intrinsic value will start to increase faster than book value due to GAAP and IFRS. It is already a business that should be valued at 1.5 times book based on the cash flow of the underlying businesses and return on the investments per share. The one area that I think they should remain cautious is their debt load. While still very manageable and staggered well, I hope they remain conscious and vigilant on this front. One of Berkshire's advantages is that they are beholden to none. I really would like Prem and Fairfax to follow that culture and model. Cheers!

Great addition if he joins! Will also liven up our dinner panel again. Cheers!

Read the deposition yourself...page 27 on. Cohodes admits to the existence of "naked short-selling". He also even admits that his partner Rocker was getting information he should not have been getting, and somehow Cohodes was completely unaware of it all. http://www.nytimes.com/interactive/2012/03/26/business/20120326Goldman-Documents.html?ref=business&_r=0 Patrick as unconventional and unpredictable as he is, is ultimately a nice person. He's put it behind him, because he was vindicated by Copper Partners $5M settlement. Doesn't mean he's forgotten everything he went through or what they tried to do him. And they tried to do this with Fairfax as well! Fool me once, shame on you. Fool me twice, shame on me! Cheers!

Cohodes still seems like an ass! Cheers! Well Parsad, since you always say 'No man is a failure who has friends', and Cohodes has become friends with one of the people he attacked, and in general has a pretty good record of attacking real corporate villains, and not legitimate companies, his Fairfax mistake notwithstanding, who is it that seems like an ass for being so unforgiving? So a guy takes advantage of the system and tries to drive a number of companies into the ground using naked short-selling, and you're telling me I'm the one that seems like an ass? Patrick isn't friends with Cohodes...he feels sympathy for Cohodes. If Cohodes showed remarkable change, that might be something, but these guys don't change. You can hear it in his language in that article. He's still speaking with bravado and that there are those that should fear him. He's still blaming Rocker, but accepts some of the blame. This guy will still tread the line, or perhaps go over it, if he gets stuck on a crusade. He's done it before and will do it again. Cheers!

Cohodes still seems like an ass! Cheers!

Nope! Wasn't Prem. Good luck to Milos at Wimbledon! Cheers!

Was watching the French Open right now with Milos Raonic...was that Prem sitting behind Milos' father courtside? Tough five-setter for Milos...over 4 hours and 15 minutes. Cheers!

There is a ton that goes into real estate development. So much so, that we actually partnered with a team with tremendous experience in the area. Buying a property and selling it are the two easiest parts of real estate...all of the work that goes into licensing, regulations, etc, combined with being incredibly efficient in contracting, building and managing the service providers is essential in deciding what is a decent profit or a loss. Add in normal delays by municipal bureaucracy and contractors, and you end up reducing your projected returns on what is almost always a leveraged investment. But if you get it right, and you can survive the downcycles, it is the fastest way to creating substantial wealth. Cheers!

My point wasn't simply averaging in, but that the best managers can and will have periods (sometimes long periods) of underperformance. From 1971 to 1975, over a 5-year period, the brilliant Charlie Munger underperformed the market: http://awealthofcommonsense.com/2014/09/charlies-munger-becoming-better-investor/ If Charlie Munger can underperform for 5 years, would it not make sense that merely very good investors might underperform for periods longer than 5 years? If you had stayed with Munger from beginning to end, you would have done extremely well, even with that poor 5-year period. For most investors, it's difficult to stay with a manager during challenging periods. Indirect has been a Pabrai Funds client from shortly after the 1st year. He has stuck with Mohnish through good and bad times, and thus has finished ahead of the index. He was also smart enough to buy when Mohnish was down and add to his account...thus he is miles ahead of the index, even though Mohnish is modestly ahead of the index over the life of PIF2. Cheers!

