Parsad

The only dependable part of the Steelers game all season was Rothlisberger until they went into the mini-slump. Their defence isn't what it used to be, so I think they are vulnerable...same problem with Seattle. As long as their star quarterbacks are playing well, and their defence is playing ok, they have a shot. Whereas I think both Kansas and the Bills are very well rounded teams this season...from their quarterbacks, offensive line, defensive line, special teams, running game...both teams are well balanced to go all the way. I think it was almost guaranteed that Kansas would repeat until Edwards-Allaire got hurt. Not only was Mahomes playing well, but the running game with Leveon Bell and Edwards-Allaire was almost unstoppable. Add Kelce as arguably the best tight end in the game taking over from Gronk...well, they looked damn good! I was expecting more from Lamar Jackson this year. I thought they had a really good shot as well, but Jackson is the one who is a little more erratic this season, even though he's still putting up good overall numbers. Then there's Tom...Tampa looked rough from game to game early on, but they are really coming on with good defence. Never count Brady out! The saddest story is the Jets have started winning...just as they were about to win the draft lottery and get arguably one of the best quarterback prospects in the last decade...and that's saying ALOT! Poor Jets fans! Cheers!

Hi Greg, I fully understand your feelings. I have no problem if he attacks Prem, me or whoever. But he knows he's been warned countless times about keeping politics/religion/non-investment topics out of other boards/threads. He wanted to piss me off by quoting me...on religion...while the subject was Fairfax in the Fairfax thread. You don't do that. Yeah, once in a while you'll post outside of the Politics thread, but for all intents and purposes you do try to follow the rules, no matter how blunt you get. Cubsfan does too...LC and the liberal contingent do too. But Cardboard not only ignores the rules, he is often the instigator and I've had tons and tons of complaints against him...that I've ignored because he posted here so long. But I can't ignore it forever. If he's purposely going to be a dick, so be it...he's gone! Cheers!

If you are going to use the quote Cardboard, use the whole thing so people understand the context: I don't think LC, nor I have any problem with your belief in God. What we have disbelief in is why that belief in God is based on stories written by men who didn't even know what a virus was, let alone had the ability to communicate broad distances like we do today, but somehow spoke directly to the creator of the universe! The second part we have a problem with is that you take those stories written hundreds, if not thousands of years ago, to heart and revolve not only your beliefs around them, but want to extend them upon other people. Why? Because you believe those stories or beliefs stand on a higher moral ground...that the majority of people don't want to stand on with you, because they think your beliefs are archaic and misogynistic. Cheers! Prem isn't running around making an asshole of himself telling liberals what retards they are, how they are turning Canada into a shit-hole or espousing other rhetoric. His faith is for him...not the rest of the world. Second, I've warned you so many times about bringing politics to boards outside of the Politics board. I've tried to be as fair as possible, even when I got more complaints about you than any other poster in the history of COBF...and most of those complaints came only in the last two years...but I can't justify giving you so many opportunities when you keep moving the topic off subject and onto political issues in non-political threads. Good bye! Cheers!

Though about it. Kansas will repeat! Cheers!

Two wonderful contrary indicators that Fairfax's stock price will do well in 2021 and 2022! Mark my words. Cheers!

My guess is if this scenario plays out we will simply see the hard market last longer. Insurers have been seeing inflation happen already for years on the cost side (social inflation). For non-life insurance companies the big question for 2021 is where does the current hard market go? Does it last all year and into 2022? What average rate increase do we see each quarter? Looks like Q4 2020 will see strong price increases with no end in sight. Yes other pieces are important: 1.) where does covid reserving go from here? 2.) how strong is the economic recovery? 3.) where do interest rates go? 4.) how bad is catastrophe season? One other thing I would remind people regarding their concerns around low interest rates. Prem and Hamblin-Watsa are one of the few insurance teams still around that saw, studied and completely understand how low interest rates affected Japanese insurers over the last 35 years. They predicted the turmoil that Japanese insurers would face, and they also watched and studied how many insurers survived and thrived. And they are also one of the few investment teams that expected low interest rates to eventually arrive on a global basis. So if anyone has contemplated this scenario carefully, they are the ones. It's also why they got some of the macro calls wrong, because with all of the government intervention since 2008 and again now, we keep prolonging the inevitable day of when consequences of these events actually arrive. Cheers!

