Dazel

SJ, Thanks I see that changed in 2010 (I am old) the Onex and Altius deals were before 2010. I would imagine there is aways ways to stick handle it... Other options are to buy Puts and sell the stock short to hedge they could do both at the institutional level easily....they could use their Blackberry stock holdings to settle both down the road...they would NOT have to disclose these positions because they would be open trades-hedges. They would of course settle out in the quarterly numbers but Fairfax would NOT be required to disclose the positions. WSB says Blackberry is going to $100 though...and they have looked a lot smarter than Fairfax over the last several years! Lol!!!

This pull back in the stock is excellent for my scenario of selling off assets at great prices to buy back the undervalued stock at Fairfax. Get to work Fairfax! Let’s go!

Once again, if Fairfax wants to sell their shares in BB they are going to do it through a forward contract as Onex did With Celestica (maintained voting majority ownership for years even thought the shares were hedged with forward contract) and Altius did this with Aurora. In those instances the underlying stock were at nose bleed levels (blackberry is not there) and both were large shareholders. You will not see this until earnings because they still own the shares. They are just hedged through the contract. The banks that they do the deal with go into the market short the shares and charge a fee for the hedge. If they want out they can get out. In Fairfax situation, they do not need the cash they have plenty at the sub level but it would freeze the capital at the level they hedged.

So yes, Fairfax can capitalize on this Blackberry advance if they want to. I think Everyone here has been so beat down by Blackberry over the years we may over looking some of its value vs the marketplace. In this crazy market it could easily go into the 20’s and maybe a lot higher! Have you seen Tesla lately? Well blackberry is heavy in their industry now with AWS as a partner....this integration is worth a lot of future $....what’s $100 on 175,000,000 cars? Security on everything from your watch to your toaster...and royalty division just winning very big certainly takes it value a lot higher. Everyone is free game after Facebook battled and lost! yes it looks like speculation because it is so quick...and yes this thing has been on a tear and I get the sceptics I have been one! Companies like Tesla and Amazon have free money to spend (their share price)...to name two..Crowdstrike? Why would they not buy Blackberry for pennies compared to their market cap and enter the car market that took 10 years for Blackberry to build for example. Anyways....blah blah.... Fairfax would likely write up a swap contract with an investment bank to synthetically short Blackberry if they wanted to that would lock up their gains. They could also enter the market and short BB themselves and cover the shorts with the shares they own. They would not have to cover until they wanted to so you would not see these actions in public filings...

You are missing 9 years of data? What happened in the last 9 years?

It has to do with reserves on insurance policies already written as opposed to what those Actual losses are. “Favourable reserve development” means you over reserved for future insurance losses and the difference becomes profit. The opposite becomes losses. You will see that Fairfax premiums growth was 13% higher than last year and it takes capital to back this growth and “favourable reserve development” reduce continued which means prior insurance policies written were OVERLY cautious as opposed to what actually losses were...that is pure profit and a great sign. As for capital needs, because of the very strong rebound in Fairfax insurance portfolio’s they will have the capital they need for growth in premiums and the $ that comes into the holding company will be used for share buybacks. "In the third quarter of 2020, all of our insurance companies achieved a combined ratio below 100%, except for Brit. Our consolidated combined ratio of 98.5% in the third quarter of 2020 included catastrophe losses of $218.6 million or 6.1 combined ratio points and COVID-19 losses of $143.2 million or 4.0 combined ratio points. Core underwriting performance continues to be very strong with a combined ratio excluding COVID-19 losses of 94.5%, continued favourable reserve development and growth in gross premiums written of 13.9%, and operating income was $254.7 million despite the catastrophe and COVID-19 losses. We continue to focus on being soundly financed and ended the quarter with approximately $1.2 billion in cash and investments in the holding company," said Prem Watsa, Chairman and Chief Executive Officer.

So how much is Digit going to trade for if it does an IPO on the Nasdaq? I think you have to consider this option In this environment which comes along once every 20 or 30 years...why not cash in...would be huge $$$$ for Fairfax at the holding company level...support for the hard market and buybacks...what an opportunity. Dazel

Investments nailed it 2003...Brian Bradstreet made a killing in treasury bonds...the gains were so large They were significant in size compared to market cap. Fairfax did very well in equites after the 2000 crash through to 2007 as well. In 2000, Fairfax and Sir John Templeman bought puts on the dot com ipo’s and were very short tech which turned out to be a big winner. A lot of those profits went to fixing the insurance company reserves that they inherited from take overs in the 1990’s...believe me the reverse of this is a tail wind of significant strength not unlike what Berkshire has had the benefit of for many many years. Fairfax is taking advantage of this hard market right now premium growth is substantial. 2007-2008 profits were spent buying back all of the subs...so the profits we have going forward which I think Will be significant we get to keep as Fairfax has reached critical mass....they will likely shrink the amount of businesses they own as stated earlier. I see “Farmer Edge” has filed a prospectus....much more to come in my opinion...including splitting up BlackBerry and getting return of capital. Shareholders will benefit this time because we get to keep the cash (reserves are in excellent shape with redundancy in their book again last quarter) to buy back stock as they did in 1990. Their best investment at these stock levels is to participate in the hard market, monetize non core assets and buy back their own stock..that’s it.

