Dazel

Fairfax 3.0 is on script the company is powerhouse and every piece they can pick up adds to intrinsic value. Hard to imagine they paid anywhere close to fair value in Ukraine. as for wild fires costs I have NO idea.

Thats positive at Chubb bond rates have not moved enough to cause enough trouble for the insurance industry. In another thread I “speculated” that Bradstreet may gave taken short term bond gains and went long term…he is the bond kind. We will see in a few weeks….

Thanks for the numbers Viking. my spidey senses feel that Bradstreet sold short duration and went long duration in the fourth quarter and is continuing to do so now. Because it’s what I have been looking at. Long bond yields (UST’s) have peaked in my opinion. That’s where the money is….stabilizes operating earnings for decades.

Viking, Our work horse. What number should we expect for annual earnings…unless Bradstreet sold bonds at the beginning of the quarter they will be down in the fourth quarter mark to market…$800m paper gain in the third quarter.

Thanks Daphne. I owe Fairfax my time for sure. Bet they are having an absolute blast at head quarters! Fairfax 3.0 will be soooo fun!

bonds trade like stocks except bonds send interest payments (interest rates are much higher now and there is much more volatility) during the trading where as there is smaller yield from stocks/dividends and Bradstreet is the best in the bond business. Take a look At ticker “TLT” (UST long bond) there is an 50% spread from high to low this year! Educate your self from there. Corporate bonds trading and income would be the higher returning bond instrument (more volatility) and in a very aggressive stance could take allow Bradstreet to do 10% plus. Most everyone should be looking at the bond market here as it is more attractive then the stock market for sure! It makes me giddy to think Bradstreet now has $40b to play with! In 2002-2003 he made a billion bucks on a $5b long bond bet. He made $2b plus (30x) on credit default swaps in 2007-2008. i also said it was an outlier like for coke going up 10X in 10 years…in the 1990’s. Google and Apple etc trounced those returns Buffett got a good chunk of Apple. Bond bets gone bad….ask Bank of America and Charles Schwab the other side of Bonds they have well over $100b in unrealized losses from buying long bonds a few years back. Make no mistake Bradstreet is the “Bond King” and the investing world has never heard of him.

Fairfax 3.0 will have very few investors left from this board and that is the reason I created this thread. Everyone has very good points that are negative because they are biased from Fairfax 2.0 and no one can blame them. Those that were around during Fairfax 1.0 did not ask where the growth would come from when the stock went from $3 to $30 or $10 to $100 or $30 to $300. I have my own biases of course. Would I have been able to hold Berkshire? After coke went up 3X would I have thought it would do another 7X? Do I think that Bradstreet can do 10% a year? Yes I do. Is it probable? Yes to me it is…to the market no it is not. Do you know what the compounding is on that? Do you what market multiple Fairfax would get on that? Think Markel and think $10b a year. So coke doing 10X in 10 years or Bradstreet doing 10% a year over 10 years what is more probable? Gotta love markets.

https://simplywall.st/stocks/ca/insurance/tsx-ffh/fairfax-financial-holdings-shares/dividend You have to set up an account to see this but it is worth noting their cashflow valuation and future value for Fairfax is $5,400 cdn. This is the first time I have seen Fairfax get this type of valuation. Fairfax 3.0

Thank you! Awesome Look at 1990 to 1998 at Berkshire actually started in 1988. Coke went up 10x then 2015 to 2023. Apple went up many X as well Bank of America….These are the greatest investments ($made because of concentration) of alltime. Take apple and coke out of Berkshire and what does it look like? I am disappointed in myself for not including Mr. Munger in my previous posts! He is the architect of the above investments and Buffett recognized this in a recent annual letter. Buffett could not and would not have made and held those bets without Munger. Did Prem and his team blow these investments away? Fairfax has made “large bets” on their own stock. First in 1990 (buying 20% back @$20 that’s 100X) and now they are in the middle of buying back a big chunk of under valued shares. (Swaps@$375 headed for 10X?) The buyback program now will get massive if the stock remains here and Long term Shareholders will make multiples more if cheap shares can be retired. Fortunately, there is more than one way to get to heaven and if Prem and his team are more comfortable going the way of Teledyne then so be it. Teledyne on steroids of course because of the rocket fuel.

This is why I would to like to look at Fairfax 3.0 compared to Berkshire 2003. size matters especially for future growth. I would argue Fairfax is in better shape because of Prem’S focus on insurance companies. Buffett is king so this is not a slight. Prem especially was focused on fixing Fairfax insurance business in 2003 and be doing so he was in the trenches so to speak. This gave him insight into the value of not only his businesses but also into the industry and made many strategically “awesome” acquisitions including as Viking said buying all of Northbridge and Odyssey Re. Many of Berkshire’s businesses long acquired have tanked during that time and Munger alluded to this in 2020. Buffet spent $30b on precision castings, news papers became worthless and Prem was busy building a powerhouse insurance company. Earnings power at Fairfax 3.0 is equal to Berkshire 2003 because of this. The outlier is Buffett himself and his stock picking prowess that is unmatched. Apple was the biggest single stock gain in history he did the same with Coke. Moodys went up 20X from 2009. Bank of America. Prem lacks this skill but has made up for it building and buying private companies.

Great work!

Fairfax 3.0 is now a powerhouse. If the above scenario plays out with them continuing to knock the ball out of the park the rise in share price could be very Berkshire like it’s the same math.

I will run some buyback numbers. Totally agree Viking Everything that matters is per share….and Fairfax has done an unbelievable job of taking advantage of the undervaluation. Hoping they will sell everything not core into this bull market and continue to consolidate and buy back every last share they can here. The math gets wonderful just in time to buy long bonds into the next bear market. Bradstreet won’t miss it.

Thank you Viking. I agree with your thoughts and why most missed Berkshire and Markel. Yes I agree volatility would be a Fairfax friend. I think you are light with Bradstreet returning 5% on bonds…remember if he does 7.5%(likely) that’s $3.75b per annum…but I understand your conservatism. He is the bond king. (And credit default king) remember! Do you have a spreadsheet set up that can reallocate what the compounding of the growth in the investment portfolio does to the total return over 10 years? Make it interesting and throw in an 13% year and 5% year etc. This is how Buffett did it at Berkshire…Fairfax is finally at this stage in their evolution where the base operating earnings and the underlying businesses are steady so capital gains juice returns significantly. Example using the above year 1=$70b +$5b earnings year 2=$75b +$5.47b @7.3% year3=$80b + $5.87. @7.3%

Markel uses “rocket fuel” as well they have long been trading under the wonderful handle “baby Bekrshire”. They use the same math I have shown above. Fairfax 3.0 has the ability to trade in the “mean” range of Markel’s PE averages. how? Stable earnings…become outstanding earnings with “rocket fuel”! Fairfax 3.0 is on its way there…last ticket to jump aboard will be soon. The market has voted on Fairfax share price the last couple of years but this year they will likely vote and weigh at the same time.