+1 +2! Cheers!

As many people have years of experience following Fairfax, is this amount of insider purchases atypical? Yes. Also Prem has never bought remotely close to as much stock as he bought in June...the $150M investment. I've just never seen him buy like 10% of his net worth at one time and probably 80% of his net worth outside of Fairfax like that. Unheard of! Cheers!

I honestly cant see how you can make these statements? Interest rates are at all time lows---unless of course rates go negative in the US? A clear head wind for any insurance company even if Brian B is making the calls on duration and quality. Quality stocks---we are talking about Fairfax aren't we? And I would love to get your feedback on the comments attributed to Prem in the recent G&M article. Has Fairfax closed out all its shorts? Have the comments attributed to Prem in the article left him with enough wiggle room to short again in the future? I don't think they've taken out any other short positions. That doesn't mean they don't have existing short positions or other hedges. You cannot manage a leveraged reinsurance portfolio without hedging some of the risk. You'd be a fool not to! Whether that hedge is a large cash position or actual hedges is a matter of investment management...but Fairfax has always protected the downside to their portfolio, especially in periods of economic risk, and that's because it will ultimately affect their statutory surplus and ability to write business when premium pricing is high. In terms of buying quality bonds and stocks. They learned to stop buying crappy turnaround insurance businesses and put Andy Bernard in charge of overseeing all insurance operations, they could do the same with the investment portfolio. I think Wade Burton and Lawrence Chin will have more and more responsibilities. I imagine the next generation of Fairfax positions to look more like Tom Gaynor, rather than Fairfax when the old guard at Hamblin-Watsa was fully in charge. I also imagine we won't do as well on the bond side as Brian ages, so quality stocks will become more important. I think we'll also see a change in the types of private businesses they buy...better quality...tier 1 instead of tier 2 and 3. Cheers! Sanjeev, I did not ask about hedges. I asked about the comments attributed to Prem in the recent G&M regarding Fairfax's short positions. Specifically, the article attributed the following comment to Prem: "However, Mr. Watsa said the company is not making bets against any stock or sector at this time." If this is an accurate statement than Fairfax has closed out the short that caused the unexpected loss in Q3. If it is not accurate then Fairfax needs to correct the record. I also do not believe you have addressed the concern I raised about the ultra low interest rates. As you know, Fairfax is required to hold a significant portion of its overall portfolio in bonds. The yield on these securities has been all but eliminated given where rates are. The overall yield in the portfolio will continue to decrease as each bond being held matures. Any upward movement in rates will result in bond losses albeit unrealized if Fairfax is able to hold each bond to maturity. It is an open question whether the underwriting performance will be sufficient to offset the loss of yield on their bond holdings. I do not believe the loss in bond yield can be replaced by quality stocks. I am not sure what that statement even means? You also commented that you believe Fairfax will change the type of private businesses they invest in---Tier 1 instead of Tier 2 or 3. What specific evidence do you have to support that statement? I see no evidence of this at all with the possible exception of the reorganization of Fairfax Africa and on this one I would have preferred that the company acknowledged that Fairfax Africa was a mistake and sold off its holdings. In the meantime they continue to hold numerous retail and restaurant businesses that will take years to recover from the impact due to covid and if they do recover they will get back to being mediocre businesses at best. Finally, you have previously referenced the positive impact that Wade Burton and Lawrence Chin will have on overall investment results. Two very talented and hardworking individuals but for now and for the foreseeable future Prem is in charge. Enough said on that point. I just get a sense from what you write or how you write that you believe that everything will work out just fine. Clearly myself and other posters on here are not in that camp and have several very specific concerns that need to be addressed before we can wholeheartedly jump back into Fairfax in any meaningful way. Do you have the print version of the article? I cannot access it. The quotes provided are comments from the writer...not Prem. I cannot comment unless I see exactly what Prem's comments were. On the comment regarding rates...that cuts two ways. Fairfax can lower its interest rate costs on its debt. Low interest rates will affect all financial institutions. Fairfax is global and can invest in bonds in other countries and other currencies. When it comes to generating bond income, I'm less concerned about Fairfax doing that while Brian is there. He'll always do better than his peers. Regarding Fairfax buying better quality investments and businesses. I think that will just be the natural progression as the older Hamblin-Watsa team passes on duties to the Cundill influenced team of Wade Burton and Lawrence Chin. Prem has the final call, but you guys don't understand how much free rein Prem gives to the guys in charge. And it's really a group of about 6-7 people who make the bulk of the investment decisions...by committee. And while I don't expect Christine and Ben to have a major influence over the board...their investment experience, as well as Lauren Templeton's will have some influence as their tenure becomes longer and longer. Overall, as you've read from Prem, Wade has a terrific record comparable to Tom Gaynor's. They learned at the knee of Cundill and now Prem, Brian, etc. On the last paragraph...I'm not asking anyone to jump in. I'm just saying that the psychology being displayed is something we've seen numerous times before on numerous stocks. Usually, by the time investors are ready to jump in, they've already missed the first big stretch of gains! Cheers!

