Viking

Speculation is OPEC currently has minimal spare capacity. Why do investors in oil care about OPEC spare capacity? The purpose of spare capacity is act as a shock absorber for the price of oil. Oil production is very volatile. It is quite common for 1 million barrels of production to get taken off line for periods of time. Spare capacity allows OPEC to fill in where needed. Why does OPEC want smooth pricing? Smooth pricing results in a more stable environment. OPEC nations need to create and manage national budgets - health, education, military etc - and a stable oil price is very helpful. A stable price also makes investment decisions easier for producers (wickedly volatile oil prices up to $120 and then down to $90 does not encourage investment). Extreme price volatility = less investment. ————— I read OPEC historically targeted to have 5% of spare capacity. Global demand today is about 100 million barrels per day. So this suggests a target of 5 million barrels of spare capacity in a normal oil market. It sounds like only 2 OPEC producers have any spare capacity today: Saudi Arabia and UAE. And it is around 1.5 million barrels per day. So low that it WILL NOT BE TAPPED unless a true emergency arises. Why so low? Just like oil majors, OPEC members have been underinvesting in new oil production for the past 7 years. Bottom line, there are no longer any shock absorbers for the price of oil. People better pray there are no major shocks to demand…. (We have our own Game of Thrones playing out in Europe and winter is coming…). ————— So what did we learn today? Shell just shuttered 400,000 barrels/day of capacity in Gulf of Mexico (pipeline leak). A couple of days ago, Russia turned off a pipeline running through southern Europe (it has since been turned back on). It is also hurricane season - which usually results in some Gulf of Mexico production getting shuttered short term depending on the paths taken. We also know OPEC currently has minimal spare capacity. As a result, any material reductions in the supply of oil will likely quickly push prices higher. The oil market is very tight. And will likely remain tight for years. ————— Shell says oil output halted at three Gulf of Mexico platforms on pipeline outage - https://www.theglobeandmail.com/business/industry-news/energy-and-resources/article-shell-says-oil-output-halted-at-three-gulf-of-mexico-platforms-on/ Oil major Shell said it had halted production at three of its U.S. Gulf of Mexico deep-water platforms after pipelines connecting the three were shut. Shell, the leading operator in the U.S. Gulf of Mexico, said Mars, Ursa, and Olympus platforms have been shut-in. The three are designed to produce up to 410,000 barrels of oil per day combined, according to data on the company’s website. The platforms deliver Mars sour crude, a grade prized by oil refiners in the United States and Asia. Shell said it was evaluating alternative ways to move the oil to shore.

Lightening up on some of my oil positions. Went way overweight a week ago when they cratered. CVE is up almost 15% in the past week. MEG +17%. Oil is still my largest weighting. If oil sells off aggressively again i will be happy to get overweight again. Gotta love the crazy volatility!

i have 2 daughters… would their opportunity set be the same if they lived in India or China today (or would they be subservient to the males in family or at work)? What about LGBTQ community? Do they have the same life/opportunity set in India or China? (They might..l i just do not know). How do Uyghurs in China feel these days? How well are Muslims getting on in India these days? What minority group is going to be targeted next? The eye opener for me, and i hate to sound like a broken record, was watching how China handled the outbreak of covid. It seared in my brain the core differences between living under an authoritarian system and living in a liberal democracy. Liberal democracies are flawed. But what i saw happening in China made my skin crawl. It was horrific and frightening. It made me appreciate the wonderful gift that me and my family have been given - the privilege of living in a flawed liberal democracy. I remind my kids of this fact lots.

i also wonder if the margin for error is smaller in Canada. Most provinces have high and generally increasing minimum wages. My guess is regulation and taxes are higher in Canada than the US.

CARA / Recipe has been a terrible, terrible long term investment for minority shareholders. And this stretches back to before Fairfax was involved and the Phelon family/CARA were in charge. There are important lessons in the previous 10 years history if Fairfax is open minded. The restaurant industry tends to be a wealth destroyer over time - except for the most well run operators (and clearly Recipe is not one of those - that long term history thing). It will be interesting to see what Fairfax does… learn from the past? Or double down on a failed strategy? Decisions like these will inform my decision of whether Fairfax continues to be a trade or becomes a more permanent holding.

Agreed. Lots of misses on my part (i sold my Recipe shares after Q2 earnings for a nice, small gain). Fortunately, also a few home runs (over the years). The key is to stay in the game and get ready for when the next fat pitch is thrown your way by Mr Market.