Fairfax is nearly at the same price today, as it was 18 years ago when I first bought a share in Berkshire. It was at 5 times book then and it is at 1.25 times book today. I would say that investing in Fairfax only once in 1998/1999 was probably a bad idea at that valuation. But imagine what your portfolio looks like if you bought a little Fairfax every year over those 18 years. What type of investment results do you get then, when compared to simply buying a stock and holding it? I'm not trying to defend Francis or any other manager that has struggled over the last decade. What I'm trying to point out is that even very good, intelligent investors can underperform for long-periods of time. It could be due to mistakes, concentration in specific mistakes, distortions in valuations, influence of monetary or fiscal policies, black swan events or changes in circumstances that affect the original thesis. What I will defend is that there are a handful of managers I know that are ethically beyond reproach...I consider them friends and mentors...Prem Watsa, Francis Chou, Tim McElvaine, Mohnish Pabrai, Jeff Stacey, Allan Mecham, etc...I would be comfortable with my family investing with any of them. And yes, many of them have struggled on and off over the last decade versus one of the largest corrections and then one of the hottest bull markets, including underperforming their respective indices. But I suspect that if investors averaged their investments into their funds over the same period, the results look markedly different...just like I hope more of our partners average into our fund over time, or into PDH shares...just like I do! Cheers!

CoBF is the reason we have no market crash in last 7 years! 8) Sanjeev did it. You're welcome! Actually if Mobius is saying that, then do the frickin' opposite! One of the highest profile and worst investment managers of all time! Cheers!

Ah, I never took down any posts in the last 48 hours, only closed three boards because I was getting complaints of too much politics on the board again. If anything was deleted, it was deleted by the writer. Cheers!

Well, I could just delete them altogether, but then how would anyone know you existed? I'm still allowing you to exercise your 1st Amendment rights, but simply telling you that there have been a number of complaints from other boardmembers on how you may be infringing on their rights. Cheers!

It's really become ugly. In all my 50+ years I've never aligned myself to a party as I am now. Maybe that's because I've voted Dem more than twice. But all this disrespect and fake grandstanding generated from your side has really got me infuriated, to the point where I swear I'll never vote democrat again. Pelosi, Waters, and their miserable flock of sheep are doing great disservice to this country (see your comment: 'Russian connections') and I'll never forget it. Oh, they've got their faults...no doubt. But both sides have their flocks of sheep. No one in their right mind would back this orange, glowing monkey of a man. But people aren't in their right state of mind...they were so disillusioned and put off by many of the Democrats, that they simply voted for whatever was available and would take a bat to the other party or even his own party. Now we have something no one really wanted, but his supporters stubbornly stick by him. Clinton & Obama pissed off alot of people, but you've got the saddest state of affairs that could have existed now in place. Fortunately the country is greater and stronger than him! Cheers!

Fake news! Cheers!

A smug looking Ted Cruz gets his teeth knocked in by Yates. He thought he was going to take her to task! And why the hell did the Dems pick Hillary, when you have such intelligent, strong, ethical leaders like Yates? Cheers! https://finance.yahoo.com/news/sally-yates-ted-cruz-heated-214622346.html

Oh, I agree it's not a fad. It makes long-term sense. But you have a congregation of capital of enormous size going into them. When a correction happens it will be bigger and faster. The recovery will also be quicker. Cheers! Bogle talks about what happens if everyone starts indexing: https://finance.yahoo.com/news/jack-bogle-envisions-chaos-catastrophe-markets-everyone-indexed-194610197.html As he states, the likelihood of 75% of investors indexing is almost impossible. But I would imagine that at even 25-50% of investors indexing, you are going to get compressions in cycles and greater volatility as investors exploit inefficiencies and opportunities. That doesn't even include what the psychological effect of a large correction would do as lemmings flee markets! Great for the value investor when corrections happen, but difficult for them to keep up when markets are bullish. Cheers!

When your mechanic and plumber start investing and touting the wonders of cryptocurrency, you should start to get concerned! Both have tried to arrange meetings with me recently on how amazing and hot Bitcoin is, as well as they want to introduce me to their Bitcoin guys. Also, the fact that Patrick Byrne is now spending Overstock.com money on this, should also concern people! Cryptocurrency is the future, but the winners will be few and far between, like how Amazon presently leads the internet wars with the dead carcasses of its competitors littering the street or barely surviving. Cheers!

I think most people are watching, so that's probably why it's a bit quiet. They will all chime in later after the meeting. Also, alot of people are actually in Omaha, so that might also be it. Cheers!