Viking

Fairfax. It has been remarkably resilient the past 2 days as the market has sold off. I wonder if FFH is buying :-) Opportunity for me to lock in some nice gains and have lots of cash to redeploy should we see the stock market continue to sell off. I continue to like the insurance side of the Fairfax; it looks like they are in a hard market. However, bond yields are down significantly and could stay down which will decrease interest income as the year progresses. And their stock portfolio is taking a big hit; Their two big holdings, Seaspan and Eurobank, are down big time since Jan 1. My guess is equity markets will stay weak for Q1.

The CDC warned Tuesday that the novel coronavirus will spread in the U.S. An official with the Centers for Disease Control and Prevention said Tuesday that COVID-19, the new coronavirus that has sickened nearly 100,000 people worldwide, will eventually spread within the U.S. “Ultimately, we expect we will see community spread within this country,” said Nancy Messonnier, the director of the CDC’s National Center for Immunization and Respiratory Diseases. “It’s not so much a question of if this will happen anymore, but rather more a question of exactly when this will happen, and exactly how many people within this country will have severe illness.” Source: Barrons Bond yields have been tanking since the start of the outbreak. Yes, stocks have had two bad days. But are stock investors not way too optimistic about the potential impacts of this virus on the US economy? Is this a ‘buy the dip’ moment or will we see much lower stock prices in the near future?

Just finished watching the full interview. Here are some of my takeaways: 1.) Buffet is running Berkshire for shareholders but mostly for long term shareholders and the big foundations. He feels an enormous responsibility/loyalty to the long term shareholders. And he feels an enormous responsibility to the foundations that expect (and need) to receive ever growing sums of money in future years. As a result of this obligation to long term shareholders and the foundations safety of principal is of primary importance. (He is NOT running Berkshire to benefit short term shareholders who may see the shares as undervalued and who also see share buybacks as an obvious solution. Rather Berkshire should be viewed as a substitute to traditionally holding a bond in your portfolio. Safe, secure, safety of principal, adequate return. Much better than holding a bond is what i heard over and over again during the interview.) 2.) he expects BRK to outperform the S&P500 in a down market (he was quite emphatic about this). 3.) both he and Charlie do not understand negative interest rates and they have no idea how things will play out in the coming years. 4.) he is mystified who would want to lend money to the government for 10 years and get paid a 1.4% return (and pay taxes on that return) when the policy goal of that same government is to achieve a 2% inflation rate. 5.) he is mystified why anyone would pay 2% to own a 30 year government bond. It has a PE of 50 with no ability to grow interest payments over time. 6.) Banks pay a nice growing dividend and Berkshire’s share of ownership of the total business is growing 8% per year due to stock buybacks. Compare this to a 30 year government bond where you will earn 2% per year. He thinks Berkshire will do very well over the long term owning banks versus owning bonds.

What is a meaningful buyback for you? How many shares and up to what price? Mario, taking out 3 or 4% of outstanding shares would tell me he is serious about share buybacks. My view is anything under 1.5 x BV offers decent value; Buffett of course has a different opinion.

I judge Buffett by what he says but mostly by what he does. BRK has looked dirt cheap for 18 months. Berkshire has a growing mountain of cash. Yes, he has bought back 1% of shares outstanding. But that is simply not a significant number. And I find it highly unlikely that BRK buying back 1.5 or 2% of shares outstanding over the course of 12 months is going to materially move the share price. Are there not a few large forced sellers out there like the Gates foundation? Normally the simplest explanation is the correct one. Either Buffett does not think the shares are cheap at current levels. Or he simply has no interest in buying back Berkshire stock. With all the time he has spent over the years writing and talking about what it would take for Berkshire to buy back stock the fact there has been pretty much zero repurchases tells investors all they need to know (on this issue). With regards to stock repurchases it sounds like ‘big hat no cattle’. When i SEE meaningful buyback i will change my mind :-) Having said all that, i do like the company and i own shares :-)

LOL, maybe even more opportunities in the upturn considering you can make money even in poo-poo that goes bust in a downturn. Great comments.

So Buffett does not believe shares are currently selling for less than they are worth. And with shares increasing 10% in Q4 (and intrinsic value increasing closer to 3 or 4%) one could argue shares today are overvalued. So the cash hoard will continue to grow. At the start of the letter he made the case for retained earnings to be reinvested. Bottom line is more of the status quo. Not a surprise. Might be a hard pill to swallow for those who feel the shares are significantly undervalued. Hard to see the catalyst to drive the share price higher in the short term.

