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Vizi1

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Posts posted by Vizi1

  1.  

    WTF.  They don't have enough of the vote, so now they need to go shmooze some of the institutional holders to put them over the top?  How about just acknowledging that minority shareholders have rights and that we *won't* chuck Prem under the bus in just any capricious manner.  Like seriously, after all of these years, Prem's partners will cut him some slack, even if we think he's gone off the rails.  He doesn't need to increase the number of votes for the multiple voting shares, and this proposal borders on insulting. 

     

    Given a few more weeks, I am virtually certain that Prem will convince a couple of the institutional shareholders to come to his side....

     

     

    SJ

     

    I am actually surprised this has happened.  I voted NO thought at least I got to vote as I assumed Prem lined up the votes before he put the circular in front of the public.  I also thought it didn't matter if CPPIB voted NO because the votes were due on July 17 to count for tomorrow and the WSJ published the article this weekend, so the article wouldn't have really influenced the vote of the retail shareholder, but I am glad to see the institutional holders weren't all sheep to Prem's proposal.

  2.  

    Sanjeev---with the utmost respect---I cannot agree with your statement. I too am a very long time shareholder of Fairfax (initial shares bought in the mid 1990's). I stayed with the company through its darkest days and added to my aggregate shareholding throughout. Yes---my patience has been greatly rewarded. All the more reason why it pains me greatly to have to vote "No" against the Proposal at hand.

     

    My concerns with the Proposal are best described on page 20 of the Management Proxy Circular that was sent to shareholders. The two issues outlined on that page are as follows:

     

    1) The Amendment may prolong the period of time during which Sixty Two can exercise a controlling influence on most corporate matters; and

     

    2) The Amendment may have an anti-takeover effect.

     

    Detailed comments are provided for each of these items in the Circular.

     

    These items are significant enough (to me) that I believe as a shareholder of subordinated voting shares that I should be compensated for these two items which are arising only as a result of the Proposal at hand. I do not believe that Prem's commitment to remain as CEO for at least another 10 years and to fix his compensation at its current level are adequate compensation. I respect that others may disagree with my view and vote for the Proposal however I could not.

     

     

    Read through the circular - Its The Sixty Two Investment Company - not 63 and not a foundation.

     

    VOTED NO and sold 1/3 of my position and lived to tell the story.

     

    While I disagree with Sanjeev on this, I do agree you should read the circular and then decide how you vote.

     

     

  3. Not really spinning IMHO, just presenting a contrarian view.

     

    I'm not looking for support, I'm comfortable in my reasoning and conclusions so far.  And I'm not looking to convince anyone, just looking to state the other side of the argument of "In Prem we Trust".

     

    The AGM was two months ago, FFH could have raised it then.  The 60 page circular wasn't just put together.  Im sure it was making the rounds between FFH management and their counsel before the AGM.  Instead, the special meeting is being held a boardroom at the lawyers office.  I don't suspect they are anticipating the lovein that is the AGM.

     

    But then again, maybe that's too dark a view of humanity.

  4. I'd be less concerned if he was going to helm the thing for the next 30 years, but he is essentially asking for another kick at the can but having someone else kick it for part of the next round.

     

    I held it for 20 years knowing he was losing control, but so did he, but now he's asking for another go round.  And yes, he should have started at 50, but I doubt he would have gotten FFH off the ground at that ratio.

     

    The argument is being made now cause he is resetting his bar but not the other existing shareholders.  The argument I had was 20 years ago when I first bought my shares, but I am surprised that Prem is pulling this after all the loyal shareholder long term holder spiel I've been listening to for all that time.  I guess at the end of the day Im disappointed that Prem isn't the guy I thought he was and really just another CEO looking out to protect his interest over his fellow shareholders.

     

    The rising M doesn't preserve the status quo, it enhances his position.  Prior to the reweighting, there was a greater chance that FFH might get taken out a premium to current price, however unlikely, it is more likely pre reweighting than post, so he's essentially removed a potential takeout premium to the stock price with the reweight, and what did the SVS get, nothing, or at least that's whats being offered.

     

    For the record petec. my first shares were bought at $414, and it took a long time to get the price back to those levels, but I believed we (FFH and I) were in the fight together, but really, we weren't cause now that the worst is over, the relationship changes.  Shame on my I guess.

     

    I understand why he is doing it, I just don't agree with how he is going out about it.

     

     

  5.  