While I don't put any stock in it, as I do my own analysis, but for those that pay attention to insider filings...alot of directors buying stock regularly...not just Prem's massive $150M purchase a few months ago: https://www.canadianinsider.com/company-insider-filings?ticker=FFH If you believe they know more than you! Hmmm! Cheers!

I honestly cant see how you can make these statements? Interest rates are at all time lows---unless of course rates go negative in the US? A clear head wind for any insurance company even if Brian B is making the calls on duration and quality. Quality stocks---we are talking about Fairfax aren't we? And I would love to get your feedback on the comments attributed to Prem in the recent G&M article. Has Fairfax closed out all its shorts? Have the comments attributed to Prem in the article left him with enough wiggle room to short again in the future? I don't think they've taken out any other short positions. That doesn't mean they don't have existing short positions or other hedges. You cannot manage a leveraged reinsurance portfolio without hedging some of the risk. You'd be a fool not to! Whether that hedge is a large cash position or actual hedges is a matter of investment management...but Fairfax has always protected the downside to their portfolio, especially in periods of economic risk, and that's because it will ultimately affect their statutory surplus and ability to write business when premium pricing is high. In terms of buying quality bonds and stocks. They learned to stop buying crappy turnaround insurance businesses and put Andy Bernard in charge of overseeing all insurance operations, they could do the same with the investment portfolio. I think Wade Burton and Lawrence Chin will have more and more responsibilities. I imagine the next generation of Fairfax positions to look more like Tom Gaynor, rather than Fairfax when the old guard at Hamblin-Watsa was fully in charge. I also imagine we won't do as well on the bond side as Brian ages, so quality stocks will become more important. I think we'll also see a change in the types of private businesses they buy...better quality...tier 1 instead of tier 2 and 3. Cheers!

Sanj, You need to go back to the posts in approximately February in this thread where we noted that earnings in the past three years have been characterized by a quality problem. It's all fine and good to note that FFH had a 11% ROE in those years, but then you should probably qualify that statement by noting that a good chunk of that consisted of paper gains (ie, marking the airport to market last December, merging Grivalia and Eurobank, Thomas Cook/Quess etc). FFH management should be given full credit for having created value in all three of those companies, but the value was created long before the paper gains were booked. Thrifty's table, while depressing, is a long enough period to smooth out those lumpy transactions. SJ Hi Stubble, you are correct, but that cuts both ways. You have to also assume that Fairfax's insurance businesses are worth a heck of a lot more than they are carried for in their books. In other words, you could assume that book value per share may be closer to $625-650 USD in reality. So you can't take away growth in book value on one hand and not give credit on the other hand. I'm the first one to say that Fairfax has underperformed over the last 10 years. That doesn't mean that the next ten years are going to be the same. I'm buying at today's prices essentially after the pandemic at $380-430 CDN...not two years ago at $650 CDN per share. I never owned BAC until it fell to $5 in 2008/2009...I still own most of those BAC shares...ten years later. I'm not looking in the rearview mirror when I invest...I'm always...ALWAYS...looking forward! Cheers! Sanj, You are suggesting that FFH is worth ~1.4x or 1.5xBV. I might actually believe 1.2x, because most of the value is in the insurance subs. There's really only about three ways that the insurance subs would be worth much more than book: 1) The subs' underwriting results are so spectacular that their ROE is high enough to merit a multiple; 2) Hamblin-Watsa's investment results are so spectacular that the subs' ROE is high enough to merit a multiple; 3) There is a "hidden" asset that is carried on the books for less than BV. So, in your view, which of those three is currently the driver of a 1.4x or 1.5x multiple? I don't doubt that the market will swing and FFH will eventually become overvalued again and might *trade* at some ridiculous level, but we are talking about value, not market bullshit, right? SJ Hi Stubble, No I'm saying that Fairfax is worth 1.1 times. My numbers are based on book today being back close to where it was at year-end 2019...around $486 USD...or about $610 CDN at 1.25 exchange. 1.1 times $610 CDN gives around $670 CDN per share. And as you know, it's trading around $430 CDN. Just getting back to fair value would be a 55% gain. In regards to the value of the insurance businesses, I was simply pointing out that if you say they benefitted in recent years from the realized value of certain assets, then you have to give some unrealized value to other assets, including insurance. What was Fairfax Asia carried as on the books...what was the total realized sale price? What about Riverstone Europe? You are at zero interest rates...you don't think other insurers will pay up for Fairfax insurance assets? Especially now that they are operating so well for nearly a decade? Cheers!

