Txvestor

Thank you for that clarification. I wasn't aware that the banking reserves were involved in the treasury sales process. irrespective it's a force function on LT interest rates and often to sub inflation levels. with the federal govt debt where it is, and with this president it's not clear to me that LT rates won't be jawboned lower. All of that said, it will be interesting to see how they position over the next quarter. Bradstreet may indeed be pivoting to something or see something coming which we don't.

The problem here is there's no guarantee that the Fed won't go loco and start a whole new Quantitative easing program. One thing they have done this tightening cycle is brought down their balance sheet. That doesn't quite get the attention it deserves. It's down from a peak over $9T to $6.6T. If the easy money president pushes them to reduce long term rates by buying long dated treasuries then rates will come down. My point is since 2008, nothing is predictable or done with transitional models in mind. Hence while rates were high even if they cut 30yr holdings I would have been happier if they extended the duration to close 4yrs.

I agree with this. Prem even touted this in one of his last Q calls. Particularly with who's in the whitehouse and the aggressive push to lower rates, and the regulatory requirements around investments, I think this was a head scratcher for me.

The minority interests.

Except for the pesky deductions of Interest on loans carried on books, minority interests and taxes. Those are also annual expenses before you get to the bottom line. But yeah since equity and investment gains will one day be realized, $200 eps a year for the next 3-4yrs seems possible and even likely. So 2029 $2k BV is within reach and a 2.5x multiple rerate on that would be wonderful.

You pretty much nailed it. Just need to remember to include that pesky minority interest until they buy it off. Speaking on which, is that just an accounting feature? Cuz as i recollect they raise those funds as preferred shares with a guaranteed coupon. So even though the earnings are adjusted lower is that real? Anyone know?

Well I'm not perfectly well versed with the accounting rules. But with the Total return swaps on their shares plus Eurobank and other smaller wins, the gain is approaching $2B which is close to $100 a share.

I think the main thing that the market missed during this period was the dramatic change that was underway in the Insurance side of the company. The market was overly focused on their investment side, which was enduring painful losses with equity hedges as well as public investments like AbitibiBowater, Blackberry Sandridge energy and countless others. Beat down after beat down. the private investments were smaller and off the radar somewhat. Heck I felt dismayed. In addition, the sustained period of low interest rate rates post GFC meant there was no reprieve on the bond side either. What earnings they did get from the insurance side of the business they plowed back into buying back equity stakes, and deleveraging as you nicely outlined. I think a still under-recognized asset in Fairfax is the extent of business contacts they have developed all over the world through their fair and friendly reputation, management team and subsidiaries, as well as a culture where those managements are empowered to call HQ when they identify an opportunity. We saw that play out in Greece, in India, with Kennedy Wilson and many other investments. They get the calls. That will be very helpful in the coming years. What's most exciting is that they will have gushers of cash in the coming 3-4yrs. On the Bond side, very likely they can/will monetize on the equity side, and as consistent and diversified as they've become, probably averaged out over 5yrs be quite profitable on the underwriting side as well. Added to that are their now not insignificant non-insurance subsidiaries. How well they allocate that coming mountain of cash will write the next chapter of Fairfax.

I think Buffett said Heinz is a very solid company, I bet if he could escape that ill fated investment with the majority of Heinz, he'd do it in a heartbeat.

Just for some perspective, I think MKL aka still underwriting somewhere in the low 90s CR. Fairfax is perhaps a point or two over that. I think what's safer to say is that Fara's has grown their underwriter premium dramatically faster through both organic growth and acquisitions while improving the CR. On the other hand I think a few nimble competitors like Kinsale have grown considerably in their traditional stronghold markets. It remains to be seen if they can capture/recapture market share. Theirs is nonetheless a solid insurance franchise.