The simplest and most effective catalyst would be to institute a dividend with a meaningful yield (slightly better than S&P 500 current yield). Makes so much sense. Would make future CEO’s job so much easier. The world is changing; it is digitizing quickly. BRK’s largest stock holdings (Apple and BAC) are leading the way in their respective industries. I hope Buffett is learnings from these two companies and lighting a fire under all the large subsidiaries he owns (hello Geico). Let’s hope WFC and Kraft Heinz are one offs. Buffett was slow to recognize the rot at both companies.

Here is a summary from RBC of what they heard about insurance pricing on Q4 conference calls: “What we heard was really bullish. We heard current rate increases were averaging anywhere from mid-single digits to low double digits depending on business mix. The more specialty, the more large account, the more excess casualty and D&O the more likely the average had two digits. The more workers comp, the more small account, the more standard lines, the more likely the average was around +/-5%. Heading in we expected the latter group would be around 5% and it was. We expected the former group however to be around 8% and we would say based on commentary it was probably a little higher than that. As far as how long pricing conditions would last, again we were positively surprised. Our going in expectation was that companies would be cagey about addressing this topic and would give luke warm responses like ‘several more quarters’ or something like that. To our surprise there was pretty good unanimity that pricing power would persist throughout 2020. To our further surprise there were plenty suggesting the good times could roll well into 2021. While the latter corresponds with our own bullish viewpoint, we did not really expect to hear it said aloud. It was. Which gives us quite a bit of confidence in our conviction that we are only in the first or maybe second innings of a very favorable P&C market.”

