Parsad

The problem I have of buybacks below intrinsic value is that intrinsic value is a range in valuation based on certain assumptions of cash flow. If you are incorrect on the cash flow assumptions, you are paying up for those shares...think Eddie Lampert and Sears. Buying below book, at least earnings are accretive and book value per share rises. I think the best type of buyback is buying below tangible book, which is what Jefferies was doing over the past 24-36 months. When you can buy back shares below tangible book, not only is it fully accretive on a per share basis, but you exclude intangibles and goodwill which is where the subjectiveness of cash flow assumptions comes from. You are literally buying back shares below liquidation value! Cheers

You don't think Buffett learns at his age? He bought BYD, AAPL and BABA in his 80's and 90's. There is no limit or age that restricts a person's ability to learn. I also don't understand this compulsive lie that is perpetuated about Prem not changing his ways or learning. As you stated, he's a self-made billionaire, who continues to make money...what exactly do you expect of him...to walk on water?! Frickin' morons on here who are sitting on net worths of a few million dollars at best (yes, I'm shitting on my own audience) espousing how a self-made billionaire needs to get his shit together! Yes, bring on the younger and hungrier jackasses who think they can make money consistently over a five year record instead of a lifetime. Cheers!

As long as the buybacks are below book and accretive to earnings and value per share, then you have two benefits...avoidance of tax on dividends and accretion of earnings. So it's not just taxes that make the difference. I would not want Prem or Buffett buying back shares above book...Buffett is doing so, Prem is not so far. Berkshire shareholders may be better off taking the dividend at purchases at 1.2 times book or higher instead of buybacks. Cheers!

This is and should be a massive concern for everyone except the underground/criminal economy. This is a $3T market now and I would imagine is significantly starting to hit the pocketbooks of nation states who cannot/have not been collecting taxes on this business. As this becomes larger, I can only imagine a huge crackdown. The fear is what dominoes fall if the price of cryptos fall when some sort of day of reckoning arrives. Cheers!

Value investors didn't have a problem with Amazon itself, but with the losses Bezos was sustaining in the early days. Investors understood what Bezos was trying to do, but weren't sure how he was going to get there. Bitcoin in this analogy would not be Amazon, but an Amazon product. Basically an item being sold through an online portal/channel. Blockchain technology would be Amazon...and I have been one of the proponents of blockchain technology for about 7 years now since Overstock.com/Patrick Byrne first introduced me to it through the creation of tZero. I have a problem with most of the current batch of crypto...not digital currencies themselves. Cheers!

On the contrary, I'm a proponent of gold in place of fiat currencies. Gold, silver and other commodities actually have a utility value...not just as store of value because of scarcity. Why would I own BTC, if I could hold coffee beans or wheat? They have more utility and less volatility than BTC. In actuality, virtually anything (even my poop) has more utility than BTC. Hey, but I'm an old goat who doesn't understand these new fangled things. My mint Wayne Gretzky rookie card actually carries more value because of scarcity than BTC! Let's get Opee-Chee to issue 100,000 new Gretzky rookie cards and release only 1,000 every year for the next 100 years. Then real estate agents, car dealers, Amazon, Overstock, etc will all start accepting Wayne Gretzky rookie cards for purchases. We can then start a company that issues wallets to hold fractions of our Wayne Gretzky rookie cards...we'll break each one into millions of fractional pieces. Because of the limited supply, the prices of the cards will continue to go up and they will be an alternative store of value for the US dollar. Sounds like a wonderful idea, since the energy costs of printing 100,000 cards would be nothing like the energy costs to mine cryptocurrencies. Cheers!

OMERS is about a related party as Markel or Lloyds of London. Fairfax does business with OMERS...there are no overlapping officers or directors...it is not a related party. The dutch auction puts a collar on the stock, allows Fairfax to buy back shares, without the daily restrictions of a normal course issuer bid. At the same time, the issuance of the security to OMERS indicates to the public the true fair value of ORH, while allowing Fairfax the ability to buy back the position in the long-term. Fairfax does not want to give up that stake in ORH, but did so to reflect the true value of the company and announce the dutch auction. If the dutch auction has its desired effect, Fairfax can use what cash is not utilized in the buyback, plus profits from the TRS to buy back its position in ORH with nominal cost. Cheers!

I agree with you on this. I think this was just another way of showing the underlying value of the insurance businesses, force the price up based on the reality that Fairfax will buy any stock tendered up to $500 USD, without having to exercise the TRS or continue buying under the normal course issuer bid...which was not having the desired effect of closing the gap between intrinsic value. This achieved what they wanted from all aspects. Worst thing that will happen is that they buy a few hundred thousand shares at $500 USD to retire. By the time they close, 4th quarter renewals will be coming in and they will have the remaining cash on hand to consider buying back their position from OMERS some time next year. Cheers!

It was trading above book just 2 years ago...so we haven't been talking about this for years. Of course markets want to see fundamental change at the company, but parlor tricks only work for the short-term...they won't raise the price on a permanent basis. Solid improvements in the operations and investments at the company is what the market is recognizing...slowly but surely. Cheers!

Digital scarcity - has no effect on tangible value or utility. Programmed deflationary trajectory - only until all coins are mined. Immutability - Yes, but can be replaced with tangible digital currency. Blockchain rails - This is not isolated to BTC...anything can have blockchain rails. Network effect - Again, not isolated to BTC...a national digital currency would have more stability, usability and would have extensive network expansion. Attraction of brains incentivized and motivated to improve the network - These same brains and ideas could easily be adapted to digital currencies which have more stability, liquidity, usability and require no energy to mine. Ethereum is a Turing complete machine - thus my question about the value of BTC, not Ethereum. Cheers!

