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StubbleJumper

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Everything posted by StubbleJumper

  1. I would say that having some international diversification of your assets would be a historically wise move. It is a very rare country that has gone more than a few centuries without a failure of constitutional government or a debauching of its currency. Canada, the UK and Australia are a few of the countries that has not been subject to those conditions for the past two or three centuries, but pretty much every other developed country in the world has experienced a failure of constitutional government through civil war or through foreign occupation, or they have experienced a debauching of the currency through hyperinflation (most European countries have had multiple episodes of these sorts of problems over the past two hundred years). That historical context should be motivation enough to keep a portion of one's assets in foreign denominated securities and in foreign domiciled accounts. Turning to Canada, my take is that Canadians generally support the freezing of assets not so much as a means to stick it to people on the other end of the political spectrum, but rather because about half of those funds are thought to have originated from donors in a foreign country. IMO, people are quite right to be ill at ease with foreign donations being used to fund political protests in Canada. Another word for that is political subversion. If the Russians scraped together several million dollars and used it to fund a multi-day demonstration in Washington DC, I suspect that Congress would also have some misgivings about that. This is an on-going problem for Canadians, as these foreign-funds have been increasingly used to interfere in our domestic politics over the past decade (cf. https://www.alberta.ca/public-inquiry-into-anti-alberta-energy-campaigns.aspx ). In the end, there will be some sort of inquiry held about the protests in Ottawa. A key element will likely be a study of the significance and magnitude of foreign money being used to influence domestic policy decisions. It is quite likely that new mechanisms will be established to staunch those money flows rather than needing to turn to the extreme of freezing assets. SJ
  2. Shhh! Don't even suggest it! That's the exact type of stinky investment that Prem seems to love. Sometimes they work out, but it's usually five years or more of holding an unsaleable position before an exit opportunity arrives. SJ
  3. I haven't worked my way through the letter in its entirety, but I found it interesting that Bloomstran's comments about the opportunity provided by ESG for O&G pretty much echoed some of @SharperDingaan's observations in a few threads before Christmas. SJ
  4. No, I think he's serious. Actually, from a conceptual perspective, it's a perfectly good application for an intermittent energy source. When the wind is blowing, a small windmill (or solar panels) can dump a pile of heat energy into a large heatsink (a swimming pool) and then when the wind stops blowing for a while, it doesn't much matter because it takes a long time for that thermomass to cool off. Whether the numbers work out and whether the municipal government will permit a windmill is yet another question... SJ
  5. I was puzzled by the people on the call belly-aching about the substantial issuer bid. It's not like an SIB is particularly exotic. SJ
  6. You should only add back favourable development from previous years if you also subtract favourable development for 2021 that will appear in the future. The conservative underwriting practices have not likely changed. The favourable development is likely to continue, but it remains to be seen just how big that cookie jar will be. It's fine to be conservative in your estimate of that cookie jar, but it'll almost certainly be at least a couple of points, right? SJ
  7. 1) Holy Christ, Odyssey is on fire. We've seen this in the past when reinsurance pricing became attractive that ORH's book exploded in a spectacular fashion. We didn't see it so much in 2020, presumably due to underwriting discipline. If the Q4 net written numbers and the complete year 2021 numbers mean anything for this year, look out! Odyssey is particularly well capitalised and there's plenty of underwriting capacity. 2) Where is the underwriting shit-show? Seriously, there is usually one insurance sub that has a crap year, but there isn't really one this year. Are the subs finally firing on all cylinders? 3) FFH will be rolling $25 billion of cash and short term investments during 2022. T-bill and ST treasury rates are a good 50 bps higher than a year ago, and that seems to be growing by the week. Will we see an extra $100m in interest income during 2022? 4) Still holding the TRS on FFH shares. It's working favourably for shareholders at the moment, but I'm not sure that I get the strategy. 5) Did they take the FF India performance fee in units? The units are ridiculously valued at 0.6x book, so I hope they took that $85m in discounted units! 6) Looks like de-leveraging has advanced quite nicely by cranking up the denominator of the debt-ratios. I hope management doesn't forget lessons learned in 2020 (I had hoped they wouldn't forget about 2003). SJ
  8. I know that I'd end up using those letters for asswipe because it's a desert island. Up until the last couple of years, WEB has generally been more verbose, so I gotta pick BRK. Don't want to scrub my ass with sand.... SJ