That might be true, but it is better to withhold an opinion until we understand who the buyer is and what sort of incentives may have come into play. I raised an eyebrow about this transaction because it seems strange that a 5% stake of a long-term asset would be sold. So, why did Fairfax sell it? Did they need to drop their stake to 49% to keep the nationalists at bay? Were they desperate for an infusion of $134m of cash? Did they find a partner with specific expertise that they wanted to bring aboard? Was there some other strategic motivation that was not articulated in the presser? One potential motivation that needs to be kept in the back of our head is that this minor transaction gives Fairfax the latitude to re-value that asset on its books. Fairfax India will book a gain of $500m based on a transaction of only $134m. And then what happens? Well, the Fairfax India's booked assets will suddenly be pumped up, which gives FFH a nice little boost to its annual management fee as well as the likelihood of a 20% performance fee in 2020. So, how much wealth will be extracted from Fairfax India unit holders from that little transaction? I'm guessing that the buyer's price for the 5% slice of that airport will be somewhat similar to the amount of money that FFH extracts from unit-holders. Maybe Prem will expand on this transaction in his annual letter and the annual report to provide more disclosure? For now, I am wary, but keeping an open mind. SJ https://www.vccircle.com/north-american-pension-fund-backs-fairfax-s-india-airport-investment-plan OMERS infrastrucure - strategic investor , this was probably done to get outside validation of big mark up in book value Okay, that makes me yet a little more uncomfortable. I had been holding out hope that it was a completely new player to the FFH world. FFH sold a chunk of the airport at roughly the same time as they sold a chunk of Riverstone runoff. I just hope to hell that there was no quid pro quo on those two deals and that the BIAL transaction was done at true fair market value rather than an inflated value designed to get a favourable mark on the value of the assets. There really should be no question about this, but unfortunately on more than one occasion, Prem has been too cute by half. SJ The quid pro quo being a sweet deal on Riverstone? Can’t see why that benefits FFH. Okay, so this is all hypothetical and nothing more. We have no knowledge that would support the existence of any quid pro quo between the two transactions. We have no actual knowledge of any wrong-doing or any other nefarious behaviour. But, the math is pretty basic and that's what creates the risk: The primary impact is that for every dollar that the value of that 5% BIAL deal is overestimated, the mark for Fairfax India goes up by $10. The secondary impact is that the annual management fee (1.5%) to FFH goes up by $0.15 based on the $10 mark and, possibly the performance bonus (20% of everything over the hurdle) could go up by $2 based on the $10 mark. So if you have the same buyer for two deals being conducted more or less simultaneously, and if you could convince the buyer to over-value one asset and under-value the other, you could create value for yourself. There's an argument that the buyer would only care about the combined value of the two cheques that he must write and wouldn't much care about the specific amounts on each cheque, so maybe it wouldn't be so hard to twist his arm. A portion of the $1 overvaluation would be attributable to minority Fairfax India holders, but that would be swamped by the secondary impact. So yes, I am a little uncomfortable with the idea of there being two transactions made to the same buyer at roughly the same time. If it true that the buyers are the same for both transactions, I wonder why there hasn't been better disclosure. And once again, to my knowledge, there is no evidence that anything like this has actually occurred. SJ Stubble, i think you are going down the rabbit hole on this one. Fairfax has a long, mutually beneficial history of partnering with OMERS on many large deals. It also looks to be doing more deals with Mitsui Sumitomo. Both of these two organizations look to be quality, well run organizations. Neither organization is going to do anything that is not in its own interests (including maximizing returns for their owners). 1.) Yes, Fairfax is in the process of completing a deal to sell 40% of Riverstone UK to OMERS for $600 million. My guess is if someone on this investment board proposed this exact deal (before it was announced) they would have been laughed at; few would have said that the Riverstone UK runoff business was worth $1.5 billion. The cash will likely be used by Fairfax to grow the business at the insurance subs that need $; we are in a hard market that may only last a year or two. Some of the cash may also be used to buy out minority partners (sounds like the timing is contractual). The deal will result in an increase in BV for Fairfax of $10/share. It sounds like the new Riverstone UK will have better access to capital needed to be able to grow their business more aggressively moving forward (likely due to OMERS involvement). This looks to me to be a very good deal for Fairfax and also a very good deal for OMERS. Nothing nefarious. 2.) Yes, Fairfax India is also in the process of creating a new subsidiary (Anchorage) to invest in the airport sector in India. This makes alot of sense as infrastructure investments are big money and it is good to have partners with deep pockets. Their investments in BIAL was $650 million, which is a massive number and not repeatable for Fairfax on their own. If they see other airport opportunities they will need to spend big money and will likely need partners to come up with the high price tag. And it sounds like there might be some big opportunities in India (see rohitc99’s comments). They have sold an 11.5% stake in Anchorage to someone for $134 million. This transaction will decrease Fairfax India’s ownership of BIAL from 54% to 49%. These is lots we do not know and when Fairfax India releases its annual report (March 6? Same as Fairfax?) i am sure we will know more. Is the new purchaser OMERS? I hope so as that would be a huge positive as they are a known entity and the perfect partner on this sort of transaction: a quality company with a long term focus (just like Fairfax) and they have deep pockets (access to capital). And it looks like OMERS is looking to grow their investments in Asia and they want to grow their exposure to infrastructure projects (in a low interest rate world with stock markets shrinking in size more money is moving to private markets). With OMERS as the partner i see nice growth opportunities with Anchorage, especially if they are able to bring another partner or two over time. This will be a big win for Fairfax India shareholders as they will slowly be able to monetize BIAL at a very good price and also grow in a new direction. Part of all the lack of communication currently may have to do with getting all the ducks lined up. Selling a chunk of BIAL may not be simple... current owners might have first right of refusal. Setting up Anchorage may require local government approval. I have no idea; but this is India so my guess is they have some hoops to jump through. The fact a buyer was not named in the press release (or would not be confirmed by Prem on the conference call) does not suggest anything untoward to me. We will know more when they can tell us. Regarding the price, perhaps the high price paid for 11.5% of Anchorage reflects the value the purchaser sees in not only the BIAL asset (which is all everyone is focussed on right now) but also the value of partnering with Fairfax in India and the value that will be created in the coming decade. Fairfax has a long successful history in India: ICICI Lombard, IIFL, Thomas Cook, Quess and more recently Digit and BIAL (just off the top of my head). Fairfax is very plugged in to India (understand the region and have the contacts) and it would be very rational for someone like OMERS to want to partner with them there (especially if they are not already well established in the region). It is also very encouraging to see the speed with which Fairfax is moving to develop BIAL; This shows a deep understanding of how to do business in India and also having the contacts to fill important positions with quality people. This will be a major drawing card for Anchorage as it expands. The sale of 11.5% of Anchorage might be an example of Fairfax actually earning its high fee from Fairfax India. If BIAL is worth anything close to $2.6 billion then Fairfax India shareholders are going to make out like bandits (and it looks like it just might be :-)