You are all doing a great job! Will add Fairfax have $10b in corporate bonds, Digit insurance (talked about on another thread) on the balance sheet as losses has little value as an asset that the public can value and its worth a lot! (IPO?), they are likely to sell Non core companies off in this environment (if Riverstone can be sold anything is on the table), AGT has a lot of value..expect a sale or IPO., Indian investments will rebound quickly as India will be leading global growth in this cycle. This year the street is expecting the highest growth numbers in a generation not sure if this will happen but any growth will help Fairfax’s portfolio greatly. Most importantly, In the 18 years I have been involved in Fairfax their insurance business has gone from a hard time sleeping over reserves to reserve redundancy. Even as the business has grown into a global Goliath. In a hard market these potential returns are mouth watering and they are the reason to believe we are headed back to all time highs in the stock. With the insurance business firing on all cylinders and capital investments and portfolio returns stabilizing the Fairfax corona virus blow up is not only over it’s time for offence. Prem and his team are great investors in blow ups and they have once again shown their strength , unfortunately, not unlike 2003, Fairfax was part of the blow up this time. It’s over...We are headed to all time highs. I have been cleaning out some files (c-19 killing time!lol.) and I found an old box of newspaper clippings of the Fairfax battle with short sellers and all of the negative media articles. The one that stuck out was Fairfax insiders buying a boat load of shares in 2003...and now we have Prem buying a boat load of shares in the summer...17 years later. BlackBerry’s moves and popularity will attract a new audience to Fairfax at the right time. Remember what Fairfax did in the late 1990’s...is the “Buffett of the North” in comeback mode!? I am betting on it. (Long and buying here) “Most people invest and then sit around and wait and see what the next blow up will be, I do the opposite, I wait for the blow up and then I invest.” Richard Rainwater But it could also be Prem Watsa. Dazel

Petec, I don’t agree. Rivett has done a great job as a caretaker and lawyer. He is not in the league of Prem And others at Markel and Berkshire...to take the stock where it should go. I called these earnings last year and a record year...no one cares. SNC Lavalin was a tap in in their backyard...SNC did not need the money but it was the kind of transaction that Buffett like operators make...Fairfax has been asleep. Blackberry is so undervalued it is attributable to Fairfax passive (do nothing) approach....hurting performance instead of helping. It is all great and everything to have a good reputation but as Buffett said about David Winters when he challenged Coke’s board....what has he done for his shareholders? I am frustrated to say the least....if Prem is done give me a leader. The bones are there....

https://www.insurancejournal.com/news/international/2020/01/13/554618.htm

InvestMD et all, While I would not quite call it complete humble pie I am eating with my early predictions for the year...I was wrong footed on a lot!!!! I will stand by my outlandish at the time prediction on 2019 profit though....there is more than one way to get to heaven...Lol. Without going through specifics....Fairfax has strengthened significantly in my mind (Seaspan home run helps).... 1. Bond performance was ok not great... 2. Blackberry and resolute were a bust...Eurobank headed higher....catalysts for 2020? 3. Insurance was excellent and is the backbone...very pleased 4. India has strengthened but has not really shown up (Fairfax India lagging) 5. There are several underrated investments in their stable that will be monetized 6. Buybacks did not materialize....I can see why and appreciate strength at the insurance level All in all a solid year at Fairfax and the future looks very bright. I was involved in discussions with a third party who I encouraged to contact Fairfax for a strategic investment so I felt it was appropriate to stay away from the board. That deal is now dead as third parties shares have doubled and to my knowledge Fairfax was never contacted. Cheers to all, Dazel

If I could just get the timing right for when the algos cover and go long on the space...Lol! What a world...where are the value buyers, where are the business buyers, the LBO guys?Buy it and take it a part...for 150%....who is going to be the new Icahn? I think someone should get ahold of Fairfax and see if they are there?lights still on? Maybe there should be an Algo message board?