    1. If Watsa's control contributes to strong BVPS CAGR in the long term, you will be.

     

    2. Yes, but only if he does deals.  If they are bad deals, complain loudly.  But if they are good ones, you'll get richer.  Which is what has been happening for the last 30 years.  Again, I don't think this proposal changes anything.  It just allows for a continuation of what's always been happening.

     

    Re: the good performance window... I see your point as it relates to very recent share price action, although if that was the goal he might have done it after the CDS, not after 5 years of underperformance!

     

    We may have to agree to disagree on this but thanks for taking the time to explain!

     

    P

     

    petec

     

    Always enjoy a good discussion  - this one is difference cause normally I'm a reader and not a participant.

     

    To respond to your points:

     

    1.  I would have gotten the  BVPS CAGR regardless of the MVS reweighting.  And if my compensation has an "if" in it like "If I get..." then I should be compensated up front for taking that risk.

     

    2.  He is going for the MVS re-weighting so that he can go out and do other deals, WITHOUT LOSING CONTROL.  And while he has done some great ones, the has also really s*%t the bed on others.  And Im not worried about the past 30 years, that's already in the price, its the next 30 and who is going to have the MVS hammer over that time, cause I don't think its Prem for the entire period.

     

    He didn't need to do this after the CDS win cause he still had enough of a margin in his MVS.  That margin has clearly gotten away from him in the past 5 years. 

     

    Here's another thought:  If he saw his MVS margin shrinking, why didn't he buy up some more Subvoting shares in an attempt to keep that voting position?  I think he didn't cause this MVS reweighting has always been part of his plan for when the control question became an issue.

     

    And we do agree to disagree.  I think we are arguing about how many angels fit on the head of a pin, cause this thing is already a done deal.  The only question I have to answer is if I hold or sell as I mentioned earlier.  This is the first time I've had to ask that question since I bought my first shares in 1994.

     

    Cheers

  6. petec

     

    1. Do you mind having your voting power diluted?  - Yes, but I'd be OK with it if I were being compensated for it.

     

    2. Do you mind having your economic stake diluted? - I think our economic stake is diluted, not now, but going forward as he issues more subordinated shares without diluting his control.  Now its on me to go to pocket to maintain my economic stake going forward.  Which is my I feel we should be compensated.

     

    And I think the timing of the request is quite relevant.  Based on the recent performance of the stock/management it makes sense to take advantage of the goodwill generated by a higher stock price.  He wouldn't have asked if he wasn't in a favourable performance window.

     

     

  7. So far there doesn't seem to be a lot of selling going on!

     

    I don't think that looking at a days trading is relevant to a corporate action whose effect will span potentially decades, depending how sensible Prem is with his new currency of diluted subordinated voting shares.  We are essentially giving him currency to spend which dilutes us, unless we keep our voting rights in line with pre-MVS restructuring levels

     

    However I don't really understand why increasing the multiple of votes on shares that are already multiple voting is a problem.  If you already own shares, you've already decided you're happy with Watsa maintaining control with fewer than 50% of the economic rights.  Why would this change your mind?

     

    petec - All questions are welcome.  I also struggled with the MVS when I bought my shares, and I continue to struggle with it.  This to me is different than most other MVS because what is being proposed to me is like adding another MVS structure into an already existing one via a re-weighting.  There have been many threads over the years questioning why he issued shares or pref shares when it didn't seem necessary.  Well, now we know he did it cause he figured whenever he needed to he could re-load on the MVS provided his record was favourable.

     

    Ask yourself, would you be OK with the current ask prior to the CDS homerun.  I wouldn't be then and I'm not now, unless he is going to take me along for the ride for being a long time shareholder, which I've been lead to believe he/they value.  Well, there is no demonstration of the love under the proposal.

     

    "their companies"...

     

    Amen globalfinancepartners

     

    I think FFH is relying on the greatest force in the universe to work in their favour - Inertia.

  8. I have to say this is the first time I have had to seriously question my holding FFH in 20 years.

     

    I always understood that FFH and Prem were always unconventional, but this recent ask is too much.  Partner24 has it right, many of the other greats against which FFH is mentioned haven't had to resort to this.  This is the first significant move by FFH that I really don't agree with.

     

    That being said, I don't think FFH would have launched this meeting without having the votes in the bag, so I think we are tilting at windmills.

     

    The only move I have left as a long time shareholder is to either hold or sell my position.

     

    Either way, the fact that we have gotten to a place where Prem needs this to solve his problem, yes, his problem, is just shameful and reeks of arrogance.