Thanks for commenting. Very helpful to understand the GVK purchases in 2009 and 2011 and the bigger picture. The growth of the airport the past 10 years has been impressive. Phase 1 (Terminal A1) expansion was completed in 2013 increasing passenger capacity to 25 million. The second runway was just completed in Dec 2019. And the new terminal (phase 1) is scheduled to open March of next year (2021) and when fully completed will add passenger capacity of 25 million. And they already have plans to add a third runway. Bottom line, the development of the airport is in the early innings of another growth phase. Link to article discussing plans for the new terminal: - https://www.trbusiness.com/regional-news/asia-pacific/bial-outlines-commercial-vision-ahead-of-t2-opening/170859

The key to Fairfax India is BIAL. It is the 800 pound gorilla in the BV calculation. Are there some other ways we can get a fix on some other measures that might help us understand what might be fair value for that asset? How about looking at all the historical sales since 1999 (when BIAL was born)? There have not been many transactions as stakes in trophy assets like this do not come up for sale often. - 2009 GVK purchases 2 stakes for 12% and 17%; implied value for BIAL = $800 million. - 2011 GVK purchased 14% (total ownership to 43%); implied value for BIAL = $964 million. - 2016 Fairfax purchased 33% for $336 million; implied value for BIAL = $1,018 million - 2016 Fairfax purchased 5% for $49 million; implied value for BIAL = $980 million - 2017 Fairfax purchased 10% for $200 million; implied value for BIAL = $2,000 million (this purchase is the outlier of recent transactions; it gave Fairfax control and they subsequently made management changes) - March 2018 Fairfax purchased 6% (total stake = 54%) for $67 million; implied value for BIAL = $1,117 million - Dec 2019 Fairfax sell 5% for $134 million; implied value for BIAL = $2,680 million Based off what GVK paid back in 2009 and 2011 it looks like FFH may have gotten a steal of a deal on 3 of its purchases (time value of money, plus the actual asset is much more valuable given all the improvements made over 5 years). Perhaps the one higher purchase ($200 million for 10%) was closer to what Fairfax felt was actual fair value for BIAL (still worth doing to get management control of the asset). Interesting :-) In the attachment below I constructed a timeline for BIAL from 1999 to today with all transactions entered. _____________________________ It is interesting to see that L&T IDPL was part of the original consortium when BIAL was birthed back in 2001. I think they were awarded the contract to build the 2nd runway (recently opened) and also the new terminal. _____________________________ Another thing to understand would be how BIAL's value compares to the other big airports in India, like Mumbai. when it made its purchases of BIAL back in 2009 and 2011, GVK also was majority owner of the Mumbai airport. Here is a quote from an article (Aug 2011) commenting on its 14% purchase: "Aviation experts say GVK must have exercised its right reluctantly considering the money involved, but BIAL was too important an asset to let go. "In the long term, BIAL will be a stronger asset for GVK even better than the Mumbai airport. The revenue share of the government in Mumbai airport with GVK is 37% whereas in BIAL it is only 4%," said Kapil Kaul, CEO, India and Middle-East, Centre for Asia Pacific Aviation, an aviation research and advisory firm. "Also, Mumbai has structural issues and is a locked airport whereas BIAL has a lot of scope of expansion and development," he added. https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/gvk-power-and-infrastructure-buys-bial-stake-for-rs-614-crore-threat-from-changi-tatas-forces-co-to-pay-premium-for-siemens-14/articleshow/9700380.cms Fairfax_Equity_Holdings.xlsx

I found the old BIAL AR doing a search on the internet. I think it was released in Dec. So my guess is the 'new' 2018-2019 report should be out shortly. BIAL has a spot for it on their web site but the link is not active.

Attached below is the 2017-18 BIAL AR (PDF). BIAL_AR_2017-18.pdf

I think they needed capital. If the deal was intended to give RUK capital to grow, it would have been structured as a capital injection rather than a partial sale. Frustrating they can’t be more honest when they describe these things. Plus, they said they’d never sell the insurance subs and now they’ve sold (part of) two in two years. Agree re what’s going on under the bonnet. It’s felt like that for a couple of years. I agree, they need capital. But not to put out a fire. Rather, they need capital to take advantage of some once in 10 year opportunities: 1.) aggressively grow business in hard market at some insurance subs 2.) stock price below BV They also need $ to buy out minority partners. Bottom line, their need for cash today is what i would call a good problem. Also, my guess is the market will never value the runoff businesses favourably (in the Fairfax family). In the current environment i am very much in favour of them selling/monetizing undervalued assets (like Riverstone) to fund hard market growth and share buybacks (the hard market in pricing will not last forever and when it ends we can expect Fairfax to get very aggressive on share buybacks). It will be interesting to see what Fairfax plans to do with Seaspan. This has become such a large position. Another first class type of problem to have :-) My guess is nothing happens until after the APR aquisition which is expected to close some time in 1H 2020 if memory serves me correctly. Seaspan reports Feb 19.

