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Saluki

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    Fairfax 2024

    in Fairfax Financial

    Posted

    13 minutes ago, steph said:

    ....and 15 times earnings.   FFh could double and still be cheaper than WRB. 

     

    Yes, a couple of months ago a friend asked me about FFH because someone they knew was interested in it. This was right before the Muddy short attack.  I mentioned that if you look at it like most insurance companies (or banks), it's above book, which is not great, but still cheaper than BRK or MKL by that metric.  If you account for future growth which is probable based on history, and profits locked in due to rolling the fixed income portfolio, it's trading at a great price (based on P/E) for anything it looks like a great bet.  

     

    I haven't sold any shares, but didn't have the courage to double down during the few days that the price dropped, because it's already a big position for me.  I have been adding to FF India though. It's still at an inexplicable discount to book and they are making some shrewd moves buying back shares and selling things when they are fully priced, like the National Stock Exchange in India. And I appreciate that when the performance fee was due to FFH, that Prem didn't dilute us and take his fee in shares instead of cash.  You wouldn't see that at Brookfield. 

     

    Some of the holdings look interesting and kind of mirror each other, like buying ATCO in FFH and the Tanker company whose name I can't remember in FF India.  

    The White Darkness - David Grann

    in Books

    Posted

    @Jaygo almost done with The Wager, thanks for the recommendation.  Besides the great writing, I enjoyed the history.  The Wager mutiny happened when they were on their way to attack Valdivia, my ancestral homeland.  At the time it was the southernmost outpost of the Spanish empire.  No one lived below that, which is why the British were interested in it and how they ended up owning the Falkland's. 

     

    One of my ancestors had arrived from Spain a few years before to be in charge of one of the forts that guard the mouth of the river that leads to Valdivia. So if the Wager and the others had succeeded they would've literally crossed swords with him. At the time, it was basically a penal colony. The forts had been destroyed by an Indian uprising, helped by the Dutch supplying weapons, and was being rebuilt by convicts who were offered freedom in exchange for a set amount of military service (the same way Russia emptied it's prisoners into Ukraine).  So he was the commander or warden, depending on how you look at it.  

    Portfolio for my 92 year old grandma

    in General Discussion

    Posted

    @AzCactus you may be well served by paying an estate planning or elder care attorney for an hour or two of their time and asking them a bunch of questions.  If your grandma needs to be hospitalized or put in a nursing home, typically Medicaid doesn't kick in until their funds dry up.  I am told some facilities will let you sign over their assets in exchange for caring for them for life, wherein they take the risk if the person lives longer than expected. I don't know how it works, but many people try to transfer a person's assets to the relatives before they need medicaid (medicare?) and apparently they have some kind of look back where they can claw back the assets.  So knowing what the rules are may have an effect on your decision making and it may provide cover if the others who were expecting to receive something from your grandma's assets decide to point the finger at you. 

    Portfolio for my 92 year old grandma

    in General Discussion

    Posted

    Sorry about your grandma.  If her life expectancy is 4 years, then preserving the capital/income should probably take priority over the highest possible return. Even index funds hit potholes and 90% of the time will return to positive within 5 years, but you don't want to be selling at a downturn, which is when she may need it, regardless of what the market it doing.  

     

    A CD ladder will probably give you the best return (higher interest because you are locking it in for a while, and ability to access it because by laddering it they become due and roll over periodically).  This is FDIC guaranteed and will protect the income stream if interest rates go down.  If you are worried about locking in money if interest rates go up, you can put some of the money in the opposite bet.  You can Treasury bonds directly from the government that are indexed to inflation (must hold for 2 years) for a portion of that and you will have a small hedge in the other direction. 

    What is the intrinsic value of Fairfax's stock as of today?

    in Fairfax Financial

    Posted

    On 6/4/2023 at 1:42 PM, kodiak said:

     

     

    I am selling other things in my portfolio to currently buy shares of NextNAV, a $300 million market cap failed SPAC that owns a portfolio of 2.4 billion POPs of nationwide spectrum in the 900 MHz band. This spectrum is worth between $1.5 and $2.5 billion and should be monetized over the next 24 months. The stock is $2.67 and I expect the shares to be worth easily north of $10 each in 24 months. They also have a cutting edge alternative to GPS which you get for free and could be worth $10 or $15 in 3-5 years. Finally, the corporate governance is fantastic, with heavy inside ownership, very smart spectrum folks on the Board and a history of making money for investors. Even with all that potential upside, I am not going to sell Fairfax to fund the purchase of NN shares. 

