Parsad

Dave Bonham, CFO for Fairfax, tragically passed away on the weekend. Our condolences to Dave's family and the Fairfax team! https://www.fairfax.ca/news/press-releases/press-release-details/2019/Executive-Announcements/default.aspx

Yes, correct. Really obscure stuff in the past...at this year's meeting, he did say it would be very specific unique arbitrage opportunities. He said that opportunities are much lower today to do this than say 10-20-30 years ago. Cheers!

He was fairly specific now and in the past. He said if he was managing small sums ($1M), he could achieve 50% annualized returns no problem for a little while. Once it got closer to 1B, things would start to slow down. So he was talking about small investors and only achieving that 50% annualized return for say a decade or slightly more...not over 30-50 years or anything. In the past, he said there were many ways to make the 50%, but today, it would be based on unique arbitrage opportunities and he said he knows of a few ways, but he won't say. That's when Charlie said or you could do what Li Lu did...create and find opportunities to make money. Buffett then turned to Charlie and said, Charlie weren't you doing certain real estate deals in your early days which were generating close to 50%? And Charlie said yes. So, both of them think gifted (1 in 5,000-10,000) investors could do 50% a year with small sums. On this message board, we know of 3-4 people who did that over a decade or so. There are probably another 20 or so who did well over 20%-30% over a decade as well. Cheers!

Rich Handler, CEO of Jefferies (formerly Leucadia), has a timeless list of 100 Things for college grads, but are completely applicable to anyone. Cheers! http://www.jefferies.com/Letters/Pages/1568

CC delinquencies are up, but from everything I've read LOC's, mortgages, etc are being paid on time and are manageable both in the U.S. and Canada. It's certainly worth keeping an eye on, as mortgage renewals come up and rates at some point continue to go higher. I would guess that budgets are strained, but not at a breaking point yet...so you are seeing delinquencies in credit cards increasing rather than secured loans like auto, mortgage or LOC's. You have near full employment with competitive wages available again in both countries, so households are managing inflation, increased rates, etc. It's highly unlikely that the economy will tank going into an election year as well...Trump will do everything he can to get votes and keep the economy running hot. Cheers!

One more near the end of the meeting...when asked about why See's never became as big as Mars or Hershey. Again, after an expansive answer by Warren, Charlie responds: "We've failed at growing See's like you've failed at winning the Nobel Prize and immortality! It's just too hard for us!" Cheers!

When asked about building a circle of competence, after a lovely long answer by Buffett, Charlie responds: "There is an advantage in specialization. No one wants a doctor who is half dentist and half proctologist!" Classic! Cheers!

So I just ignore it, and focus on whether I think 95% and 7% are achievable (probably and probably not, respectively) and whether I'd be happy owning Fairfax at the current price if the ROE was say 10% over the long haul (yes with bells on). Pete I’m really surprise that you think FFH will probably not achieve 7% investment returns. Long term it’s less than a S&P500 index. I’m more septic about 95% CR when the loss from catastrophes are include That's 7% across the whole portfolio, ~70% of which has to be invested in fixed income for regulatory reasons (quite rightly). 7% was very doable when treasuries yielded 5%. Much harder now - the extra work the equities have to do is far greater. As far as I know, they aren't required to have 70% in fixed income for regulatory reasons...where did you get that from? I think they could do 7% no problem long-term, as long as Brian Bradstreet is also there. They will have to find someone as gifted as Brian to join Hamblin-Watsa. I don't think they can rely on the young guys they have there already, because it's not something you just can learn...like picking equities, there is an art to fixed income as well. Brian is one of the best...Francis is damn good...but I don't know how much depth there is at Hamblin-Watsa on the fixed income side. It's a project they need to work on over the next 2-3 years. Find that guy! Cheers!

No gift cards from Toys'r Us, but they gave out hundreds and hundreds of toys! Beggars can't be choosers! The crowds seems a touch smaller than last year...or they spaced out the booths better, because it was less crowded. The energy of shareholders was very palpable this year and it seemed like my first visit to Berkshire in 2001! Our dinner was amazing again...with Rob Ruffin and Tim McElvaine giving great presentations and then Fairfax putting up two terrific panels with Jeff Stacey moderating. I will be starting a semi-annual podcast called "Pabrai and Chewster!" An hour each time with just Francis and Mohnish going at it, and Francis talking about how great a deal Stonestreet was and then Mohnish talking about how he had Francis pay all of the legal bills! Hilarious! I remember telling shareholders back in 2006 that we may not quite understand how big Fairfax Asia could get...I'm saying it again about Fairfax India and Fairfax Africa! The snowball is starting to roll! Cheers!