Another sizable hit to BV. You def. have to believe in their intrinsic value story to buy here. I do, but definitely would like to see some demonstration of this at the earliest opportunity. looking at their balance sheet, I don't really understand where the liquidity will come from if they want to build a new airport or partake in other infrastructure projects. They barely have a couple hundred million $ of liquidity. And 70% of their credit line is pledged to Siemens 10% acquisition. If BIALs exclusivity guarantee is waived off and Fairfax gets involved, how do they keep that fair and friendly to Fairfax India shareholders. Lots of questions. I bought over the last year because I thought the IV was over $30 and it was a growing dollar bill trading at 50c. With a path to closing that within a reasonable time frame. Let's hope so.

Nice quarter from Fairfax. EPS $42.7 BV $1080.4 up ~3.5% adjusted for the dividend paid in Q1. Add in the $1.44B in gains they have not accounted for and you get another $67 per share or so of BV. So call it an adjusted BV of $1147. CR for the Q1 came in at 98.5% despite Cat losses of $781M($692M of those from the Cali wildfires). Prior year reserve releases were particularly strong at over $200M. So even with the major Cat event they made about a $97M of underwriting profit. Gross premiums grew 5% and Net 8.4%. Thats despite Gulf shrinking some by letting go of some marginal business on the health insurance side. Investment gains from equities of $779.5M and Bond gains of $388M. $2.1B cash at holding company level and $1.7B more available in associates and non insurance subsidiaries(great liquidity). Don't they also have a $2B LOC they extended recently? The non insurance consolidated earnings is the one that's a tad weak, and where I have to wonder if the LT returns on capital are worth the hassle for them. But I guess it's a source of diversification of income streams and they can trade them for capital when opportunities arise. Insurance interest and dividends was $516M up from $500M, so going along at an annual run rate of over $2B now. I also saw the share count down by about 87k to 21.59M. Whats not to like!

I also expect them to come in better than expected. I vaguely remember them saying in Q4 conf call commentary that they expected the Cali wildfires to come in within their cat loss anticipated underwriting guardrails. It wasn't clear if they meant for the Q or for the year. MKL had 4 points attributed to the wildfires yesterday. So my guess is Fairfax come in around a 97-98%. Lets see.

Thanks for your perspective. But it's all a matter of your vantage point. If memory serves me right I bought my first shares of Fairfax at $330US in 2009. A decade later when Prem bought a tranche of shares, I believe he paid less than that. Now clearly his timing was a lot better than mine. I guess many of you are Canadian investors and TSX and Canadian $ is your benchmark. As a US based investor in $US, the time frame I referenced 2009-2020 was very mediocre compared to any US benchmark. Now the last 5yrs have substantially made up for that. Fortunately I had the conviction to hold on to my original shares and add on the way up building to my current position size. However for me the more exciting part is what is likely to happen with Fairfax over the next 5-10yrs. Its still trading at a discount to market, which will almost invariably close, and its insurance, bond investments and private equity investments as well as Indian investments seem well positioned with a degree of predictably and diversification even. Add to that the share buybacks and billions in capital annually to deploy opportunistically and it's a great set up for continued outperformance of the indexes.

If you take 2009-2020 I don't think you can argue the results were any good. For a reference I've been a stock holder since 2008. Forget the stock price, even the P&L was mediocre for most of those years, underwriting was less consistent, the investments were poor(think BB and Sandridge energy to name a couple) and market hedges and deflation swaps eroded value, interest rates on a huge bond portfolio were minimal to zero, the green shoot unicorns like Digit and Ki etc were unproven and nascent, and Prem came to the shareholders and asked for his control to be cemented, and the stock reflected all that. Essentially being flat for 10yrs and trading at a discount (sometimes significant discount to BV). However since 2020 both management's approach as well as circumstances have changed. I won't elaborate on that as posters like Viking have done a mighty fine job of that. Yet, to say the turnaround (both aspects) has been spectacular is an understatement. However, I think there is a recency bias and it's still part of the discount that Fairfax has to the market or frankly its peers. It's closing gradually. IMHO in an environment where interest rates seem set to be higher go forth than the 2010s and frankly for the foreseeable future, Fairfax should easily be trading at closer to 2.2x book rather than the 1.3x book it currently does. Especially when we all know book itself is atleast 10% conservatively valued. But that's the opportunity, that's why I have been adding Fairfax shares a little at a time and it's now roughly 20% of my portfolio. The dilemma I have is that I think Fairfax India is also significantly undervalued, arguably more than even the mothership, and I think India is likely to grow more over a 20yr horizon than globally or atleast the western economies, so I've put an additional 5% in that, otherwise it would have been 25% in Fairfax. I don't have the cahunas to go any higher unless the stock itself does the lifting for me.

