ander

my understanding is the reason for the process behind these authorizations (versus Berkshire) has to do with it being a Canadian listing and the rules there.

Thanks. That's exactly what I'm trying to understand re: consolidation. Are they buying a nominal amount, or accounting change or large $ amount? I'm just wary of them adding at possibly inflated multiples (could be a great deal, but things are frothy in this environment). And if so, if true value turns out to be lower in the future that would be unfortunate.

On Digit, are they contributing any cash or proceeds to increase ownership to 74% in Q3/Q4? and presumably, if so it will be down at today's valuation? or do they own rights to purchase at lower valuation? or is it not an actual increase in ownership but since would be allowed to increase ownership, it triggers a change in accounting only? From the Q2 report below. "During June 2021, the company's 49.0% equity accounted associate Go Digit Infoworks Services Private Limited ("Digit") entered into agreements with certain third party investors whereby its general insurance subsidiary Go Digit Insurance Limited ("Digit Insurance") will raise approximately $200 (14.9 billion Indian rupees) of new equity shares, valuing Digit Insurance at approximately $3.5 billion (259.5 billion Indian rupees), which resulted in the company recording a net unrealized gain of $425.0 on its investment in Digit compulsory convertible preferred shares as described in note 5 (Cash and Investments) and note 6 (Investment in Associates) to the interim consolidated financial statements for the three and six months ended June 30, 2021. The transactions are subject to customary closing conditions and regulatory approval, and are expected to close in the third quarter of 2021. Upon closing of the Digit Insurance equity issuance in the third quarter, and upon final approval by the Indian government of its previously announced intention to increase foreign ownership limits in the insurance sector from 49.0% to 74.0% and the company obtaining regulatory approval specific to its holdings in Digit, the company anticipates it will consolidate Digit and record an additional gain of approximately $1.4 billion."

Great results! On the Digit portion I read the Digit thread as well, but wondering if anyone had a sense of fair value. I understand the benefit of the mark-to-market, but in this environment (some companies being value at ridiculous price levels), anyone do work on what they think would be a reasonable valuation on Digit.

For anyone looking for a replay of the interview:

Anyone familiar with the process of how long it takes to get the $10 per share back (i.e., the trust value) after you put in for a redemption?

It’s back on. Odd flip flopping.

Thanks to everyone for the feedback and comments. I'm still in favor of the split (either 2 or 3 - in 3 you'd have to get a 3rd allocator) since you have 2 capital allocators (Ted and Todd), which would allow for at least 2 smaller Berkshires. I do believe it would create additional value. Arguments against have included: no incremental value created (I believe in smaller size even at 1/2 helps), not a permanent home for cos selling (they would still be a part of Berkshire Hathaway 1 or 2 or 3 (though 3 i would envision be cash only), not be able to reallocate capital (they would as cash is generated a capital allocator can re-allocate, except they have less businesses to choose from, but on the other hand plenty of businesses just as Buffett did 20 years ago).

I'm not focused on day they do it re: stock price reaction. I'm looking at what the intrinsic value would be in a decade and would argue the case it would be higher in aggregate. You would have each manager be able to look at smaller investment opportunities. The businesses that Berkshire has acquired they are not trading / disposing -- might just be a yield play. That's if you kept the weight of the 3. I might want more exposure to the new capital that is deployed over the following 10 years and maybe would weight more heavily towards that entity (for example maybe there is excess capital of $50 B -- or pick your number).

I thought there would be a discussion about breaking Berkshire Hathaway up, but I didn't find one. I've been a shareholder for almost 20 years. Buffett was asked the question of a break-up at the AGM, but it's not what I would envision. Maybe break up in 2 or 3 different companies with a stock for each -- no tax consequence. Not selling off the pieces. You can have an insurance entity and the related float required to support it / another business with the operating entities (option for a 3rd company with excess capital). Could lead to greater outperformance since size is the anchor of performance. Thoughts? AGM - Buffett response

I'm in the same boat. I'm not going to pay for CNBC Pro either.

When will you take a vaccine -- assuming it's available?

FRFHF

It's often done by high growth cos (software, etc.). Unfortunately - a great way for bankers to make some extra money too. Companies often end up wasting money on the calls they purchase to increase the strike in case the stock price performance underwhelms. Part of the argument is that they end up getting a lower rate on the financing (the interest rate on the convert is lower) versus if they had just borrowed the money. But yes, I don't usually like it but if the company fundamentals and valuation is compelling enough, I live with it.

Spoke w/ a merger-arb investor. He stayed away b/c of big premium 100%+ and it's biotech, so too much risk. He's not able to get up to speed on it since it's biotech and he does not have domain expertise (similar to most merger-arb guys). My guess is if it was a 20% premium then merger-arb guys could get comfort with the downside being lower. Here they assume that the downside is back to where the price was before deal was announced. However, on CNBC GILD CEO said there was a bidding war and process had been 2 months so unlikely it would go back to that level.

Thanks. Luck as the bid / asks are wide and moving around. (and hopefully good luck -- barring some left tail risk and deal blows up!).

I wrote some 80 strike sept 25th expiration puts for $2.00 per share.

I took more risk and wrote the 2023 puts at 65 strike. What you're doing might be the smarter play in that you get value for the theta (time decay) and can end up in the same spot while rolling over every week, versus I get stuck. And even better may be writing the higher strike puts when they're available like you said.

Anyone surprised that it's at $84 in a 0% interest rate environment -- basically yielding close to 5% upon tendering the shares?

I don't see anything to do. Please let me know if you have any ideas.

Hard to predict regulatory agencies, but unlikely that deal is rejected (e.g, cancer is highly competitive space, there isn't a concentration of indications being addressed, etc.). High probability of deal being completed is what I would guess. Besides the short term puts on IMMU, what other risk arb positions were you thinking?

I think you need to tax effect the loss that you are embedding, but this is how I think about it as well. Thx. Would have to do that with gains as well. Including share-based payment awards, BV per share is closer to $376 which would be 0.83x BV.

When looking at book value per share, wouldn't it be fair to adjust the Investments in Associates to Fair Value. ($4,684.7 carrying value - $3,669.0 fair value = $1,087 impact to Common Equity ... $11,458.7 common equity - $1,087 = $10,371.7 adjust common equity divided by 26.487 shares outstanding = $391 adjusted BV per share ... $313 share price / $391 is 0.8x book value). Still cheap at 0.8x but not as cheap. Thoughts?

First time I'm doing a deep dive on Fairfax. Have not previously been a shareholder. I saw that Prem invested with David Sokol a couple of years ago. He was speculated to be heir apparent at BRK before implied questions of integrity (I do not have a strong view on the situation, but on the face of it, it did seem what David did was inappropriate in the spirit of highest integrity). Any thoughts on Prem's decision to invest with David Sokol? I'm looking at it from the perspective of BRK tries to measure themselves with the highest integrity. There were some questions about Prem's practices several years ago, which I am comfortable with. Prem is a big admirer of BRK. Was his decision to work with David Sokol questioned?

US based investors do you buy the local in Canada or FRFHF? The FRFHF not as liquid and wider bid / asks. Any other considerations?