SafetyinNumbers

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.

The structure is exceptional. It’s why the returns are high and it’s not well understood.

It’s possible market structure will change but I wouldn’t bet on it. I think premium/discounts drive the narrative but flows drive price. With FIH not being in any benchmark there are no passive flows to get ahead of which keeps most flows out. I think the discount to IV is probably as wide as its ever even though the discount to book is tighter than average. I think it’s a result of investors trying to get in ahead of BV growth based on the IPO. At what discount will the buyers show up post IPO is a reasonable question if they don’t have the IPO catalyst to look forward to.

Maybe. I think E-L Financial thought that too and were surprised the discount didn’t close much after they bought half of the free float back. They also paid over 25% of the starting share price in special dividends, raised the regular dividend 30x and split the stock 100-1. ELF’s portfolio is closer to 80% public stocks and ETFs too so in theory should lead to a smaller discount.

Share price is just supply and demand. Fairfax and OMERS aren’t sellers.

I don’t think there is a fixed number they have disclosed but how much more than their float do they need to own in bonds at the insurance subsidiary level. That’s where the allocation decision to switch to equities would happen if there was a dip to buy.

I don’t think over. 1% of the float is peanuts.

FIH was active on the buyback last month.

They probably own $6b or more in fixed income then they need to so there is lots of dry powder to buy dips in equities if there is a major market dislocation.

I think Prem’s contract expired at the end of last year so I’m curious if they will be making any changes going forward.

I think so too but I also think Fairfax does whatever they can to defer reserve releases.

A lot of reserves were released in Q1 for wildfires. I’m not sure if we get as much as you think.

I think it’s worth 2x right now. What are you looking for? Relative valuation vs other airports suggests it’s worth that. A DCF with more normal discount rates would get you there as well.

This shouldn’t be hard to do for the accounting equity returns. They give us the asset mix, the coupon on the fixed income portion and the gains/losses on bonds are separated from the equities.

I think most investors would be served to not project their investment style on Hamblin Watsa. Historic returns were very strong pre 2010 and unsurprisingly declined with interest rates. Now that interests are more normal returns are up. If they can stay above 6% (about 8% for the equity portfolio) one can see how ROE can stay above 15%.

It seems like BDT has a relationship with the CEO/founder so presumably whatever they are telling Fairfax has made them decide it’s worth a bet. I think expecting them to be wrong a third of the time is fair.

Maybe take private with the CEO and BDT or just has confidence in the turn. It’s cheap if margins can go up.

That started rolling up BIAL’s valuation last quarter, I assume that continues for all of the private holdings. Just like the mothership, the longer they own things it becomes harder to hide the returns. The INR is less of an impact in Q4 as well. I do find it a bit surprising that the INR doesn’t do better given how much gold Indians own. Most of it happened last quarter.

Some pictures to put into context the move since the last book value was struck at the end of Q325.

They write the same thing every year. It’s discretionary as always.