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Maxwave28

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Everything posted by Maxwave28

  1. I think argument that Buffett is making is that if one were to borrow money (float) with a zero cost or negative cost with an infinite or very long term ie 50-75 years than the npv of that liability today is can get pretty close to zero, depending on discount rate used.. Yes we are restricted in how we can invest that liability but that liability should not be valued at par. Agree tho that it all comes down to expected Roe of the business over time irrespective of the inputs to get there.
  2. Bought the book! Thank you for doing this. Happy new year.
  3. Agree the hard market may reverse but at that point the insurance subs would no longer need the capital and Prem said on the conference call that that is the time FFH would increase the volume of share repurchases price dependent of course. So sorta tho not exactly a bit of a built in hedge / outlet for incremental capital allocation. is that a plausible scenario?
  4. Below is my look thru earnings calculation, I am at a similar earnings yield of 4.8% on $353bn (i get to the portfolio yield by grossing up the top 5 holdings as indicative of the portfolio at large) or ~$16.9bn but think we have subtract dividends paid to BRK of about ~$4.7bn as those are already in operating earnings. Therefore I get to an incremental pre tax look thru earnings of $12.1bn apply a 10% discount for some taxes and I get to $10.9 of incremental look thru earnings to BRK. If we annualize the $10bn of operating earnings to $40bn and add the $10.9bn then perhaps run rate total look thru earnings maybe ~$50.9bn on a market cap ~$760bn equates to a look thru earnings yield ~6.7%. See my calculation below. Please rip it apart as I am guessing I missed something.
  5. Viking, thank you for all of your thoughtful analysis. I truly appreciate it. Newbie question for you b/c I dont understand exactly how it is working, on your earning estimate below I believe #4 represents the new IFRS discounting of reserves. If so I thought that might have been a one time adjustment but the below projects this recurring albeit at a smaller amount into the future. Was wondering if that is to capture the delta b/w the old way of reserve accounting and the new IFRS mandated way of discounting or am i totally missing it.
  6. 20% makes sense to me. Thanks for the input. I’ve always struggled with the fact that selling outs exposes one to black swan events for little premium. Is that a fair analysis?
  7. Thank you. what do you think is an acceptable premium? Sorry for the basic questions, haven’t ever considered this strategy before.
  8. interesting, how does one get paid for a standing limit order? By selling puts?
  9. Another way to look at the pref equity investment is that it is covers all of the capital KW needs to invest in this deal (5% x $3bn = $150mm) plus $50mm. So fairfax is funding 100% of the purchase price and getting less than 100% of the returns. However fairfax is also getting ownership in KW which mitigates its dilution on this deal and is profitable and valuable in its own right.
  10. if you have it, could you also share the Fairfax Financial annual meeting transcript?
  11. agreed, thank you Viking for sharing your work with the board. It is highly appreciated.
  12. think this was discussed a little earlier in the thread or another thread...I could not find the quote, but was hoping I could solicit some help on the share count post the SIB. Per the press release "As of November 17, 2021, the date the Offer was announced, there were 26,986,170 Shares and 1,548,000 multiple voting shares issued and outstanding. After giving effect to the Offer, Fairfax expects to have 24,986,170 Shares and 1,548,000 multiple voting shares issued and outstanding." I am prolly reading this incorrectly, but this would imply to me 26,534,170 (25mm + 1.5mm) shares outstanding post SIB. What I cannot reconcile is that as of the Q3 2021 financial reporting p.19 there were 26.7mm (excluding the 0.8mm multiple and subordinate voting shares held through ownership interest in shareholder) shares outstanding. The only thing I could think of is that the 25.0mm Shares are inclusive of the 1.5mm multiple voting shares but this is not how the share count is presented in the quarterly financial reporting. But that is inconsistent with the quarterly reporting and still would not tie out. Said differently, I would have expected in round numbers that after the 2mm shares purchased thru the SIB there would be 23.9mm shares outstanding. See simple math below: Shares Outstanding as of 9/30/2021 - 25.1mm Multiple voting shares issued and outstanding - 1.5mm Total - 26.7mm Less: Interest in Multiple and Subordinate Voting Shares held through Ownership interest in shareholder - 0.8mm Total Shares Outstanding as of 9/30/20/21 = 25.9 Less: 2.0mm shares repurchased thru SIB Post SIB Net Shares Outstanding of 23.9mm Instead per the press release it seems there will be 26.5mm shares outstanding which is hardly a change from 9/30/21 and seems odd and would imply that Fairfax issued shares b/w 9/30 and the SIB which can not be accurate. Apologize as I am sure this is an obvious miss on my part.
  13. Is Fairfax Financial a PFIC? I thought it was not, but after reading the notice that @StubbleJumper posted I’m confused so was wondering if anyone could set me straight? much appreciated!!
  14. What about if one is not a taxable entity eg pension funds in the United States and or Canada? Perhaps those types of investors are less sensitive. perhaps naively but I doubt that fairfax would go thru this process if they didn’t have some reasonable expectation of the tender being somewhat successful. Otherwise why go thru the brain damage.
  15. am thinking about hidden / undervalued assets at Fairfax as we head into the end of 2021. Exco Resources comes to mind given the current natural gas price environment that everyone is aware of and the dearth of information out there Prem had this to stay about Exco in the 2020 AR. "Fairfax owns 44% of Exco, a U.S. oil and gas producer. Despite weak energy prices in 2020, Exco generated $128 million in EBITDA and $36 million in free cash flow. Net debt fell to $145 million (1.1 times EBITDA). Led by Chairman John Wilder and CEO Hal Hickey, Exco achieved these results through high field level productivity and company-wide cost control. In December, Exco recorded its 73rd month without a lost time incident. Exco’s Chairman, John Wilder, is a great partner. We are well served by his leadership." Natural gas prices are up ~90% (3.8/2.0) from their 2020 avg, per https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm Henry Hub Natural Gas Spot Price (Dollars per Million Btu) Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg. 2020 2.02 1.91 1.79 1.74 1.75 1.63 1.77 2.3 1.92 2.39 2.61 2.59 2.035 2021 2.71 5.35 2.62 2.66 2.91 3.26 3.84 4.07 5.16 5.51 3.809 Would imagine more than a doubling of ebitda of $128mm and free cash flow of $36mm from 2020 at 2021 avg. gas prices but have no idea how to ball park this. Does anyone have a feel for what kind of free cash flow Exco has been doing this year or a good framework to think about this? Exco financials require a login for access and their website does not provide other useful info thank you
  16. attached is my running share repurchase data there are may be mistakes so any corrections are appreciated. BRK_Share Repurchase Data_10.25.2021.xlsx
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