Last night to get your tickets if you haven't. We have to give the final number to the hotel tomorrow morning, so please get your tickets in the next few hours if you haven't. Thanks! Sanjeev

We've talked about his on occasion and read it in other papers, but here is another one from the Bank of International Settlements. The low interest rate environment continues to create distortions. Cheers! https://www.bis.org/publ/qtrpdf/r_qt1809g.htm

He'll be fine. WWE or movies...he'll make as much money as he did playing football. Cheers!

Hi All, We are down to our last 20 tickets for this year's event. Please get them soon, as we will be out and will not be selling any at the door. Cheers! Sanjeev

Did Brian retire? No...no. But I suspect he's slowing things down a bit like Prem. A good question would be has Brian ever taken on a protege and who is it? Cheers!

The way it used to work before Wade Burton was appointed managing director was that they had 5-6 of the core group/old guard...Prem, Brian, Roger, Chandran, Sam & Francis (when he was there)...Tony Hamblin before Francis, etc. They would make the broad capital decisions after the senior analysts provided their reports. Prem would have the final say. Each of the analysts were given smaller amounts to deploy, while the old guard deployed the bulk of the capital and oversaw billion/multi-billion portfolios. They would also go through sessions on any capital ideas where others would try and kill the idea. If it passed, then capital is allocated. Today, I'm not sure exactly how it is done, but it may be worth asking at the next meeting. Paul is President of Fairfax, Wade is essentially the managing director, but some of the remaining old guard, including Prem, still oversee and provide advice. But I think the bulk of the capital decisions are now made by the next generation (Paul, Wade, Lawrence, etc). The one thing that Fairfax shareholders shouldn't worry about is succession. They've essentially passed on core duties now to Paul, Andy Barnard, Peter Clarke and Wade Burton. I think that eventual transition will be far smoother at Fairfax than at Berkshire or Markel. And in terms of the investing team...they won't be as good on the bond side as Brian was (but who in the world really is), but the bulk of them are Cundill proteges, worked for and with Fairfax's team and are very well-established value managers. Fairfax is extremely deep in nearly every part of their business! Cheers!

We already have that in place. If I get even one complaint of politics entering into a non-politic board/thread, I investigate. If it is something blatant, then it is removed (not moved). If it is something that is mentioned in passing, then I leave it. So the more complaints I get about a post, the more likely it will be removed. Politics should stay in the Politics section, and those that don't want to waste time with politics, always have the option (which is very easy to do and works extremely effectively) to ignore the Politics board altogether. If we don't have the "Politics" board, then I will be constantly getting complaints about politics in the Investment sections. The manpower needed to monitor that on a free site would no longer make the site free. Cheers!

Hi All, I made a mistake in the original post...I had the date as April 3rd. The correct date, which has been updated on the original post now, is April 10th...our usual time slot the night before Fairfax AGM. Thanks! Sanjeev

Hi Folks, Our 15th Annual Fairfax Financial Shareholder's Dinner is scheduled for The Gallery Room (4th Floor) of the Ritz Carlton Hotel on April 10th. Due to the number of events taking place and space availability at the Ritz, we have downsized the crowd size to no more than 80 guests. So please get your tickets early to ensure a spot! We also no longer have the "presentation only" option...the only ticket is a dinner ticket, and the Ritz has a lovely buffet set up. https://www.pdh-inc.com/2019-premier-fairfax-conference.html Due to the lack of adequate space, and the move of the Fairfax Africa meeting to the 2:30pm timeslot, the annual pre-dinner event has ended after last year. We would like to thank Francis Chou and all of our wonderful guests over the last decade who made that a terrific little event! Thanks and we'll see you there! Sanjeev

You guys are jackasses! ;D Here you have a man who was an optometrist, built up a company and then took the cash flow and invested it over time. It doesn't really matter what his results were like...he could be conservative or he could have shot the lights out. The main point is that he took a career and became entrepeneurial, and then through long-term investments built enormous wealth...that's it! Who give a rat's ass what CAGR he was compounding at? He wasn't going for the title of greatest investor of all time...just that people can achieve tremendous success by doing some simple things...even if you only achieve 1/100th of what he did in terms of wealth, you would be well off copying his behavior. Cheers!