Well!! That's a whole another topic. It's not that easy in such a polarized political climate. Would have been far raise to have never got to this point.

Agree with Viking on the US shipbuilding. The policies seem more to negotiate, otherwise the implementation will be quite turbulent and definitely inflationary. I know everyone is saying transitory but it could be stickier than people think if it plays out over many years. the US is near full employment and just wage inflation could drive it.

Interesting. May or may not be sustained but certainly a good thing for recipe for as long as it lasts. I'm surprised that with 1200 restaurants it was only $114M of free cash flow for the year on $3.6B in sales. Thats under $100k a restaurant with ~$3M annual sales per year. Which suggests to me the potential for great operational leverage. Prem also mentioned focus on top line growth which should certainly come their way now. Will be interesting to see what happens to margins.

https://www.cnbc.com/2025/04/17/trump-administration-announces-fees-on-chinese-ships-docking-at-us-ports.html Well, it looks as if Chinese vessels might hit the market for a discount but....... $1.5M per trip up to 5x a year. IDK if the numbers work out at those docking prices. Depending on the construction cost delta of American built ships it may drive demand for them. Sokol has his work cut out next year or two navigating these cross currents.

Anyone with detailed thoughts on how tariffs and the plunging container shipping volumes will affect Seaspan and how the terms of their LT contracts affect or not their revenues and profitability? Counterparty customer risk? I remember they didn't necessary benefit much when spot shipping rates spiked post covid but trying to understand if there's downside here. i know everyone was gushing about valuation after the AGM, but wonder if any of this discussion came up with its leadership at the meeting up? Overall I feel like the trade war will impact Fairfax's private equity investments even if less so that the overall stock market. Their hedges with commodity producers and insurance etc should keep them moving along though.

A little worried about the Trump proposal for heavy docking fees per Chinese manufactured ship, in order to bring back US shipbuilding. Anyone know where Atlas' fleet was manufactured?

Only if they paid me in Fairfax shares and avoided me paying capital gains.

Another risk I thought of especially for the non BIAL part of the portfolio, Maxop, Jaynix and other manufacturing and export companies is the tariff issue. India actually does have quite high tariffs to imports relative to most large economies and Trump has promised reciprocal tariffs in April. Many of those companies set up nicely for 10-15% annual growth could actually see negative growth instead. Likewise BIALs cargo volumes could take a hit. We already saw the results of Chinese dumping on their Sanmar investment. Irrespective of execution these extraneous risks are much more now than ever. I agree that the major risks to their financials and airport investment are more general economic slowdown. Overall still a decent bet for a patient investor as I think this is easily a 60c dollar right now with an indeterminate time of full valuation. If you're prepared to stick it out for 10yrs though the odds improve significantly in your favor for a solid returns outcome.

Admittedly I haven't looked at the returns of their portfolio since 2018 vs the S&P. However looking at their 13F, we see holdings like OXY, BB, Kraft Heinz, Kennedy Wilson, and Molson Coors accounting for 1/2 of their $1.5B equity portfolio. I've followed these for a number of years and they've gone nowhere. If any of you have audited their equity performance I'd be interested to know. It sure didn't feel like they beat any index, but maybe I'm wrong. I don't believe they reported on that in any of their annual reports either.

I'm glad they aren't taking many positions in publicly listed companies, and that the positions they are taking are relatively small. Their style of investing seem to hit on a lot of value traps. They do better with private equity style investments, insurance start ups, of course their bond king is exceptional, and internal investments/stock buybacks. Even over seas, they lost in Africa and did well in India, albeit without many exits yet.