So how much will Fairfax spend to take Recipe private? I am using the ownership % provided in Globe and Mail article from today. Recipe total shares = 58.8 million Fairfax = 45.8% = 27 million Phelan Family = 22% = 12.9 million - Fairfax will buy up to 4 million shares from Phelon Family (if i am reading things properly) - so assuming Phelon Family stake will fall to 9 million shares Fairfax buys 23 million shares @ C$20.73 = $475 million Fairfax owns 85% Phelon Family owns 15% ————— Total market cap of Recipe = $1.2 billion. From Recipe 2019AR: “Free Cash Flow before growth capex, dividends, and share repurchases under the Company’s normal course issuer bid (“NCIB”) for the 13 and 52 weeks ended December 29, 2019 was $44.3 million and $155.9 million compared to $47.3 million and $158.7 million in 2018, respectively.” ————— Now what does Fairfax do with Recipe after the purchase goes through? I really hope Fairfax does not provide any additional funding for Recipe to expand into the US. If Recipe wants to expand make them fund it with their own earnings. I would love to see Fairfax use Recipe as a piggy bank (kind of like Berkshire) and use Recipe’s free cash flow to fund growth into better returning assets as chosen by Hamblin Watsa. I hope Recipe does not turn into another version of the Abitibi/Resolute frankenstein.

You are correct. Atlas shares have been a big underperformed recently compared to peers in the same industry. Modest upside in strongest market ever. And now getting crushed as sentiment in industry wanes with investors. Well, Atlas stock was getting crushed until this take private offer surfaced. Atlas is trying to do two things: re-invent itself as a finance company and double in size quickly. Mr Market/analysts were not drinking the Kool-Aid. Going private makes a ton of sense for Atlas given feedback from Mr Market, their current situation (crazy aggressive expansion) and the state of their industry (lots of uncertainly about where capacity and rates go from here).

In the 2020 bear market Fairfax was playing defence. They were not able to take advantage of the low prices offered up by Mr Market. Fairfax is playing offence in this bear market. They can play offence today because they are in much better shape financially. Operating income has spiked higher… they are earning +$500 million per quarter (from underwriting and interest and dividend income). Pet insurance sale will bring in +$1 billion. Sale of Resolute will bring in even more in 1H 2023 when it closes. Recipe is cheap and C$20.73 is a very good price for Fairfax. Recipe’s business is improving as Canadians return to restaurants. Fairfax’s timing with this deal looks good. The John Keels transaction also was opportunistic. Of course we also have the Atlas take private offer currently on the table. It will be interesting to see what Fairfax does with the Stelco dutch auction: tender shares or own a much bigger % of Stelco and its future earnings. 2022 is shaping up to be another active and very good year for Fairfax. With 4.5 months still to go… what else will Fairfax do in 2022? My guess: 1.) Fairfax India dutch auction once IIFL Wealth deal closes. This will continue the trend of Fairfax increasing its ownership stake in Fairfax India. 2.) Fairfax dutch auction once pet insurance deal closes. Or perhaps simply ramp SIB and start buying back 1 to 2% of shares each quarter moving forward.

What could possibly motivate energy companies to grow production today? Patriotism? No. That, of course, is stupid. But politicians will try and play that card. (It never works.) SPR release is a short term fix that eventually reverses and becomes a big, big problem (it needs to be re-filled which simply adds to future demand). Oil is a commodity. Want to know where the price of a commodity is going to go? Not that difficult. Follow supply and demand. What is going on with demand? Growing by 1 million barrels per day every year like clock work. Need to re-fill SPR demand (after the election) will add another 800,000 barrels/day to demand in 2023. What is going on with supply? Growing by less than 1 million barrels per day. Demand growing greater than supply = higher prices. As we get through Q2 earnings calls what are we learning? $90-100 oil prices are not high enough to solve high oil prices. Oil companies are not growing production. Why? 1.) Labour. No one wants to work in oil and gas…. As the government reminds us every chance it gets… oil and gas is not the future…actually it is the devil… 2.) ESG: debt and equity continue to flee oil and gas. Money to finance long life producing assets is gone FOREVER. 3.) stock prices are in the toilet. Why invest in new production when you can buy back stock at much better risk/adjusted returns. Oil companies are trading at crazy cheap valuations. What is the solution to the current shortage of oil/high price of oil? THERE IS ONT ONE SOLUTION.. MUCH HIGHER PRICES.