  9. Even if Ben doesn't control it, in case something happens to Prem, Prem doesn't control it which is why he is looking for maintain control, so that he can maintain the stewardship of the company as he has since 85.

     

    As well, don't let the recent past cloud your judgement, there were a lot of years where the Faifax "culture"/strategy did NOT pay dividends.

     

    Regarding succession plan, I'd like to know more about what that looks like.  Most the of brain trust is well into their 60s.  The succession risk goes far beyond just Prem.

     

    And I am back to my point, if he is looking for continued "rope", he should be willing to pay for it as it does have value.

     

    There is no free lunch.

  10. I think a fair number of value investors put too much emphasis on book value, at the expense of earnings, cash flow and especially ROE/ROIC. Another way of putting it is they overemphasize accounting at the expense of economics.

     

    x1,000,000 yes

     

    x1,000,000 yes

  11. Even if you offered Prem a market compensation package but didn't allow the change to the multiple voting shares (MVS), he wouldn't take the market comp cause that's not what he's interested in.  So to me that argument or justification for the boost in the MVS is ridiculous.

     

    As for Prem holding it, if he dies tomorrow, or more accurately, after he gets the MVS boost, the Watsa family gains control, so now we've surrendered more voting control to a group that is NOT AT ALL Prem.

     

    Being a capitalist, tell me what I'm getting out of this, cause right now, I don't see it.

  12. I love the Fairfax guys, but can someone explain why this isn't a bad thing for shareholders?

     

    I'm kind of with you Norm. 

     

    Its great that Prem keeps keeps control, but what do I get as a subordinated shareholder (sine 1994) other than basking in his greatness?  And a Keg gift card aint gonna cut it....

     

    Heres an idea, if you are going to bump your voting rights, why not offer me some kind of kicker for going along.

  13. http://www.stockhouse.com/news/press-releases/2015/06/12/fairfax-calls-special-shareholders-meeting-to-consider-amendment-to-terms-of

     

    "As a result of the gradual dilution of the percentage of votes represented by the multiple voting shares from their original 85.2% in 1986 to the current level of 41.8%, Fairfax has reached the limit of its ability to issue subordinate voting shares to continue its acquisition-related growth without reducing Mr. Watsa's effective controlling interest to a level at which the preservation of Fairfax's culture and governance can no longer be assured."

     

    Hopefully we get to attend and see what's going on...

  14. Let's invert: assume you know nothing about Warren and Charlie and you start to analyze BRK as a black box company with no previous knowledge about its management. Would you not raise serious questions about the BRK corporate governance?

     

    For example, nepotism in the board: we let Warren slide with it, but it would be a red flag at other companies.

     

    (Aside: auditor trouble at DJCO would have legitimately crashed stock of other companies. DJCO shareholders let it slide because it's run by Munger).

     

    Edit: I wrote about corporate governance, while the article talks more about transparency. Still the issue remains: if you were to deeply analyze BRK, would you not need the info about its (re)insurance businesses that is not provided? Would you buy the stock if it wasn't "Warren knows what he's doing, so let's pay 1.3 P/B"?

     

    Edit2: I thought the article was a bit sensionalistic, but it IMHO raised some valid points. And to answer the question above: if BRK was a black-box-no-name company, I would not invest in it. I think it is very hard to analyze and very hard to predict future returns.

     

    I'm with Jurgis on this one.  There seems to be blinders on when it comes to all things WB and BH.  Look at it without those glasses on and I'm sure your opinion on its disclosures and governance methods would change.  If there is any take away from Munger its that you should question things and ALWAYS INVERT.

  15. You could read Taibbi's book - The Divide

     

    http://www.amazon.ca/The-Divide-American-Injustice-Wealth/dp/081299342X

     

    It covers how the justice system for the bankers is different from the justice system of the common citizen.  Its a little preachy but it is well written.  At the end of the day its written to get people to be more aware of inconsistencies in the US Justice system.

     

    The chapter on Fairfax I thought was well written and pretty accurate.

  16. For 2013, 74.81%.

     

    Hey enoch, don't you have a boatload of cash too?

     

    I have very little cash at the moment, versus just a couple of months ago.  Recently I've bought Sears (again), Fortress Paper, and EXCO Resources, and added significantly to Sarepta Therapeutics.  I've also bought puts on The Royal Bank of Canada.

     

    Enoch,

     

    A question if you are willing to share - Why, of all the financials, did you pick Royal Bank of Canada, why not a US bank (given your residency) or another of the big Canadian banks?

     

    Thanks in advance.

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