  9. It actually is a bit of a tricky situation for the FFH bond team. The good news is that rates are on the rise all across the curve. The tricky part is what to do with duration in the short-term. Five or six weeks ago, I suggested that the 2-yr treasury looks like it might be a bit of a sweet spot, achieving a balance between improving the current portfolio yield, while not really locking in a high duration. But, it's very much decision-making under uncertainty as we know which direction the curve is headed, but we don't yet fully understand how far and how fast it will go. My guess is that duration will remain pretty low and that FFH will not be rolling much of the portfolio into treasuries of more than 1-yr. It's a good problem to have, and it's nice that FFH has guys like Bradstreet who have seen this type of thing in the past. SJ
  10. The short term has only moved about 50 bps over the past year ( https://www.bloomberg.com/markets/rates-bonds/government-bonds/us ), so unless they allocate more heavily into 2-yr or more, the effect will be about half of what you calculated. It's still good, and it's still a low-risk increase in income. SJ
  11. Yes. The wildcard round were mostly sucky games, but this weekend we had four good games! SJ
  12. Stelco shares hit CAD$32 this afternoon, so I bought 99 shares to tender using the odd lot privilege. The tender range is CAD$31-37, so odd are strong that I'll make a bit of beer money. SJ
  13. Yes, if it does IPO, we will have a ready-made evaluation framework for FFH management because they just took it private three years ago! So if they bought AGT for $XXX and three years later they issue shares we'll be able to declare at least a short-term victory or defeat based on whether the valuation has grown adequately... SJ
  14. There's a good reason for that: https://www.theglobeandmail.com/business/article-fed-co-op-agt-foods-to-build-canola-crushing-facility-in- saskatchewan/ AGT is partnering on a CAD$2 billion canola crush plant and biodiesel plant. So, I am guessing that AGT will need to find its 49% of the capex from somewhere. SJ
  15. I don't know much about packaging, but it strikes me as a pretty moat-less industry. SJ
  16. Well, that's an interesting question, isn't it? The X-D just means US$10 in our pocket. But, what of the Q4 that should be released around Valentine's Day (or Superbowl)? What kind of adjusted BV do you think that FFH will report? After adjusting for Digit, the SIB, and the US$300m in MTM gains that @Viking shared with us earlier in the month, should be easily US$600, even after the dividend right? Well, today the market has it at US$515. That's what, ~0.85x book? Not sure how much steam will come off when those numbers come out. If steam comes off, do we end up back at 0.75x book? SJ
  17. FFH is trading at US$508 as I type. I kind of wish that the tender offer had been even more oversubscribed! The ~10% of shares that they didn't take up in the tender look like they'll be more profitable than those take up! SJ
  18. Fascinating. So, the implication is that because trading in a particular security was restricted for a brief period of time, the value of that security was permanently destroyed and therefore a compensatory payment required. We now have a new legal principle: value delayed is value denied. SJ
  19. It will be interesting to see what FFH has done with its cash and fixed income portfolio. My sense is that they'll be waiting for rates to rise a bit more before making meaningful changes to duration, but there will at least be some slightly better return opportunities for the short-term investments. At this point, perhaps two-year treasuries are the compromise position that delivers some yield while allowing the long treasuries to return to sane prices. Even reinvesting $5b into the 2-yr at current rates would probably bump interest income by $25m/yr or so. It still doesn't take you to the 3%+ that you'd like to see, but every bit helps.... SJ
  20. It's been a good month to have a value investing orientation. Can't belly-ache too much these days! SJ
  21. I am mostly happy with out it played out, except that I sold some BRK to make space to buy FFH to exploit the tender. So, I made ~10% on the FFH, but in the meantime BRK has skyrocketed ~10% over the past month! After repurchasing the BRK shares with my tender proceeds, I haven't made much money on that portion of my tender. I'd have been in the same position, more or less, if I had just sat on my ass! Oh well, even if it didn't work out this time, I guess that's the sort of bet that I should be happy to take as often as possible (a bet that BRK won't soar 10% in a particular month!). I did make a bit of beer money on some of the other shares that I purchased specifically to tender.... SJ
  22. No, you are right. It's mainly about the size the buy-back relative to the daily volume and market cap. FFH was attempting to repurchase a boatload of shares in percentage terms and it doesn't have enormous daily volume. It would take months to repurchase that many shares through a NCIB with an average daily volume of 60k and a 25% limit. 2m shares divided by 25% x 60k/day = ~130 trading days? SJ
  23. No, there are also stock tenders for US companies all of the time, and many of those are also Dutch auction processes. When a US tender is announced, it's the same process for shareholders. You need to download the filing off of EDGAR instead of SEDAR, read the general provisions and then carefully read the income tax treatment. My conclusion for most of those US tenders is that I am better to exploit them using an registered retirement account because they are exempt from any sort of US withholding tax or income tax under the Canada-US Tax Treaty. If you don't use a retirement account, then you end up screwing around to make a declaration under Section 302 or 303, which is paperwork that I don't really need in my life. All of that to say, FFH did something completely normal and common, but in this case it involved Canadian tax law instead of US. SJ
  24. I don't see a press release for the annual dividend yet. Maybe after the close of markets..... SJ
  25. Certainly the news releases did not make any mention of it, but usually @Daphne is spot-on. SJ
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