Hi Investmd, I think the one conclusion you can draw about Fairfax, say compared to Berkshire, Markel, etc is that the talent pool at Fairfax is very deep. You have layer of quality manager upon layer, so succession is not an issue at Fairfax unlike Berkshire and Markel. Fairfax's investment and operations teams are huge! While the decisions are made at the top with the core group of managers at Hamblin-Watsa, you have managers below them that are very capable and have the expertise in regional markets. I also don't think you are going to get the huge swings we used to see earlier in Fairfax or Berkshire, where Prem or Buffett would make that one big acquisition/investment over and over. I see Fairfax now as a vehicle that will take the occasional big swing, but a lot of smaller swings in succession that will create returns and value over time. So imagine a less volatile Fairfax, and probably very diverse in terms of regional investments and insurance operations. That era of huge bets by Prem or Brian Bradstreet is coming to an end. It will be many smaller decisions that will move the needle in the future and a globally diversified entity...much earlier than Berkshire. Cheers!

Broad subjects like this belong in the "General Discussion" section, where I will move it to. It should not clutter the "Investment Ideas" board, where individual stocks are categorized by their ticker symbol. Cheers!

After an exhilarating night in Jaipur, we awake and make our way to Jaipur Airport for our flight to Bangalore. We arrive at the Bengaluru Airport...incredibly modern and very well designed. We are greeted by the entire BIAL executive team who walk us through the airport and outside to the Quad...their outdoor retail complex. Fairfax has essentially paid for 51% of BIAL's profits for the next 30 years, plus an option of another 30 years. They have 4,000 acres of land to work with and are pushing ahead with a much needed 2nd runaway and terminal, as well as a city centre with residential and commercial development. BIAL does about 25M passengers a year, putting it in the top 10, and is expected to hit 60M passengers in a little over a decade. It is as sophisticated as any top airport in the world, and it's outdoor plaza is an enormous outdoor retail centre where passengers are picked up and dropped. It keeps passenger traffic spread out and doesn't clog up the terminal. Also encourages visitors to spend dollars at the airport. From the Quad, we walk over to the Taj Bengaluru Airport for a fantastic lunch and presentation by BIAL's CEO, Hari Marar. From the airport, we travelled to the Taj Westend where we stayed overnight. In the evening, we had an amazing dinner hosted by Quess and its CEO, Ajit Issac. Quess is owned by Thomas Cook India and Fairfax directly, not through Fairfax India. The next morning, we flew from Bengaluru to Mumbai and arrived at the Taj Mahal Palace Hotel...right across from the Gateway of India. Really a beautiful and fantastic hotel! The Leela Palace in Delhi, Rambaugh Palace in Jaipur and the Taj Mahal Palace in Mumbai...three extraordinary hotels with service to match! We had lunch and then went on a double-decker tour of Mumbai. Mumbai is extremely cosmopolitan. It is a city rich in history, architecture, art, food, music and people! 25M people coexisting, surviving and thriving...I loved it! In evening, we had a dinner hosted by Madhaven Menon, Chair of Thomas Cook India, at the Konkon Cafe. The next morning we enjoyed a presentation by the Dabbawala's and the great-great-grandson of the founder. The Dabbawala's are a cooperative of 5,000 employees who collect tiffin containers of lunch from the homes of 200,000 patrons, and deliver them by 1pm to the patron's office. They have a 99.999999% accuracy rate, and have been studied by Google, Amazon, Fedex, Harvard and a whole host of researchers and corporations. They employ a decades old color key code system that helps identify, location, building, address and patron. We learned about how they operate, their service to the community and visited one of their sorting sites during the lunch hour rush. Their existence comes from the fact that patrons cannot carry their lunch containers onto the frantic rush of people when they board trains and buses, as they need both hands to climb aboard and hold on...the essentially have 10 seconds to board. During lunch we enjoyed expansive presentations by Chandran Ratnaswami, Head of Fairfax India, Madhaven Menon, and CEO's of other Fairfax India companies, including the youngest CEO, Ragahav Agarwalia, CEO of Saurashtra Shipping. We covered Thomas Cook India, Sanmar, Fairchem, Saurashtra and Catholic Syrian Bank. I was most interested in Thomas Cook India and Catholic Syrian Bank. Two terrific businesses and Fairfax is the first foreign investor granted a majority stake in an Indian bank. They will have to dilute their ownership over time, but CSB (they are rebranding) will naturally be multiple times bigger as the do so. In the evening, we were taken to an old abandoned mill (Mukesh Mills) which was staged and decorated for a soiree hosted by Nirmal Jain and IIFL. It was stunning as we approached the mills, and inside was a beautiful event staged in pink hues, a jazz band/singer playing, bar and fantastic dinner. We enjoyed an extensive presentation by IIFL. Very, very exciting around its business and prospects. Stunning growth, and we all know what a great business the wealth management business is! All 45 attendees had a spectacular time. Other than the occasional bout of stomach flu, no one had been on such a trip in their lifetime. We packed a ton into each day, and saw, heard and experienced the wonders of India. For investors, we walked away understanding India better and the opportunities available. For travellers, they enjoyed such a broad and diverse culture, food, art, music and history. I cannot thank enough Vinodh Loganadhan, Madhaven Menon and his team at Thomas Cook India, and Manoj Pamneja! They made this a trip of a lifetime for everyone that went, and took special care of each and everyone of us. It was executed with near military precision and we walked away changed forever! Thanks to Fairfax and everyone involved! Cheers!