I think many people are completely missing what is going on with Atlas. Since the news first hit all of is have learned more. ONE is offering up $1.4 billion to take Atlas private. ONE is the driver of this deal. Everyone, take a deep breath and think about this. This is not a Fairfax deal. Or a David Sokol deal. For Atlas this is a kick ass offer. Because going private offers many big big advantages for Atlas, especially in its current state (big time expansion). Public markets are a big pain in the ass. For the other large shareholders (like Fairfax) going private is also a big win. So what do you do? You support the proposal. It is the rational and right thing to do. This is not screwing anyone. This is how business is supposed to work. i am sorry, but i do not get all the anger on this site about this proposal. It is a business deal. Not that complicated. Atlas stock was stuck; mired in the toilet. Shipping rates could drop through the floor in the coming months. Actually it is pretty likely that shipping rates will come down. Atlas stock could easily have fallen off a cliff from here. For anyone who was paying attention, the stock tracks what is going on with container rates. NOT Atlas as a finance/leasing/capital allocation company. Mr Market WAS NOT DRINKING the Kool-Aid. And despite all the talk about how cheap Atlas stock was pretty much nobody on this board was buying when the stock was trading below $11.00. At least i wasn’t. The bottom line is current Atlas shareholders have been given a gift. An opportunity for a quick, sizeable gain. In the middle of a bear market where the funds can easily be re-deployed into lots of other great opportunities. ————— Many years ago when Odyssey was bought out by Fairfax a majority of my net worth was in Odyssey stock. I welcomed the news of the buyout. At the time i expected the buyout offer (unlike the current situation). Was Fairfax being opportunistic? Yes. Smart bastards. My only mistake was not waiting for the the small bump Fairfax delivered to shareholders to close the deal (very predictable in hindsight).

@glider3834 so it looks like ONE is the driver of this transaction. I am VERY happy to see that Fairfax is not putting any new money in (at this time). I am hoping Fairfax does a big buyback of their own shares when the pet insurance sale closes later in 2H (so it looks to me like this is still in play). As a Fairfax shareholder bringing ONE on board likely makes Atlas a stronger company. I like this ALOT. Atlas is Fairfax’s largest investment. ONE has very deep pockets. They are a shipper. What i do not understand is why ONE does not buy all of ATLAS. Right now shipping companies are making obscene profits. If you want to keep the shipping market tight (and rates high) you use your profits to take out other players… you DON’T use your profits to add to capacity. That is largely what you are seeing with lumber and steel producers in North America (i.e. Stelco is not using its profits to grow steel production… it is using profits to dramatically reduce share count). Atlas was the shipper adding the most new capacity (i think). This deal makes lots of sense for ONE. It will be interesting to learn exactly what the strategic aspects of this deal are for ONE and how Atlas’ strategy possibly shifts as a result. Will ONE be a silent partner? Or not? Bottom line, I am quite happy to see another deep pocketed investor now involved with Atlas. i wonder what the other 5 shippers are thinking about this transaction (all of whom are bigger players than ONE). Could we see another larger shipper come in with a higher offer all of Atlas? From one of the other consortiums? The Altas conference call will be a very interesting listen. ————— ONE is the natural partner for Altas of all the big shippers. ONE is Seaspan’s largest customer by far at 24% (up from 16% Dec 31, 2017). ZIM is #2 at 17%. - https://filecache.investorroom.com/mr5ircnw_seaspan/1231/download/Atlas Investor Presentation May 2022 - vF.pdf ————— ONE is part of THE Alliance, which also includes Yang Ming and Hapag Lloyd. Combined, the three shippers represent 39% of Seaspan's TEU. - https://www.container-xchange.com/blog/shipping-alliances/

@nwoodman i think we need to see how this whole thing plays out before we reach any conclusions. I am trying to figure out why ONE is part of the deal. That makes no sense (given Seaspan’s historic practice of doing business with all shippers).