Crip1...agreed. How can a company who has every major global bank, airline, and the U.S military as a client be virtually unknown as a security company? Fairfax and Chen have to see this...it is crazy. Sales multiples to market cap for competitors Blackberry 3x Crowdstrike 35x Sales force 8x Microsoft 8x Datadog 35x https://ca.finance.yahoo.com/video/datadog-raises-648-million-u-135726259.html

https://ca.finance.yahoo.com/news/fairfax-watsa-lost-121-million-164238512.html Odd that Fairfax responded. However, Fairfax stock price and investor confidence in their investing ability has fallen evidenced by this board. Time to create value Fairfax you know you have the ability let’s see some action....Blackberry is in a classic value position that needs a shareholder to push it....or buy it and create value for Fairfax shareholders...I am both. Disclosure I continue to buy Blackberry....and am a Fairfax shareholder as well.

Lol SJ. Do you know that Canadian and U.S military have no choice but to use Blackberry for security? It’s not Lotus...but I get your point. The IP alone is very valuable.

If you have been watching Mr. Buffett and the second biggest holder of stock at Berkshire (yes more than mr. mungerJ...Bill said that software is a really good business...actually if you get it right it is the best business...Microsoft has become a behemoth again....Fairfax or someone else has a shot here it’s free!

Think Microsoft

Does taking Blackberry private now make sense for Fairfax? It makes a hell of a lot more sense now than it did then. Onex made their biggest return ever on Celestica when they took it public. Times are similar now than they were Celestica went public...ie Crowdstrike. There is a margin of safety in the fact firms would be lined up to buy the new Blackberry (no one wanted it when they made their last offer as risks were very high...right now they really could not loose taking it private. I was very critical of John Chen on the Blackberry thread but they are dealing with a market who does not know what Blackberry does or how to value it!? CNBC called them a “smart phone maker” yesterday when they were down 22%!!! They don’t have an identity in the public markets and everyone knows that. Fairfax could do very well in a taking private transaction and Blackberry shareholders are just DONE...they want out and as far away as possible. Fairfax does not have a lot of opportunities right now they are loaded with cash and would be able to do a deal as it would no longer be a marketable security (down 50% this year)! So it helps with capital as well...on the tak8ng private price and becomes a sub of the company. They would be a white night in sheep’s clothing...kinda like Mr. Buffett. This I an old headline!!! Below..... https://www.cbc.ca/news/business/blackberry-to-be-sold-to-group-led-by-fairfax-financial-1.1864922 Dicsclosure I have not talked to Fairfax or Blackberry and I am buying shares because I think it is a no brainer for all involved...even if it is someone else who decides To take advantage of the Blackberrry discount. Dazel.

$6b debt at the holding company is net $4b after cash...and the insurance companies do not have a lot of debt as they are strategically being less levered to be able to take advantage of an event, maintain high ratings and once you dividend their access capital to the holding company it’s gone...so it does not concern me. Insurance companies are vastly undervalued.

I am aware it is a bold call and certainly would not bet the house on it...but Fairfax is coming from a very low level on Dec 31 2018...why not have 2019 be a big year for Fairfax...they are certainly due.

I am okay with $3b pretax probably $1.3b first quarter...will go from there. I don’t agree with the crowd normally and have been wrong here before but not often...I am happy to be against the crowd. Good luck to all!

I am not concerned with the drop in holdco cash vs debt....they bought back more of their subs and they had a miserable year investing not unlike everyone else this time. I have argued and continue to argue their massive cash position and treasury position puts them in position to outperform the Markel’s of the world who got caught in quarter four of 2018. This has allowed them to fund AGT, Seaspan, Greek eurobank-real Estate merger funding if needed and to give Blackberry the courage to make a game changing acquisition and most importantly to me...to give Brian Bradstreet the ability to print cash (I like the corporate bond position and hope that he went bigger in quarter one...it is likely up 10 to 15%=$700m to $1b from dec 31). Fairfax and Prem’s gift are operating companies not stock picking. They are vultures....it has cost them lately but that’s how they built Fairfax. Bradstreet and the insurance companies give me enough confidence that they will create very solid operating earnings...the investing side needs to do very little to create big numbers from the 2018 low. In quiet year this year...Fairfax should make $3b pretax.

Petec, I get it...a good year is expensive in share dilution because of share based awards....but profits will go into more buybacks which will bring the share count down the next year... It’s incentive that is not being met which is why 89888 shares were issued the insurance companies that did well I am assuming. So if Fairfax performs I can worry if not the buy back continues at a good clip unabated by share based awards. Why not just pay cash bonuses from profits if it is a good year and take the share count down? Surely no one is begging for more shares the price has not moved in years!