U.S. dollar is supported by its tax revenue base and all national assets (resources, technology, patents, property, etc). Both BTC and the Packer's certificates have nothing tangible backing them...simply digital scarcity. Cheers!

+1! Cheers!

Whatever Greg! That's what Prem and the team do all day, sit on their asses and smoke cigars. The change in fundamentals is what allowed them to pay down debt, pay off their LOC, buy back shares and now issue a security for a portion of ORH to buy back even more shares. Otherwise none of that would have happened. Cheers!

Prem doesn't care about price in any given year or year-end. As long as the price reflects intrinsic value over time, he's happy. This was just an opportunistic way to buy back shares...if it improves visibility on share price, then that's just icing on the cake. All institutions are reaching for yield now with interest rates so low and asset prices so high. Pension funds like OMERS are looking at any way they can generate interest income. Buying a stake in ORH, with Fairfax likely to buy it back over time, and in the mean time reap above market rates on the deal...that's a win for OMERS with limited risk. It's also a win for Fairfax to be able to buy a large amount of shares at reasonable prices. Cheers!

Probably correct. But remember with large losses come large premium increases. With the flooding and damage in BC, we are going to see 3-4 times insurance price increases in the affected regions next year and the year after. Cheers!

They are limited in what they can buy back with an issuer bid. So they buy back shares offered now in the dutch auction, and then they've also locked in a buy back price through the TRS which they can exercise outside of a normal course issuer bid. In essence, they may be able to buy back 20-25% of their stock at reasonable prices without being limited under a normal course issuer bid. Prem has often talked about Singleton and Teledyne. This is Fairfax's Teledyne buyback moment! Cheers!

Yup! It's win-win for Prem. Either they buy back stock for cheap or they've proven that Odyssey Re's valuation is higher than on paper. Question for those more astute on these matters, will this mean a repricing of Odyssey on the balance sheet? Based on IFRS, the new securities would reprice Odyssey's fair market value significantly higher than on the current financials, in turn increasing book value per share. Cheers!

Well, I guess Prem isn't waiting for gravity! Here comes the massive buyback you guys wanted. A dutch auction to force the price higher while any shares tendered will be retired at a really good price to intrinsic value. If this doesn't push the stock to at least $625 CDN, nothing will until gravity eventually kicks in! Cheers!

...Bitcoin or Green Bay Packers stock certificates? For those that own crypto, please explain how the current batch of crypto are any different than the Green Bay Packers stock certificates issued regularly, with little in voting rights, no profit sharing, no assets backing them, etc. Cheers! https://sports.yahoo.com/one-year-after-booking-record-profits-packers-seeking-90-m-in-faux-stock-offering-to-fan-base-001540715.html

I've seen this over and over for the last 20+ years with Fairfax and with different investments. If the long-term fundamentals of the business have truly changed, like gravity, the price will move up or down to intrinsic value. It's not a re-rating, or question of "if this happens", but it ALWAYS happens. Any business or investment will always long-term be priced at the discounted value of the cash that can be taken out of it...be it in liquidation or long-term cash flow. The question is how much time it takes and will the net annualized return compensate for the risk taken. Generally, if a business is generating positive free cash flow, is priced below liquidation value, and has manageable debt, you've taken most of the risk out of the investment. Then all it comes down to is patience! Cheers!

Berkshire continues to churn out boatloads of cash...I don't think the model is the problem. Impatient investors wanting to maximize shareholder value for short-term gains, rather than growing something long-term and durable are at war with one another. In other words, owning the work of art as a long-term asset versus selling the work of art for short-term liquidity. Cheers!

With the announcements of GE and Johnson & Johnson breaking up, we now have the announcement of Toshiba breaking up. Is the long-waited end of the Japanese keiretsu that global value investors have been pushing for finally here? Alot of unrealized shareholder value in these holdings! Cheers!

I've always felt that Susan should have been the first Buffett child sitting on the board...ahead of Howard. She's definitely her father's daughter, and has been fully involved with Berkshire, its meetings, engaging its shareholders, etc for quite some time. She has her mother's keen understanding for giving, and her father's instincts on responsibility. Cheers!

We all talk about making money on this site, but now heading into the season of goodwill, let's not forget about those that barely have enough to make ends meet. With many businesses still struggling, price inflation, etc, food banks and many other non-profits will be struggling to support those needing help. Cheers! https://www.voanews.com/a/fewer-in-us-turn-to-food-banks-but-millions-still-in-need-/6267495.html https://www.cnn.com/interactive/2021/11/business/london-food-banks-cnnphotos/ https://www.thenewswire.com/press-releases/1k98FbjXX-survey-shows-alberta-nonprofits-struggling-with-growing-demand-fewer-resources-and-concerns-about-staff-mental-health.html

I don't see the dividend going up...not until the stock is at full value and they have excess cash flow still coming. The whole point behind it was simply because Fairfax didn't want managers, including Prem, to have to sell shares to top off their income or do things outside of what their normal salary could afford them...long-term partners, long-term gain, long-term control, long-term focus. So they instituted the dividend. But with the stock so low, they will run things normal, be financially secure, buyback stock...and then when the stock is fully valued, possibly increase the dividend then, as buybacks wouldn't make as much sense. Cheers!