Agreed. I missed this in my previous point. It looks to me like EM and India in particular was starting to come back into favour the end of Q4 and start of 2020 (before Caronavirus hit). I think this trade may come back into favour in another month or two which would help investments like FIH.

I think it is safe to say sentiment in FIH is at an all time low. Same for FFH (the two are linked at the hip). My guess is a lot of the initial investors in FIH were big FFH supporters (at the time). Although i would say i think the issues at FFH were internal; they made some bad decisions. Fortunately, i think FFH has learned some important lessons and have been moving in a better direction for about 2 years. But it will take time to right the ship and get BV growth into double digits on a consistent basis. I think the issues with FIH are more external. INR devaluation hurt. The Indian banking crises was not their doing; however, it crushed the value of IIFL. Until recently, book value for BIAL was near cost. Bottom line, investors were too optimistic a couple of years ago. And now they are too pessimistic. Company (FIH) has not really changed that much :-)

I found it useful to do a quick read of all 32 pages of posts on this thread. It provides a great look into the life of a stock. What a roller coaster ride! In the beginning there was such euphoria (and interest). And rightly so. Fairfax has a long history of investing well in Indian stocks. People were happy a few years ago to pay well above BV. What happened? The past 2 years have not been kind. - INR currency has depreciated about 10% versus the US$ (their reporting currency) - banking crises in India caused IIFL stock price to drop 50% (all financials got wacked) - Fairfax India ‘paid up’ to get control position of BIAL; looked like big overpay at the time Where are we today? - currency looks to have stabilized at current levels (we will see) - banking crises in India has forced financials to fix a few things (which is good for shareholders) and the IIFL triplets are once again coming back into favour (stock prices up 45% in the last 6 weeks) - BIAL continues to execute its business plan with 2nd runway opening in 2019, 2nd terminal on track to open next year (2021) and progress being made on monetizing the land around the airport. Bottom line, value of the airport asset is up significantly and the glide path for future growth is happening. I agree the fee structure for Fairfax India is not good. The fact the stock is listed in Canada but trades in US$ is problematic. I also do not like how illiquid the shares are. Do i believe current BV is $16.89? The problem with stocks in general and especially Indian stocks is it is tough to know. So it really comes down to do you trust management. And i do but not blindly. Is there some promotion in the current price of BIAL? Probably. Will the airport be increasing in value in the coming years? Yes. So even if the current value attached to BIAL is a little stretched the business will get there over time. With shares trading at $12.85 (my average price is about $12.45) BIAL is still being valued below the old valuation. I think there is a large margin of safety at the current stock price. Investor sentiment in Fairfax India is at its low. And with IIFL triplets on fire the margin of safety is only getting larger as we start the new year. One thing i really do appreciate is all the disclosure that Fairfax India does. It is very easy to understand what they own, when they bought it, what it cost and what they think it is worth at each quarter end.

Does anyone have thoughts on the RiverStone UK sale? Fairfax mentioned when they announced the sale that there will be a $10 gain in BV. My guess is that is still coming in Q1 when the deal is announced (i.e. it did not hit in Q4 financials). Correct? Prem on the conference call said the benefit of selling 40% and getting OMERS involved is it will provide access to $ to grow the business. It will be interesting to see how fast Riverstone UK grows post acquisition. Sounds like there are lots of opportunities. That deal closes soon (sometime in the next 6 weeks). Fairfax will be able to put the $600 million to work. They will likely use it to buy 10% of Brit and Eurolife minority interests. And grow the business at the insurance subs. Prem mentioned they may IPO Riverstone UK down the road. Perhaps that is the plan for how they will take out their minority partners in Allied. Trade runoff (Riverstone UK) for minority positions in Allied and Brit looks like a good trade to me. Makes Fairfax more of a pure play insurance operation and removes the overhang of having to find a big chunk of cash to buy out minority partners (especially in a hard market when your stock is trading below BV). It really is amazing how much stuff is going on under the hood at this company. My guess is 2020 will see lots more developments just like 2019 :-)

Xerxes, nice to hear that you are finding the spreadsheets useful :-) The Fairfax information is much more 'hairy' and I plan on updating it when the Annual report comes out. The share count (for all companies) is shares owned by Fairfax India. If you are interested the Fairfax India quarterly reports do a great job of clearly laying out all investments they hold (with lots of different perspectives). I wish Fairfax would do the same. I have attached a screen shot of page 30 of the Q3 report as an example (hopefully it opens in a format you can see).