We stayed at four of the top ten...also Taj Palace Mumbai and Oberoi Mumbai. The Oberoi Mumbai was not part of the tour, but I stayed a couple of extra days in Mumbai and added it. Extraordinary hotels, but the service put them all over the top. You have very nice hotels in the U.S., but the service is nothing like what we experienced in India! Cheers!

We awake for breakfast and then depart by coach to the Amer Fort. Jaipur's traffic seems a bit more serene than Delhi's with much less honking and cars running red lights. We arrive at the base of the Amer Fort and Jeeps are used to ascend the winding and steep pathway to the entrance. The interesting thing about the Fort is its self sufficiency. It was meant to withstand a siege, with grain and food storage, it's own water supply from deep wells and secure ramparts. From the Amer Fort we travel to a fairly large jewelry shop, and are given a crash course in precious, semi-precious stones, and how they are cut. After the presentation, we are provided the opportunity to purchase jewelry from the store, while being served refreshments. It's both amazing and sad to remember that India at one time had vast resources of gems, gold, silver, etc...it was the richest nation several times in the last 2,000 years for centuries at a time. From the jewelry store, we travel to to hotel Samode Haveli, where we enjoyed a beautiful lunch on a sunny, open, courtyard terrace. There was a festival in Jaipur, and residents were flying hand-made kites all over the city. Some would cut off other kites, and we had a few land on the terrace. Quite an Indian experience! After a brief respite back at Rambaugh Palace, everyone prepared for an evening visit to the City Palace, where the Prince of Jaipur resides. Fairfax (TCI) adorned all of the men with colorful turbans and the women received beautiful scarves. We loaded up the coaches and made our way to City Palace. As we enter City Palace, a large procession of elephants, horses, riders, and drummers lead us around the Palace courtyard a couple of times. We then enter an area that illuminates what the Prince's living room would have looked like in the past. After which, we are guided to a huge beautiful open courtyard, lit up and prepared for a banquet. A handful of performers dance for us, and then the entire crowd is pulled into a large dance circle. After which, we are provided a sumptuous dinner, drinks and dessert. We leave City Palace and are transported back to Rambaugh Palace. The night leaves everyone thrilled and mesmerized!

Yeah, I highly doubt that that's a good decision. Giving up on value investing sure, most people can't beat the market, and the sooner you realize you aren't one of them the better. But I think the conclusion of Muscleman that "value investing" doesn't work, but perhaps something else does, is 100% the wrong conclusion. If you can't handle value investing, arguable one of the easiest ways of active investing!, I doubt an alternative active approach is a wise step. Especially since all the point why his value investing doesn't work also apply at basically anything else. Some of them even at passive investing! If you can't psychologically handle the risk and the losses that are inherent to stocks it doesn't matter what your strategy is, your problem isn't going away. Everyone should do what is best for them, but I fully agree with the above comment. Cheers!