Sanj, You need to go back to the posts in approximately February in this thread where we noted that earnings in the past three years have been characterized by a quality problem. It's all fine and good to note that FFH had a 11% ROE in those years, but then you should probably qualify that statement by noting that a good chunk of that consisted of paper gains (ie, marking the airport to market last December, merging Grivalia and Eurobank, Thomas Cook/Quess etc). FFH management should be given full credit for having created value in all three of those companies, but the value was created long before the paper gains were booked. Thrifty's table, while depressing, is a long enough period to smooth out those lumpy transactions. SJ Hi Stubble, you are correct, but that cuts both ways. You have to also assume that Fairfax's insurance businesses are worth a heck of a lot more than they are carried for in their books. In other words, you could assume that book value per share may be closer to $625-650 USD in reality. So you can't take away growth in book value on one hand and not give credit on the other hand. I'm the first one to say that Fairfax has underperformed over the last 10 years. That doesn't mean that the next ten years are going to be the same. I'm buying at today's prices essentially after the pandemic at $380-430 CDN...not two years ago at $650 CDN per share. I never owned BAC until it fell to $5 in 2008/2009...I still own most of those BAC shares...ten years later. I'm not looking in the rearview mirror when I invest...I'm always...ALWAYS...looking forward! Cheers!

Also, one thing Thrifty didn't show, was that FFH's earnings in the last three years (2017-2019) was roughly $63 CDN per share...$64.98 USD in 2017, $11.65 USD in 2018 and $69.79 USD in 2019. That's about 11% ROE over those three years. I think if Fairfax keeps things simple...focus on strong, growing, conscientious insurance businesses...a diversified portfolio of quality bonds (not going to second guess whatever Brian does) and undervalued, quality stocks...complemented by quality, wholly owned businesses. With their leverage and acumen, if they just do that, they'll hit 15% ROE long-term. Keep it simple Prem! Cheers!

Is this supposed to be supportive of the bull case? Doesn't look that way to me. 12% ROE gives you a $70 per share net profit...that's today...gives you a 10 times multiple of around $700 per share or 1.2 times book. If they compound at 12-15% ROE for the next 15 years...what would you say is fair value for that business on a per share basis? From a price of $430 CDN today. Cheers! The chart I quoted showed that the EPS in the 5-year range from 2005-2009 was greater than the EPS a decade later during the 5-year stretch from 2015-2019. An earnings/share decline over 10 years isn't bullish in my book. You give the bull case - that they'll today generate good profits. I haven't verified your numbers or Thrifty's, but your estimate is double the recent past EPS given by Thrifty. Sure, if they now start producing double the EPS, the shares should be worth a lot more. Of course. Fairfax hasn't had a problem projecting gains (15% in fact). It has had a problem avoiding stumbles so that they actually achieve them. Sure. I agree with you. But if they have somehow learned from their mistakes (a great deal of which was being too conservative and macro-based), would an investor supposition that the numbers I provided above are relatively realistic? I believe so. Cheers!