@nwoodman my read is the shorting strategy was the final nail in the coffin for many investors and Fairfax (in terms of reputation). The losses continued year after year for 7 or so years. And they were big. The other things Fairfax does that drives investors a little batty were just icing on the cake. My thesis for a few years now has been that i think Fairfax has turned the corner. And i do think investors will come back into the fold. The first problem was covid. That set the ‘new Fairfax’ thesis back 12 months. And now we have a second bear market in equities in 30 months. The losses in the equity portfolio we saw in Q2 are an all too familiar reminder of the reality of investing in Fairfax. Will the Atlas deal hurt Fairfax’s reputation? My guess is not much. And that is mostly because Fairfax restoring its reputation is still a work in progress (the bar is very low right now). I continue to be optimistic moving forward. Fairfax needs to continue to deliver exceptional/very good financial results for its shareholders - grow earnings per share and book value per share. Year after year. I think they are on track to do exactly that and so i expect their reputation to also slowly improve in the coming years. ————— i have less confidence in the multiples the publicly traded equities Fairfax controls will trade at. Fairfax India is perhaps the best example. I have no idea exactly why it trades at the extremely low multiple it does today. It looks like a broken stock to me. Performance, which has been very good, does not seem to matter.

@Xerxes What you say makes complete sense. What i am wondering is if we are not seeing a trend at Fairfax. A shift in strategy to owning private businesses again. For the past 3 or 4 years Fairfax has been on a mission to get its privately held businesses into the public markets. To ‘surface value’. Grivalia Properties was a large private investment made in Q2. ATCO take private is a huge deal if it happens. Stelco makes sense after the dutch auction closes. Fairfax India is another take private deal screaming to happen (for years). My early read is Fairfax likes to hit the public markets when they need cash but they prefer private markets when they are in good financial shape. ————— For Fairfax 2022 is certainly playing out far differently than 2020 (the last bear market). Back in 2020 Fairfax’s stake in Resolute dropped as low as US$40 million; Resolute’s sale will deliver $600 million to Fairfax + $180 kicker (potential future duties payout). In 2020 Stelco fell to C$50 million and today the position is worth $470 million. The swing in EXCO’s value (their 40% owned nat gas business) the past 2 years must have been massive. Bottom line, even though today we are in the middle of another bear market Fairfax is likely +$4 billion better off today than the bear market lows of 2020 - just looking at its equity holdings.

My math says the consortium needs to find $1.165 billion to take ATCO private: 252 million shares x .32 x $14.55. It is clear to me that Mr Market is not buying the ATCO value proposition and has not been for years. Mr market is not going to value ATCO as a finance/lease/capital allocation company. Despite ATCO’s attempts to ‘educate’ investors. ATCO is being valued today as a shipping company. Further, because of the new builds coming on line the next couple of years it will be nice for ATCO to NOT be in the public markets. Being private will greatly simplify what management at ATCO needs to do moving forward (make money) and not spend a ton of time jumping through hoops required by publicly traded companies. Do i like the transaction as a Fairfax shareholder? Yes. Although i would like to better understand how much of the $1.165 billion will be coming from Fairfax. This likely means we do not see a big share buyback from Fairfax and if so, that would be disappointing.

CVE, MEG, TVE Most energy stocks are getting crushed again the past 2 days. Free cash flow is still massive at $88 oil and will be directed increasingly to stock buybacks (at low prices). Great set up.

@Spekulatius I think you might be right. I am 1/2 way through the video you posted on Xi (thanks for doing that). A real eye opener. It sure makes one appreciative of liberal democracies of the West (with all their faults). ---------- From an investing perspective, China is in my too hard pile... especially given Xi's hard pivot to nationalism/communism/autocracy and the rising tensions with the West. Not to say there are not great investments there... just not a fit for me.

@Sweet no, of course in am not blaming the US. I am just trying to understand what is going on (from the very different perspective of each player). And how things are likely to play out in the future. And hopefully make some $ along the way ---------- Bottom line, Taiwan is a big, big deal for China. US is crossing a line... i am not sure why. Perhaps US is not happy with China's positioning with Russia and Ukraine war. What do you do if you want to get China's full attention? Visit Taiwan. The next move is now China's. What will they do? Escalate or not?