    NextNav investor presentation.pdf 2.44 MB · 29 downloads

     

    @kodiak, Congrats. This was a shrewd call.  I'm looking at NN and Ondas now as they came on my radar because a press release mentioned one of my holdings that does something similar, Anterix.  Why don't you start a post on this?  

    Bad Management?

    in General Discussion

    Posted

    Speaking of good management, @Gregmal's favorite stock JOE had Bruce Berkowitz managing their portfolio for free, even though that's his day job and other people pay for it.  Compare that to WeWork's Adam Neuman who would buy buildings himself and lease them to WeWork.  

     

    Good managers are rare and even rarer are legitimate turn around guys.  Look at how Thurman Rodgers took Enpase from trading for less than a dollar to $200+. And I think I've recommended Tony Griffiths (FFH Director) book Corporate Catalyst on the Book post. If you read the book and put yourself in his position in some of those turnarounds and ask how you would handle it, you will realize that you probably don't have what it takes to be a turnaround guy.  It's okay, neither do I. 

     

    A good management can do wonders with a terrible business.  Compare Walmart under Sam Walton and Costco to other retailers, or Tesla under Elon to Ford or GM. But if you have a good business and good management (BRK and Warren and FFH and Prem) then you can get that lollapolooza the Charlie mentions. 

    Bad Management?

    in General Discussion

    Posted · Edited by Saluki
    follow up

    If you look at TYCO before the CEO went to jail, you can see how easy it is for management to line their pockets at shareholders expense.  One of the easiest ways to see this is to look for related party transactions which are usually a huge red flag, such as with Enron.  Some recent ones that I've seen are POWW which built a new production facility which was built by the brother of one of the insiders.  UHAL which  buys manages self storage facilities for themselves and well as the ones that the controlling family buys. And just yesterday I came across SOWG which leases a factory from the CEO.  Sometimes even a good company has some of these, such as FFH which has Prem's son managing some money for them, but it should be the incredibly rare exception. 

     

    With a big company, it's a problem, but in a profitable businesses they can absorb that waste and graft.  In smaller cap companies, there isn't enough meat on the bone for both you and the vultures. 

     

    EDITED to add

     

    Stock based compensation and dilution is a huge red flag too.  In companies like BRK and CPNG, you don't see ridiculous pay packages like you would at some tech companies like TSLA. 

    Tidbits

    in General Discussion

    Posted

    This came on my radar from looking at Form 4s. 

     

    Two years ago this was trading at $300. For entertainment purposes, imagine you had bought it and coffee canned it until last month when it was about $20. 

     

    https://finance.yahoo.com/quote/PGY?.tsrc=fin-srch

     

    Now imagine that last month, after waiting for it to come back 150x so you can get back to break even, they dilute you and your shares drop in half again. 

     

    Then you see that the SEC filings show that insiders bought on the dilution after the price drop. There's probably a lesson in there somewhere. 

    What are you buying today?

    in General Discussion

    Posted

    Small adds to JOE and NTDOY.

     

    I was tempted to sell something for more to deploy but I'd like to imagine that one day ( a very, very, very long time from now) that my descendants are going through my brokerage account after I pass and they find the stock equivalent of an episode of Hoarders. Except that instead of old magazines, it's full of hundred baggers 😂.

    What are you buying today?

    in General Discussion

    Posted

    22 hours ago, Jaygo said:

    For starters my purchase was only like 110 shares so its not like i'm all in on PLOW. Ive owned and followed over the years and was looking for another beaten up dividend payer so tossed a few bucks at it.

     

    Douglas was a pure play in Plows but then bought Dejana the upfitter that had bad margins and changed the whole way the company was looked at. It went from seasonal cyclical but with good margins in the up years to lower overall margins but still cyclical.

     

    In my mind at these prices your paying a decent price for a commodity plus business. The steel blades are the commodity and the wiring harnesses and accessories are the plus and where you make money.

     

    Its no different than Toro or Federal signal and with some management improvements there is no reason they cant get their shit together. 