Is this supposed to be supportive of the bull case? Doesn't look that way to me. 12% ROE gives you a $70 per share net profit...that's today...gives you a 10 times multiple of around $700 per share or 1.2 times book. If they compound at 12-15% ROE for the next 15 years...what would you say is fair value for that business on a per share basis? From a price of $430 CDN today. Cheers!

Haha! +1! Maybe you are right. The only CEO I've seen as much love and hate for, constantly flipping back and forth, is Elon Musk. And presently, everyone loves him! Cheers!

Hi Libs, You did see the smiley face after the sentence, correct? It meant as a joke between me and Greg. Cheers!

Sanjeev....I was wondering how long it was going to take you to respond to my post. I now have my answer. You are loyal to Prem and I get that. I do however believe that you are not as objective as you could be when it comes to discussing his investing results. BTW...that's okay...this is your board and you can do with it what you want. The job/role of any investment manager is to respond to the world they encounter. Holding onto positions thinking that you are right and the rest of the world is wrong year after year after year makes no sense. At least not to me. We must all adapt. This is a point Gregmal has made on numerous occasions and I happen to agree with him. Yes the amount of government intervention in this magnitude has never happened before. So what. It did happen. It was happening before our eyes. We all had to respond to that. Prem does not get a pass on this simply because of his past successes. Or because he is a great guy and a wonderful friend. Prem often quotes Ben Graham. Did Graham sit on losing "bets" or positions for 10 years? If I recall correctly Graham had a 2-3 year hold period and then he got out of the position if his original thesis did not play out the way he thought it would. Either you follow Graham or you don't. I feel at times that value investors love to sit around with each other and tell each other how smart they are. How stupid everyone else is for not getting it. They seem to take comfort in holding onto their positions in the face of all evidence to the contrary. When Prem says that the last 10 years has been tough on value investors. What does he accomplish by saying this other than being part of the misery loves company bandwagon. For what its worth...I thought Prem's deflation bet was brilliant. The amount invested (I believe something like $500-$600 million) for the potential payoff made sense to me. The fact that it did not work out was okay. I do not however agree with him doubling down over and over again on losing positions in Blackberry, Eurobank and Resolute Forest Products to name just a few. Holding onto these positions year after year because value investing will prevail makes no sense. Gates is a wonderful example. I am glad you brought him up. What about the old man himself... Warren Buffett? He seems to have done okay over the last 10 years. Bill Ackman is also someone who comes to mind. After a tough few years he pivoted and reacted to the way the world was and not how he wanted it to be. I really do not want to go back and forth here. I know I will never convince you of my views and I can assure you that you won't convince me of yours. I still hold a smallish legacy position in Fairfax and hope it does well. I was just frustrated by some Prem's comments in the G&M article and decided to respond to them on this board. Thanks for providing a place for me to do so. First, my friendship with Prem, Mohnish, Francis, whoever else, doesn't make me blind to their faults. So that's one supposition that is incorrect. Other than accounts managed for my brother, mother and niece and nephew, and one personal taxable account, I've owned Fairfax for maybe 8 of 20 years. I don't own any stocks for long periods of time other than PDH...and that's another discussion altogether. Not even Berkshire Hathaway. I buy below intrinsic value and sell above intrinsic value in my non-taxable accounts and my personal holding company. Second, you're comparing two different things: Money management is not what Prem and Buffett do. Their hold period is not 2-3 years...it's forever, so making the comparison to money managers is like comparing apples to oranges. You should be comparing Prem to other corporations...not money managers. Markel would be an ideal comparison for better or worse. Third, you use Greg's comments about adapting. Unlike public corporations and public money managers, their records are exactly that...public. Greg may be full of shit and hasn't outperformed anyone other than Dane Cook. No offense Greg...just saying! ;D Lastly, again you compare to Ackman who uses his fund and SPAC's. Ackman lost nearly 100% of his Target SPAC a few years ago...how do you account for that mistake? Dare I say "FELP". Again, no offense just that Ackman put nearly 100% of the capital into one stock. That's effing crazy! So, let's keep comparisons on a level playing field. Also, you haven't provided anyone who actually got it right. Even Microsoft was in a deep 10-year funk a while ago until they got rid of Ballmer, and like I said, they had access to the one guy who studied both technology and pandemics! Cheers!