If you want to rattle China’s cage you do what Pelosi is doing today - visit Taiwan after you have been told to stay away. The US is clearly ‘crossing the line’ with this move. Xi is looking to get re-elected in the fall and he cannot look weak (which he does today). This is looking like the next chapter in China’s Century of Humiliation (from a Chinese perspective). I HOPE it is part of some larger, well thought out strategy. But i have little confidence in Biden/Democrats right now. What is the investment angle? I continue to be completely unable to comprehend what companies like Apple are thinking - they are all in on China today. And seemingly oblivious to the new direction China is pivoting towards the past couple of years (nationalist, communist and authoritative). The West’s relations with China are a slow moving train wreck… and what is happening in Taiwan today is throwing gasoline on the fire. ————— - https://en.wikipedia.org/wiki/Century_of_humiliation

FFH. Down 5% on the day. Downgrades post Q2 results? RBC did lower their price target on Friday by US$25 to US$725. FFH is almost back down to US$500. Hopefully it continues lower. Will we see US$450 in Q3 as some on this board have speculated might happen (as the hurricanes start showing up)? Gotta love Mr Market. FFH is becoming the gift that keeps on giving. ————— RBC: Our view: Underwriting results continue to hit the marks and top-line growth has been strong driving improved underwriting profits and cash flows. Traditional net investment income continues to rise as assets are deployed to higher yields further supporting earnings growth. Several transactions are in the pipeline which upon closing could add about 10% to book value on top of ordinary earnings. We view FFH shares as a best-in-class value opportunity at about 0.85x book value. There are lots of things going 'right' and we don't see this as being reflected in valuation.

immigration policy is just like any other government policy. It should be well thought out and rational. What little i know of Canada’s immigration policy sounds ok to me. Like i said before, i do not follow the US. My views of immigration have been shaped by personal experience. My wife’s family came to Canada in the 1950’s from Italy. Talking to my mother in law - pretty much all the negatives about immigration you posted earlier were strongly felt by lots of Canadians in the 1950’s. My mother in law hated living in Canada for the first 5 years or so… why did she do it? She wanted a better life for her kids (than what was then available in Italy). So she and her husband worked their asses off to build a life for their 3 kids (2 were born in Canada). They succeeded in building a very good life. How? Work ethic. Thrift. Love of family. Value of education. Love of community and country (this last one took some time). Kids? One’s a nurse, another was a professional hockey player and the third (my wife) graduated from university and worked in HR. My mother in law laughs at the idea of moving back to Italy. A second story: one of my best friend’s (who i have known since high school) family came to Canada in the 1970’s from India. Same story as my wife’s parents. Parents worked their ass off. Pretty much all the negatives about immigration you posted earlier were strongly felt by lots of Canadians in the 1970’s (especially in my rural home town) so my friends family had to deal with all of that. The parents passed on great set of values to kids: value of education, work ethic, thrift, importance of family etc. Kids all went to university and have built great lives for themselves and their families (two are senior administrators in education system). I have been telling my kids for years that i am going to screw their lives up. Because i am going to do what many non-immigrant Canadian families do: they want to give their kids a better life. Free of hardship. So they spoil their kids. Who then grow up with an entitled attitude… they DESERVE a great live. Shitty work ethic. Shitty attitude. Scoff at education. Money morons. i tell my kids to talk to their grandmother. To hear the stories of growing up in Italy during the second world war. Coming to a country where you could barely speak the language and everyone hated you for ‘stealing’ jobs etc. Working in the mines in BC in the 1950’s. Working 2 full time jobs for close to 10 years to get a leg up. I want my kids to hear first hand what life is really like for most of the worlds population. I also tell my kids that living in Canada is a gift - one that they need to be thankful for and take full advantage of. I think immigration is important in part because it provides the next wave of parents who want to make a better life for their kids. Yes, just like parents of every generation going back hundreds of years.

It looks to me like both the US and Canada have built 2 very successful countries over the last +200 years. What was the secret sauce? A key ingredient was immigration. Immigration certainly was not a ‘cost’. Moving forward i can’t really talk to what is best for the US. For Canada i am all for immigration - too many positives to list.

