SafetyinNumbers

Given how conservative they are, if they booked a gain it was probably a success.

I think it may be useful to come up with a range for expectations using the RBC ROE model. What’s the low vs high end for combined ratio? What is a range of investment returns? If fixed income is 2/3rds of the portfolio and it’s earning 5%, what’s a reasonable range for equities? What possible gains could make their way into BV over the next few years between Eurobank, BIAL, Poseidon, Ki (not in the equity portfolio) etc..

Bessent is a hedge fund manager. They borrow at the short end while buying long dated treasuries when they get high enough. It’s a pretty nice spread trade when they control the short end. It almost seems things like Greenland are designed to force this outcome.

I’m focused on the current set up. Not the past.

It’s hard not to like Fairfax under almost any macro set up. They are pretty creative when it comes to making money.

I think it they are better set up for it than most. Losses on bonds will be relatively low and short lived given the short duration. It might mean the market hardens a bit so premium growth could also pick up. Long term a positive for ROE for sure.

I haven’t taken the time to analyze it closely but from what I can tell, the levered it up to 4x EBITDA on purchase and managed to pay the debt down over that period before relevering it up to buy in the family’s interest and the royalty company. My guess is the return on invested capital exceeds their 15% hurdle rate even if it’s not there on an accounting basis yet (it might be).

That cross was from Questrade. I’m not sure what it means to be honest. My guess is an international broker using them for direct market access.

They likely buy in Allied World and Odyssey minority interests before buying another large insurance acquisition.

I’m guessing that there was a mandate change on a portfolio. There were some other big moves in other TSX stocks that didn’t have any news flow from what I can tell. Pure speculation but it makes the most sense to me.

I think the expense runs through in the period when the shares are provided to the employees. They buy the shares ahead of time so that the cost doesn’t end up being higher when they vest presumably. It’s one of the more unique and shareholder friendly SBC plans I have seen.

It doesn’t trade at 5x earnings it’s a holding company like FIH. The family and the company itself controlled 3m out of 4m shares at the end of 2019 when they started and now it’s 300m out of 345m shares. They don’t want to take it private much like FFH doesn’t want to take FIH private. In ELF’s case there are no real benefits from being private and likely gives them less tools the next time there is a market dislocation. If you don’t think stock prices are based on supply and demand then there isn’t much to talk about. Fwiw, the stock has done pretty well despite the discount not changing much.

Should also have a float cap to get in the S&P/TSX Composite in March so another reason to buy besides commissioning the mine and copper prices moving higher.

I think we already know they didn’t.

Sure but if they want to stay public there is a conflict. With ELF, they keep picking away at shares but at a much lower rate than when the discount was wider. With both ELF and FIH, there are good reasons to remain public and both have shareholders who think it’s a scheme to take the company private on the cheap which I think is nonsense.

Exactly. The discount to BV was 35% in 2015. It ballooned to ~45% by the time they started buybacks in 2020, bought back half of the float, raised the regular dividend 30x, paid big special dividends and split the shares 100-1. The discount is still about 35%.

I think this mostly has to do with banks rolling the TRS. Volume usually spikes in mid January.

In the current market structure, I think the only way that works is if it’s a take private. Even in that case, I think it happens at a big discount to intrinsic value even if it’s close to book value. I just don’t see where the incremental buyer comes from to keep the discount closed. I lean a lot on E-L Financial for my views on this but it’s a good comp also being listed in Canada where half of the float was bought back.

It’s being borrowed against and invested so I do think it helps the economy via credit creation. I had a theory that gold would help strengthen INR but it was explained to me last year that the government has a policy to weaken INR to help with exports.

I would appreciate it too. Probably mostly selling puts and buying LEAPs.

A benefit of higher volume is that it will increase how much FFH can buy daily on the NCIB when it comes up for renewal.

It’s considered part of the insurance business I think but not clear its core. They should start consolidating it soon based on the new regulations. Ki is also part of the insurance business and probably is core even though they own a smaller percentage.

I think it’s helpful to separate the holding company from the insurance subsidiaries. The asset mix at the latter doesn’t have much to do with how much cash there is available at the former. Another way to frame Fairfax is to consider it has a dollar invested in equities for each dollar of shareholder’s equity. On top, we get 2x the fixed income return plus any underwriting profit less head office and interest expenses. Looking at it that way, helps me appreciate how low expectations are for the equity portfolio.

Pretty sure. Generally buybacks aren’t active in the first 15 minutes and last 15 minutes of trading. Also, buybacks can’t be done on an uptick. It might have to do with trades related to S&P/TSX 60 futures.

Fairfax also adds some leverage at the holdco level which boosts the investment:equity leverage a bit more.