Now for the comment about a tough decade for a value investor? How utterly ridiculous! How about he misread the impact of low interest rates and Fed policy intervention? How about he didn't understand the impact of technology on so many industry and sectors. Sitting around waiting for 10 years "patiently" waiting for value investing to be back in vogue means you were wrong with your stock selection. Its as simple as that. Even if his picks shine for the next 10 years on average over 20 years he will be lucky to breakeven on many of his selections. In my view, Prem did not adapt and is now unable/unwilling to admit he was wrong. Did anyone...anyone at all in the entire world...expect this much government intervention over 20 years? From the original Nasdaq bubble popping, to the huge amount of asset buybacks during the Housing Crash, to finally the massive amount of stimulus being applied by almost every country during the Pandemic. History, if it does truly rhyme, told us that the intervention in 2008 would have led to deflation. Prem was more ready for that period than anyone else in the world...they had cash, shorted markets, collateral bonds betting against housing and then were ready for the eventual deflation that never arrived. Theoretically it should have...Jeremy Grantham has laid waste to all the reasons why it should have happened...but it didn't. Now, during the Pandemic, we are witnessing the greatest debt explosion in history with the average consumer having no safety net, nor can they afford any reasonable spike in inflation. How do you get this right? How do you prepare for this? For me, after the housing crash, that was my last macroeconomic bet and I decided I will just buy cheap stocks and forget about macro...and we also pursued PDH at the time. Macro is just too hard to get right! Especially in unknown territory where history no longer rhymes. I'd like to know one guy who actually got it right and understood the disruption that would occur from technology, as well as expected a global pandemic to hit! If you can find that one guy Bearprowler, let me know. The only person that I can think of that may have gotten some of it right was Bill Gates. Cheers!

My friend, Tim McElvaine, who runs the McElvaine Trust sent out his annual holiday greetings. I thought this was probably the best card I've ever received from a peer/business/fund...very funny! Also incredibly well-timed for value investors in general. Enjoy! https://www.valuefund.ca/a-christmas-carol-for-value-investors.html

Arguably, the greatest pilot in history! Should have been the first one in space. Cheers Mr. Right Stuff!

That's all you had to say. I'm fine if you want to critique his performance...but critiquing his integrity just doesn't fly based on what he's done and how he treats everyone around him. Cheers!

You know Greg, that's the dumbest thing you've ever said! I know Prem really well, and he has never acted in a way that would be a "fuck you" to shareholders. He could...but he never has. He's actually one of the most humble people you will ever meet...a perfect CEO in terms of leadership, integrity and honesty. And you can forget about my opinion...Ajit Jain would tell you that! David Sokol would tell you that! The numerous executives who have worked with Prem would tell you that. The hordes of shareholders who know him well will tell you that. By the way, the media came up with the "Warren Buffett of Canada" moniker. Prem has never liked that. Does he make mistakes? Sure. Is he as good as Buffett...he would be the first to tell you he isn't. But he keeps trying...keeps aiming to live up to that standard. That's all you can expect of anyone. So please refrain from talking like an asshole about something you know absolutely nothing about! Critique all you want, but keep the slander to a minimum. Cheers!

Stock market capitalization is closing in on 185% of GDP...long-term interest rates are near zero...you have bubbles in other assets classes...tech stocks are frothing at the mouth with Tesla leading the way at a 1,000+ P/E...government debt as a percent of GDP is hovering over 100%+ for most developed countries...consumers while paying down debt in 2020, still live hand to mouth for the most part...what happens when stimulus stops...I'd say the short position this time may have some legs going forward compared to after the tech wreck when they didn't invest heavily and held short positions. Cheers! After posting my last comment and thought about it a little more I also wondered if shorting Tesla right now actually makes some sense (not that we know that is the name FFH was short at end of Q3). So, yes, I agree with you :-) I’m not a fan of shorting...but if I had to pick one, even though I really like the company and Musk...that would be the one. Extremely overvalued...one miss and boom! Cheers!