With the release of Q2 results we got additional information on the pet insurance sale to JAB. This has to be one of the best investments Fairfax has ever made. The after tax gain is $975 million ($41/share) and will be booked when the sales closes later this year. For a business with $350 million of revenue (if i understood the Q2 conference call correctly). Fairfax made two purchases in 2013 and 2014. The pet insurance business was cultivated within Fairfax for 10 years. The pandemic likely accelerated the growth of the business. And now Fairfax is opportunistically exiting/selling at what looks to be a very good price. And selling this business looks like it will have little impact on Fairfax’s future insurance business (top or bottom line). We like to obsess over Fairfax’s many investment failures over the years. Farmers Edge being the most recent example. The flip side of the coin is Fairfax has many examples of where they have hit the ball out of the park. Most importantly, the gain from the sale of the pet insurance business will not be used to cover significant realized losses in the investment portfolio (like the recent $4.5 billion in losses from the disastrous shorting campaign that stretched over 7 years). Instead, the significant gains will be used to build future shareholder value. This is a significant NEW development for Fairfax. And that prospect should get all Fairfax shareholders very excited. Fairfax is now, after 7 lean years, finally playing offence again. Strong underwriting + solid investment gains are now driving significant growth in BV per share. 2021 was the start. Much more is coming. Eventually investors will figure it out. The trifecta is happening with Fairfax: 1.) growing earnings 2.) higher multiple 3.) lower share count ————— Fairfax will receive approximately $1.4 billion in the form of approximately $1.15 billion in cash and $250 million in seller promissory notes, and the company will also invest $200 million in JCP V, a JAB consumer fund. The transaction is expected to close in the second half of 2022. On closing of the transaction the company expects to record an after-tax gain of approximately $975, and deconsolidate assets and liabilities with carrying values at June 30, 2022 of approximately $150 and $32. ————— Mark Dwelle RBC - Another quick numbers question. If I may, on the sale of the Pet Insurance business. Can you give us a sense of kind of a range of about how much revenue you'll be, I guess, selling when that happens? And again, it's just I'm trying to understand as we get into next year, that's revenue that will go away from Crum and to be able to keep track of the run rate there. Prem Watsa: Sure, Tom. But forex must be $350 million, and it's a Pet Insurance and it's in the United States, mainly, but Canada and then the UK, some, and obviously, we like the price. But JAB is they get a lot of good things from Crum, including data on 30 million pets, and ASPCA support for 16 years. And so we think it's a win-win. ————— TORONTO, ONTARIO--(Marketwired - May 15, 2013) - Fairfax Financial Holdings Limited (TSX:FFH)(TSX:FFH.U) announces the signing of a merger agreement with Hartville Group, Inc., of Canton, Ohio, pursuant to which Hartville will become wholly-owned by Crum & Forster's United States Fire Insurance Company. The transaction, which is subject to customary conditions including regulatory approval, is expected to close early in the third quarter of 2013. Hartville, one of the oldest and largest pet insurance providers in the U.S., provides pet insurance plans under several brand names, including Hartville Pet Insurance and the Petshealth Care Plan. Hartville also is the exclusive strategic partner for pet insurance with The American Society for the Prevention of Cruelty to Animals®. "We are very excited to have Hartville join the Fairfax group," said Prem Watsa, Chairman and CEO of Fairfax. "This acquisition represents a new phase in our existing relationship with Hartville through Fairmont Specialty. As a result of the vertical integration created by this merger, Hartville's pet insurance programs will be uniquely positioned in the industry to generate sustainable growth." ————— TORONTO and OAKVILLE, ONTARIO, August 29, 2014 – Fairfax Financial Holdings Limited (TSX: FFH)(TSX: FFH.U) (“Fairfax”) and Pethealth Inc. (TSX: PTZ) (“Pethealth”) announced today that they have entered into an arrangement agreement (the “Arrangement Agreement”) under which Fairfax will acquire all of the outstanding common shares of Pethealth for $2.79 per share in cash. In addition, under the terms of the transaction, Fairfax will acquire all of the outstanding preferred shares of Pethealth for a purchase price of $2.79 per share in cash, plus any dividends accrued but unpaid up to, but excluding, the day of closing. The purchase price represents a premium of approximately 26% to the closing price of Pethealth’s common shares on the TSX on August 29, 2014 and a premium of approximately 69% to the closing price of Pethealth’s common shares on the TSX on August 15, 2014 (Pethealth announced on August 19, 2014 that it was reviewing strategic alternatives). The purchase price also represents a premium of approximately 69% to Pethealth’s volume weighted average share price for the twenty trading days ending on August 15, 2014 and a premium of 36% to the all-time high price of Pethealth’s common shares prior to such date. Total cash consideration of approximately $100 million will be paid for Pethealth’s common and preferred shares and options. The transaction, which will be completed by way of a plan of arrangement (the “Arrangement”), is subject to certain customary closing conditions, and is expected to close in the fourth quarter of 2014.

@Thrifty3000 thanks for providing details on diluted shares. I do need to better understand this bucket. My assumption is these shares are part of employee compensation program. Do you know the details? Are they earned over many years? Are they performance based at all?