Here is a summary of Q4 results from one of the big Canadian banks: “Our view: The insurance part of the business is shifting into a higher gear with strong growth, improving margins and still solid reserves. Quarterly results were negatively impacted by some non-insurance items that are largely one-time in nature. We think valuation is among the most attractive in the P&C space at a discount to book value with rising earnings momentum.”

Fairfax India reported yesterday. As expected, the increase in 'fair value' of BIAL increased BV to $16.89/share (from $13.86 at Sept 30). Key development: "The net change in unrealized gains on BIAL of $751.5 million are supported by positive operational developments and the finalization of BIAL's real estate development plan." The other piece of good news with Fairfax India is what is going on with its triplet investments in IIFL (Wealth, Finance and Securities) to start the new year. These three companies had been in a bear market for about 24 months (falling in value by more than 50%). However, they all look to have bottomed in price last Oct and have been moving higher since then. And so far in 2020 (6 weeks) they are up +45% or about $180 million. Fairfax India has 153 million shares outstanding so this increase (more than $1.00 per Fairfax India share) is significant. This will be worth monitoring moving forward. Shares are up a little today to $12.94 Attached is an Excel spreadsheet that can be used to track all of Fairfax India's publicly traded holdings (tab 2 of the spreadsheet is a tracker for FFH holdings). Let me know if you see any errors :-) Fairfax_Equity_Holdings.xlsx

A couple of notes from the conference call: - Annual report and Q4 info will be available March 6 - net written premiums grew at accelerating rate each quarter; sees trend continuing in 2020 - supporting growth of insurance subs top priority; this is because hard markets occur infrequently and only last a short period of time (a couple of years) - share repurchases will be done with cash not needed to grow insurance subs - in the non-insurance segment, TCook/Quess demerger resulted in $191 million impairment - US runoff had $216 million loss due to asbestos strengthening; example of social inflation - $600 million will be coming to FFH in Q1 when the Riverstone UK deal closes; after sale closes Riverstone UK will have opportunity (with OMERS) to grow business. Fairfax may take Riverstone public at some point. - minority insurance partners buyout: 10% of Brit soon at $100 million (seems low?); Eurolife will be small amount; Allied agreement opens up mid year and Fairfax has 3-4 years to buy out minority partner - Go Digit: the company recently raised 10% at $800 million valuation. The $300 million gain recognized by Fairfax was Go Digit convertible shares (owned via Quess) not the common stock owned by Fairfax (hope i got this right) - BIAL sale was to third party investor; purchaser was not named

SJ, regarding market valuations my guess is Fairfax is expecting the US and global economy to continue to chug along which should be good for stock markets. When you look at their specific holdings (Dec 31, 2019 valuations) there is nothing that i would call grossly overvalued and not much that i would call overvalued. The large position in Indian equities (Quess, Thomas Cook and the twin IIFL positions) have been in an 18 month bear market that looks to have finally turned in the last 6 weeks (for Quess and IIFL anyways). Similar for their position in Recipe - casual dining restaurant stocks in Canada have been getting crushed all 2019. Hard to see Recipe getting much cheaper and when they get back to same store sales growth (and improve profitability) there will be lots of upside (2H 2020?). Seaspan had a wonderful run in 2019 but i dont know if i would call it super expensive (perhaps a little expensive). Eurobank also had a great run in 2019 (it was crazy cheap at the end of 2018) and is probably fairly valued now with decent prospects. Blackberry is not expensive and if the Cylance acquisition works out it could increase 50% or more. Bottom line, valuations of the stocks they hold look pretty reasonable in aggregate. 2020 should be another decent year for investment gains.

Here is what one investment house had to say in their preliminary report :-) "Net/Net: Core insurance underwriting results were strong and growth was good across most units although this was significantly overshadowed by weak results from non-insurance operations, affiliates, and the run-off unit. While we think that Fairfax is well positioned for current favorable market conditions, quarters like this are why valuation has continued to lag peers. A conference call will be held at 8:30 a.m. ET (dial-in 800-369-2013; passcode Fairfax) on Friday, February 14."