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Viking

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  1. Thank you for posting. Some take aways: 1.) current investment positioning: short US$; positioned for inflation - long commodities (oil, copper etc); long equities. Will be surprised if he has not exited equity positioning by year end. 2.) Fed is supposed to be forward looking with policy. Focussed on employment which is a lagging indicator. This makes no sense. 3.) current environment: risky, interesting as hell, will end badly just don’t know when. 4.) shorting: currently as much opportunity as he has seen in his lifetime on short side
  2. Good question. I have no idea If we see volatility i do think they will be opportunistic. Like they were with buying corporates in March/April of last year. And my guess is we could see some serious volatility if the economy and inflation run hotter than expected (decent chance of this happening).
  3. If the move to higher 10 year treasury yields is somewhat orderly i agree with you. But if the move in yields is a spike i think the stock market will sell off aggressively and this will hit Fairfax in the short run. The other risk is if inflation moves much higher than the Fed expects. This will also likely hit equities hard. Bottom line, inflation looks like it will cause volatility to hit financial markets in the coming months. As we learned last year, Fairfax has been very opportunistic in volatile markets. Their recent selling of 1/2 of their corporate bond portfolio at yields
  4. It looks to me like higher inflation in the coming months is now being confirmed by the data. As a result bond yields are once again moving higher. There are three key buckets to understanding Fairfax and its ability to grow BV: 1.) insurance: we are in the middle of a hard market 2.) equity holdings: have been on fire the past 6 months 3.) bond portfolio: this is the bucket that has been the biggest question mark the past 6 months. Fairfax is positioned very conservatively (with very low duration). They have positioned their portfolio to benefit from higher interest rates
  5. It looks like Atlas is looking to build a utility type of container shipping company. A company that is little affected by the cyclical nature of the containership industry. We saw this during the pandemic when their business held up better then expected. We are also seeing it now; spot container shipping rates are through the roof and Seaspan current year results are benefitting only modestly. The challenge for Atlas is timing... when will Mr Market get it (the strategy), like it, and pay up? Will it take another couple of years? The analyst community seems to be taking a wait and see ap
  6. Pedro, Fairfax’s long equity investments have been purchased with the objective to earn Fairfax a better return than bonds over time. These long equity investments will do well if they go up in price over time. The equity investments are volatile: as we learned last year, they can go way way down, and as we learned the past 6 months, they can go way up. I view the TRS as another equity type investment; and yes, it will be volatile. Shorting, either individual names or indexes, are a very different animal. Fairfax has proven to be spectacularly bad at shorting over the past 8 years; it is
  7. Right now Fairfax continues to be ‘cash poor’ (example: selling 14% of Brit to further delever balance sheet). Nothing that is a concern. They will have lots of good options in the future as more cash becomes available. 1.) deleveraging 2.) FFH buybacks - with stock trading below .95 x BV 3.) buy back minority stakes in insurance subs (Allied and Brit) My assumption is the insurance subs do not need cash to grow in current hard market (given positive earnings and their equity portfolio rising significantly)
  8. The Covid situation in India is looking like Italy back in March of 2020 (a tragedy). I have sold my Fairfax India and purchased more Fairfax. For Fairfax, the Covid situation in India (and its impact on the economy in the short term) is the one negative i see right now.
  9. On Friday RBC released its Q1 report on Fairfax RBC and raised its target price for Fairfax to US $550 (from $500). Fairfax has a very strong presence in specialty insurance and large account. These are the segments of the market that are experiencing the best rate increases and there is little sign that rates won’t continue higher throughout 2021 and likely into 2022. Equally, there is ample evidence that the rate increases achieved over the last 12-18 months are finding their way into accident year margins. For the quarter the accident year combined ratio was 90.9% we don’t the compa
  10. If Fairfax had a strategic reason for taking Fairfax India private then i think they could worry less about the optics of purchase below BV. The immediate problem for Fairfax is where do they find the cash? They are selling 14% of Brit because they need cash to delever. And if they have some extra cash why not buy back FFH stock trading at 0.9XBV.
  11. What Fairfax does with Resolute and Stelco will really depend on their assessment of whether we are beginning a commodity super cycle. If lumber and steel prices stay elevated for the year (as futures prices currently forecast) both stocks should trade much higher later in the year. And likely pay large special dividends. Resolute has a carrying value of US $134 million. The current run up in the stock price is not impacting BV. A sale would drive a nice increase both EPS and BV in the quarter it is booked. Stelco is mark to market so the impact on FFH EPS and BV is updated each quar
  12. Below are some notes from Q1 conference call. The key take away for me is deleveraging (debt reduction) is the near term priority. $1 billion in debt reduction in Q2 and ‘further over time’. Smart to do this when times are good. Fairfax needs to re-build management credibility and this is another step in the right direction. This also perhaps explains why they increased the number of FFH shares owned via TRSwap (and why they did not just buy back more shares outright). The insurance side of Fairfax is performing well (thank you hard market). bond portfolio is positioned for higher rates
  13. Results were pretty much in line with what was pre-announced; my guess was earnings would hopefully come in around $30/share and that is pretty much what we got. BV was up nicely to US $497 despite US $10 dividend payment. Great quarter. Bottom line, Fairfax needs to continue to execute and deliver results (under promise and over deliver). - hard market is benefitting insurance companies - rebound in equity markets is benefitting investment portfolio (understatement) Interesting to see the increase in the number of FFH shares held via TRSwap (including April). I wonder what the
  14. Castanza, very impressive. You are an artist... the finished product looks great! i am ok painting and simple jobs. The rental we are moving into i am completely repainting (including kitchen cabinets), new flooring in kitchen, upgrading some light fixtures and lots of other small improvements. And, yes, youtube is an amazing resource (i have tried to explain to my kids what life was like before the internet existed...)
  15. The (good) problem that cyclicals have is what do do with all the free cash flow. The do not want to just let the cash build as they will become a buy out target. So the cash is normally used to buy back stock (as high prices) or make an aquisition (at a high price). As you point out Stelco has a GREAT use of cash at a very attractive price (buying 25% of Minntac). Combine this with a special dividend and you have a very rational use of free cash flow. The management team certainly has positioned the company well. My guess is someone will try and take them out. And management looks motiv
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