Dazel

Fairfax reorg of Thomas Cook and it’s position in the company makes sense as Fairfax India is now their investment vehicle for new investment. The market likes the decision...Thomas Cook shares are up sharply...

Petec I think AXA shareholders and those following the stock were expecting a one time dividend from the sale of their U.S operations....they will not only not get this dividend now they are using the proceeds of the IPO and leverage for the purchase to make it a cash deal.

http://xlcatlin.com/insurance/news/axa-to-acquire-xl-group This transaction values XL at 1.5 times book value....XL has a $32b bond portfolio which would have dropped in value 2018...very little cash. Under theses metrics with the unrealized value added into Fairfax book value...FFH would be trading for $870. FFH Bond exposure is limited (XL full earning power in play for interest income but unrealized losses this quarter from bond drop) Massive cash position (XL has very little cash a little over $800m) India growth exposure (XL investment portfolio is smaller and over 85% in fixed income) This is why FFH best investment opportunity lies in share buy backs it’s cheap relative to its peers.

SJ, The market may be reading these post for (f......k) sakes....reluctant to reply! Fairfax is a USD company....my point is we are being priced and buying back in CAD which is FFH. So if Book Value remains constant...and CAD drops 5% then the FFH shares are 5% cheaper because in CAD they should be priced 5% higher....if it is just short term fluctauation which is possible no big deal because we will not buy enough shares back to be meaningful....but if it is a trend and CAD continues lower and the market does not price it in we get a 5% plus discount to the Book value which is priced in USD.

I know in the past they did not hedge in a meaningful way....it is possible they hedge on their European and Asian investments. But apples to apples FFH should have had a 5% boost in Feb relative to book value because it is priced in CAD. This is short term stuff of course but like I said if it is trend then it should be paid attention too and a buy back at a 5% to 10% discount on the FFH shares added to the discount I think is already there...well that is just smart business to buy more shares back until the market figures it out.

For those holding the FFH shares...USD and the Euro have risen about 5% in FEb...I am not certain of Fairfax hedges but I believe they are unhedged other than most liabilities? All numbers and most importantly book value are stated in USD as we know...it is a trend to watch and another reason for Prem to be picking off FFH shares. 5% is a lot to Fairfax these days as it has become very large.

Obtuse, I have been warned in the past about getting personal on this board...but I will say it is a heavy position that will grow at these levels...pretty sure I mentioned it was my only equity holding about a month ago... Dazel

http://money.cnn.com/2018/02/28/news/economy/india-economy-gdp-7-2-growth/index.html

https://www.wsj.com/articles/indias-quarterly-gdp-increases-7-2-1519821904 http://money.cnn.com/2018/02/28/news/economy/india-economy-gdp-7-2-growth/index.html Would it not be nice to intenched in India already? Fairfax will look very intelligent over the next few years.

I am kinda giddy with how things are going...on script.

I would have to assume Lonf Leaf is thinking the same way I am (no idea whether they have talked directly with Prem but they have historically ingaged with managements of the company’s they own very successfully I might add) about Fairfax. It’s cheap and the holding company has $2.4b in cash for buy backs and the earnings power is being hidden by the large cash position. These prices are excellent for long term holders that will benefit from buy backs.

I went to look and I see quarter 3 is not there...not sure how you get it. There was not a lot of detail just the fact that these large capital gains would give Fairfax the firepower for the buyback plan...despite the hurricane season that was going on.

Longleaf letter quarter 3 I believe they refer to the fact the ICICI Lombard sale and the First Capital sale will greatly aid Fairfax’s buy back plan. Quarter 1 I believe they describe Fairfax how I see them...

This is a great environment to build value for Fairfax...volatility, rising rates will bring many corporate convertible opportunities and bond prices have dropped a fair amount. What an opportunity to keep buying shares as they have dropped on the open about 12 of the last 14 days (LOL). I have rethought the tender offer as I don’t think they would get the amount of shares they want tendered and it would drive the price up....This works out a lot better over the long term. Looking forward to Prem’s annual letter....I would bet he will write about what he thinks of intrinsic value and why share buy backs make sense here. He should be clear with share holders on this in my opinion Longleaf talk about the Fairfax buyback plan in their letter it should be talked about in detail from Prem. Usually we would worry about Prem’s explanation driving up the price of the shares which would hinder the buy back...but I think we all could likely agree that NO one is listening right now. Long term shareholders do deserve the heads up...as it looks like Mason Hawkins has gotten it.

Cigarbutt, With all due respect when you have record investment gains you have the optionality of sandbagging one time expenses against those gains. No one in industry had per share investment gains like Fairfax did. No one is even close! Has the entire board decided to just forget this fact? They still had a record year....If I were running Fairfax I would have taken massive reserves this year....what an opportunity. Speculitus, Of course we want to see a couple of years of good solid earnings and underwriting...that’s how the revaluation happens....people are disappointed here I get it. They had a record year and their long term record is amongst the best in the world...what is that worth? Well everyone will have to decide for themselves. Fairfax knows so we will see shares get bought back by the boat load. My opinion...everyone’s is free to make their own. Good luck all. Dazel

The insurance business they have will create a Markel and Berkshire type outcome. But you get the shares now at the level where there is the doubt of that outcome.

Anyone that is following the financial stocks in the U.S can see that everyone is sandbagging their 2017 earnings. The reason is that anything you write off for the year is taxed at 35% as opposed to less than 20% for most in 2018. As a whole the financials results look terrible...but forward earnings will be tremendous at lower tax rates. Why would Fairfax not take higher reserves in 2017 in their U.S business? I would be dissapointed if they didn't as their were already taking big hits on the disasters! A good business would take the opportunity to over réserve at the higher tax rates and show underwriting profit at the lower tax rates. It's common sense....and they still had a record year.

Because it is a hell of lot easier to be negative...join the club! If the crowd was not negative than the price would be much much higher and we would not even be having any conversation.

There is $1.2b not recognized in book value in the associates....and yes the hedging losses 2014-2016) is reason why we trade so cheaply....it has been beaten to death here!

And...$20b cash... Lucky I guess?

Look at the 2018 thread

Some will recall.....record earnings.....just saying!

You guys had me at hello!! LOL

If they continue to follow Berkshire and Markel...they will do very very well over the next 10 years. As the brilliant Charlie Munger said “Warren and I figured out that we only had to do 10% and the magic of the float would give substantial returns over the long term”. Berkshire holds common stock for the long term because of their dividends...do you know what their yield is on Coca Cola!! Wells Fargo for example is similar to Fairfax other deals...it is yielding 2.7% and will yield 5% on purchases now over the next few years and maybe much more depending on what the shares do. If it were to fall great buy more and more and higher yields averaging cost and rising the yield on investments...it Is just math now for the majority of the investments...obviously India are greater risk reward....but the majority of the money should be Bradstreet’s and yields are the key...

I expect a bit of everything but you are correct 2 yr yields have doubled.... If you think in terms of every 100 basis points is $400m in income like Fairfax is thinking...it does not make sense to have long periods of holding cash unless things are really stupid....they were correct yields were really stupid...they are becoming normalized. All Fairfax needs to do is have normal returns on their investements.....they have set up the future with all of the insurance companies they bought and consolidated cheaply after the crisis. Its time to invest the money....rising rateswill create value quickly...you can see in their last two deals. Opportunity is here...