     

     

     

    When I used to listen to their conference calls, I was impressed with their Kaizen continuous improvement philosophy.  It reminded me of the Danaher guys. It rang a bell when I read the Isaacson book on Musk over the weekend because with cars, or spaceships, or tunnel machines, the design is something that a lot of people can do, but building "the machine that makes the machines" is a complicated process and a rare skill.  I noticed a similar skill when I was connected the dots in my investment in Smith and Wesson.  It's surprisingly hard to make a gun because of tight tolerances and manufacturing processes.  I noticed that although some companies have been around for a long time (Beretta started in the 1500s), there are a lot of crappy new entrants, and a few surprisingly good ones.  What the good ones have in common, is that they were in some other manufacturing business first.  Benelli, the high end shotgun company made racing motorcycles, and Diamondback made speed boats etc. There's a reason that they sell most of the snow plows in the US. They have a really great process for efficiency and improvement. 

     

    Several years of warm winters have taken their toll on PLOW.  It WAS a slow and steady compounder with no debt and a decent, boring dividend. I check in on it once in a while, but it seems that the most important thing in moving the needle (a cold winter with lots of snow) is something that they can't control.  I hope you are right about it. 

    Climate related investments

    in General Discussion

    Posted

    https://finance.yahoo.com/news/panama-canal-drought-could-threaten-202842044.html

     

    It seems that containerships, which are probably overbuilt already, are going to pay higher rates to use the Panama canal because their cargo is more valuable and they can eat the cost.  I've always hated bulk carriers, but there are a lot more of them carrying low value cargo that doesn't warrant paying for passage through Panama.  I wonder if it's worth it to start looking at some of these companies again. 

    Elon Musk - Walter Issacson

    in Books

    Posted

    37 minutes ago, blakehampton said:

    This was a great summary and I guess in the end, it all comes down to perspective. I haven't read the book but do you mind explaining the context behind "His dad is a monster."

     

    Well, according to Elon and family, he was physically and psychologically abusive.  He tried to falsely take credit for a lot of Elon's accomplishments by claiming to have sent him to America and being an investor in Paypal. As a child, when Elon was beaten unconscious and hospitalized, his dad blamed Elon for provoking the kid. He used to send Elon and his brother to some summer program that was more Lord of the Flies, than a camping experience. According to news reports he killed 3 home invaders in South Africa.  In the book, it mentioned when he visited the US he was acting very possessive of his 15 year old stepdaughter.  She joined the family at 5 and Elon and his siblings considered her a sister. Elon was creeped out and tried to get them to stay and send his dad away to head off whatever weirdness was happening.  If you google his dad, you will see that he had 2 kids with his step daughter. Etc etc.  

    Tidbits

    in General Discussion

    Posted

    There's a video on CNBC now of Einhorn pitching his stock Solvay at the Sohn Conference.  When I checked the prices, the shares in Brussels are up 4% and the OTC  US shares are up 12%.  And markets are efficient? 

    Elon Musk - Walter Issacson

    in Books

    Posted

    Listened to the audiobook over the weekend.  It's really well done and with inside access.  I wouldn't want to compete with Elon, he's a madman, but it's clear that from being around him a lot, Isaacson sort of takes Musk's side on things, even when he's clearly in the wrong.  Part of that is probably because if you are spending a good chunk of your life writing about something, you will have a soft spot for it.  When people write about the Comanche, they revere their prowess with a horse and bravery in battle.  They don't start writing about them and then say "I've changed my mind, they were actually genocidal sociopaths who tortured people for fun, raped and murdered settlers and other Indian tribes, kidnapped children, and never developed an advanced culture like the Aztecs."  Isaacson never calls out the mental acrobatics that Elon does to justify doing what is in Elon's best interest. He bans the guy who tracks his plane from Twitter (because safety!) and then bans the reporters who write about it for the same reason.  But he leaks the name of the guy who was in charge of content moderation, who later got death threats at home and had to sell his house and move.  Elon's got private security, but banning the plane guy was a legitimate safety move, but picking on this guy was okay? 

     

    And the weird prickly behavior, like arguing with Twitter users, or rage posting and sharing fake news articles like Trump is disturbing. He's genuinely a bad person. His dad is a monster, but that doesn't excuse his behavior. Trying to pretend that he isn't insensitive to trans people when he makes jokes at their expense by stating that his kid is trans, is weak. His kid won't talk to him and changed his last name to his mom's because he can't stand Elon. Spending hours a day playing video games, but not reading his wife's novels, shows that it's all about him. The weird dick-measuring rivalry with Bezos over spaceships is funny, but despising Bill Gates because he shorted Tesla is just thin skinned nonsense. 

     

    This is a fascinating book about a rich, brilliant, and despicable human being. 

     

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