Phoenix01

@Viking - Thank you for the amazing posts. Please keep them coming... In the spirt of improving the forecast, would it make sense to account for the base CR without an CATs and then layer in a CAT factor. That would allow a better look-through on the insurance operations, and more focus on the risks of potential CATs as we move through the wildfire and hurricane season.

I think it is all about the opportunity. As Mr. Market bounces the prices of investment up and down, different opportunities surface. FFH collects the best opportunities and they have proven that they are very good at it. The FFH price will fluctuate, and at some point in time, the shares will be fairly valued and eventually over valued (the market is a short term voting machine). This will make it harder to keep the shares if there are other glaring opportunities available at that time. For now I am grateful for the lower price that juices the buybacks and improves the investment thesis.

Gemini adds: Fairfax Financial Holdings Limited (FFH) imposes a quarterly blackout period that begins 15 calendar days prior to the date on which the quarterly financial results are released and ends at the end of the first full trading day after public disclosure. FFH release Q4 on 2/12 so they will be blacked out starting on 1/28. They will only be limited by their limit: 11,371 shares There were 236k shares traded yesterday. Automatic Share Purchase Plans (ASPPs): Fairfax can, however, make purchases of its own shares under a pre-approved ASPP during a blackout period, provided the parameters were established before the blackout commenced.

Don't forget the reserve redundancies. This serves as layer of capital protection and defers profits by years.

Here is table that shows FFH treasury purchases and Issuances over the past 6 years. FFH does has not disclosed the cost of the shares issued before 2023.

The building of positions ahead of the opening follows the Lassonde curve:

It will be interesting to see how the inclusion in index will impact the volume around the dividend. Last year the dividend was announced on January 3rd and payable on January 23, 2025 to shareholders of record on January 16, 2025.

@Viking - Thank you yet another great post. Regarding the virtuous circle: Higher prices → higher market cap → increased index and momentum demand → higher prices. These cycles can take years to fully play out. FFH also has the TRS that will further amplify this effect. It will be interesting to watch what FFH does with the TRS over time.

From the article: Fairfax Financial Holdings Fairfax Financial may be the closest thing to a mini Berkshire Hathaway -- and it may be a better bet at this point. The Toronto-based property and casualty insurer has strong insurance operations, an excellent investment record, and phenomenal long-term performance under founder and chairman Prem Watsa, 75. The company targets 15% annual growth in book value, against what's probably high-single-digit growth at Berkshire. It has a market value of about $40 billion, against Berkshire's $1.1 trillion, which makes it easier to grow. "This is like investing in Berkshire in 1993," says investor Charlie Frischer. Its current price/book ratio of 1.5 is in line with Berkshire's, but Frischer says the true figure for Fairfax is closer to a cheaper 1.25 times because some investments are carried below market value. It has an excellent portfolio of Indian investments such as a controlling stake in the Bangalore airport. Fairfax even partners with a Berkshire alumnus, David Sokol, who was once viewed as a successor to Warren Buffett. Sokol runs a containership business in which Fairfax owns a 43% stake. The stock trades mainly in Canada, and has thinly traded U.S. shares now around $1,750.

This does seem like potentially a wonderful holiday gift, however, I will wait for the results before celebrating. That said, there are some really interesting tailwinds: 1) Earning growth (~$200/Sh in 2025 + TRS based on any large price movement) - base assumption of 15% annual growth rate - reduced preferred dividend payment ($50M/yr) starting 2026 (+$2.5/Sh) - reduced non-controlling dividend (was $295M in 2024). In 2024 FFH exercised options to buy back Brit non-controlling interest (~$100M/yr in non-controlling dividends - SWAG). - reduced non-controlling earnings (was $450M in 2024). In 2024 FFH exercised options to buy back Brit non-controlling interest (was $137M in 2024 in non-controlling earnings). In 2025 Recipe bought back the non-controlling interest (now 100% owned by FFH), but has negligible impact. - remaining options on non-controlling interests for Allied that expire in September 2026 & call options on Odyssey that expire in 2029. Allied had non-controlling interest earning of $176M in 2024 and Odyssey of 128M in 2024. 2) Multiple growth - Forced buying - Inclusion in S&P/TSX60 (extent is tbd) - Forced buying by FFH - Treasury purchases to fund employee share -based awards (208k shares purchased in 2024). - Limited float - At end Q3 there were 21.3M shares outstanding. Adjusting for 1.5M multiple-voting; 800k internal interest adjustment (the 62 company); 1.8M Treasury shares; 1.2M Shares issued as employee share based awards; 500k shares held by Prem; give an available float of ~ 15.5M Shares. If you further reduced by the TRS (1.7M shares) this give a float of 13.8M shares. 3) Virtuous TRS feedback loop - as the earnings grow, the "value" of the TRS appreciates (base assumption of 15% annually) - as the multiple grows, the TRS impact on earnings & cashflow increases on top of the 15% - In the first 9 months of 2025 the TRS produced gains of $585M. We are down so far in Q4, but I think that might reverse by YE. In 2024 the TRS produced gains of $1,033M and in 2023 $635M.

Question - what happens to the price of an essential commodity that is trading below its cost of production? Answer - either the price goes up or there is a shortage At the current prices, the global inventories are drying up

https://www.reuters.com/markets/commodities/opec-advance-oil-output-hike-plan-with-bigger-may-boost-2025-04-03/ LONDON/MOSCOW, April 3 (Reuters) - Eight OPEC+ countries unexpectedly agreed on Thursday to advance their plan to phase out oil output cuts by increasing output by 411,000 barrels per day in May, a decision that prompted oil prices to extend earlier sharp losses. Oil, which was already down over 4% on U.S. President Donald Trump's announcement of tariffs on trading partners, extended declines after OPEC updated its plans in a statement, with Brent crude dropping over 6% to below $70 a barrel. It is interesting to see that the Trump admin has some leverage over OPEC+.