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SafetyinNumbers last won the day on April 15

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  1. GWO has a low weighting because most of its market cap is included in POW’s float cap as @bearprowler6noted. It doesn’t make sense to add the 63rd biggest weight to the 60 over the 27th (FFH). FFH has not been overlooked yet but it might be with the next opening. That’s probably better in the long run for most shareholders as they might be tempted to sell on the multiple expansion when the compounding in BV should go on forever. It’s just too big to not go in eventually. It’s a matter of if not when, IMHO.
  2. I believe 1 share was distributed for every 12 EUROB shares so it can’t be that big. Presumably FFH would have to equity account for it as well but probably on a lag. Since they reported in April, maybe we get that in Q2 results.
  3. I think it depends on the market and the benchmark. When I left UBS in 2012, the estimate was about 4% of the shares outstanding for the 60. I assume that’s probably up a bit since then. I’m hopeful there are enough long term holders who won’t want to pay taxes, that the P/B multiple will expand on entry and continue to expand as the flows persist. It might be a pipe dream though if it’s truly quants that control the multiple (i.e. are the marginal buyer).
  4. I think it matters because FFH is particularly under owned by Canadian active managers benchmarked to the Composite. Of course, it will depend on the price individual shareholders are willing to give up their shares (recently 1.2x trailing book). A new permanent shareholder of a million shares plus that adds with passive inflows regardless of the price is a nice to have and may help with multiple expansion but it’s no guarantee.
  5. 26th biggest in the Composite which is the population set for the 60 assuming Blackrock isn’t taking basis risk, they have AQN at 22bps so a decent amount of room. Most people dismiss FFH as a potential add because the Financials are already overweight but at some point it becomes too big to ignore especially given the likely forward book value growth. The longer it takes the better.
  6. Probably still 1x FTM BV so not too demanding a valuation for buybacks. Personally, I think they want to buy shares back ahead of the eventual 60 add as that may drive the multiple much higher.
  7. I have built a 6% position in Strathacona Resources (SCR.TO) ahead of their expected capital return policy to be provided with Q2 results on August 14. The company is guiding to C$1b in free cash flow or ~C$4.50/share to be returned to shareholders at $80 WTI. They say they will have a base dividend that is sustainable if prices dip. My bet is that will be using $60 WTI which should support more than a 5% yield. They also have discussed variable dividends, SIB or NCIB. I’m a big fan of the management team. They certainly have skin in the game with Waterous fund owning 91% and have no dilutive securities (options etc..). They have a history of growing accretively through acquisition but want to use their stock now that they are public but the stock is too cheap. I think that makes them very motivated to close the NAV discount (~30-40%) as quickly as possible.
  8. Thanks for tallying up the quarterly gains, @dartmonkey. This should make a decent difference to FFH’s Q2 results as well.
  9. It looks like there was a Market On Close (MOC) imbalance at the close. I used to check these religiously when I was on the prop desk at UBS as it was brand new and there was a lot of edge available. Maybe I should again . The TSX publishes the imbalance at 3:40pm and brokers can enter orders in the MOC facility to offset the imbalance until the close. If the stock is going to move on the imbalance more than a certain percentage from the VWAP of the last 20 minutes of trading or the last price they publish a Price Movement Extension (PME). This allows brokers another opportunity to offset the imbalance. This afternoon had a buy imbalance on the MOC and it grew when they published the PME. Meaning investors saw there was an imbalance to buy and more added to it then provided an offset. The stock went up to 15.15 because that was the clearing price. The buy imbalance acts like a tender at the close. For a buy imbalance, the shares offered at the lowest price in the MOC facility and in the open market get priority but all trades clear at the price needed to satisfy the buying. i hope that’s explanation is helpful. I don’t remember all of the specifics but fairly certain on the mechanics. It has me wondering why someone decided to trade it this way and if they have more to buy.
  10. Is there any analyst coverage yet? Maybe that will bring the quants in
  11. Besides the resulting Xerxes is pointing out, the line of thinking ranimo presents suggests “the errors” were considered errors when they were entered into. In reality, FFH investors cheered the hedges and gave FFH a much higher valuation than it has now.
  12. Thanks for sharing. My impression of the call is that Indian analysts are definitely more engaged on Digit than NA analysts are on Fairfax!
  13. I used the pre-offering share count of 875m * 68% * Rs 272 / 83.5 to get an IPO valuation for FFH’s stake at ~1.938b which is where it’s marked. I don’t assume the stake changed so to value it now that would mean it’s worth $2.42b (i.e. up 25% from IPO at Rs 340 all else being equal). I don’t think they were allowed to mark up the equity but they wanted to reflect closer to what Digit was worth on the balance sheet so they used the preferred valuation to reflect it. Since they are compulsory preferred, I assume the thinking was it reflected the economic reality so useful to the users of financial statements.
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