nwoodman

This seems reasonably accurate https://www.dataroma.com/m/holdings.php?m=FFH

They blew thru estimates, impressive Micron Q2 24 Earnings Results: - Adj EPS: +$0.42 (est -$0.27) - Adj Revenue: $5.82B (est $5.32B) - Cash Flow From Ops: $1.22B (est $2.14B) - Adj Op. Income: $504M (est -$238.4M) - Sees Q3 Adj Revenue Between $6.4B - $6.8B (est $5.99B) “No technology investment for me!"

I was actually referring to Digit’s float. While relatively small, surely the appeal of an Indian P&C and Life insurer is investing in domestic assets. I have often wondered how the investment ideas get split once Digit is large enough. One of those nice problems to have as long as you are invested in the Parent.

1. Agree about selling BIAL but it doesn’t mean you can’t use it as part of a financing deal and still maintain control. 2. I think we are already seeing that hypothesis play out. 3. Digit is the obvious answer to that last point. I think this years AGM is shaping up to be a cracker. I will be following it as best I can from the trek to Mera Peak in Nepal. Have fun y’all

Spot on. I don’t think the existing and potential future credit upgrades have been fully factored in by the market. Access to “cheaper’’ money than your competitors in an environment with sticky inflation is a great position to be in. Fairfax doesn’t ever seem short of stuff to do.

For those too lazy to reach for a calculator: Based on the information provided, the current 30-year U.S. Treasury yield is around 4.44% as of March 19, 2024. Several reputable sources, including Trading Economics, Bloomberg, and Barron's, confirm this yield level. The Fairfax Financial notes, with a coupon rate of 6.350%, are offering a spread of approximately 191 basis points (1.91%) over the current 30-year Treasury yield of 4.44%. Spread = Fairfax Financial notes coupon rate - 30-year Treasury yield = 6.350% - 4.44% = 1.91% or 191 basis points This spread is within the range of 100 to 200 basis points that is typically observed for investment-grade corporate bonds with a 30-year maturity. Seems pretty competitive. @StubbleJumper will be happy…for a while. Only 5 more similar sized offerings to go

1. The airport is the biggest and potentially undervalued asset on the FIH books. It has to figure prominently in any capital raise for a cash purchase of IDBI but I don’t think they want to sell it completely. 2. Yes OMERS is what I was referring to but they will need a substantial contribution from FFH. Thats assuming there isn’t a “pet insurance” business lurking on the FIH balance sheet. Warrants/Prefs makes good sense rather than equity. IDBI seems to moving in the right direction from a profitability perspective but non Performing Assets were a big problem for them until recently. GNPA peaked at 28% in 2018 and is now around 4-5%. Roughly like a current Eurobank vs the 2015 version that saw NPLs peak at 45%. I am more intrigued than concerned as to how they pull it together. Their timing was pretty good with Bank of Ireland but they were definitely early with Eurobank. Given these experiences I am hoping their “rat sniffing” is finely tuned these days, especially in the context of banks.

Thanks for the post. I agree, not sure there is a number that could offset the political optics. The irony is obviously Berkshire could do it in a heartbeat, so it is a potential snub anyway. Good thing there was 30 insurers who came to the same conclusion. Safety in numbers

I see it as parlaying an airport into a bank. Fairfax will likely do their usual debt dressed as equity but with a twist to comply with the banking regulators. I doubt the regulators would take kindly to slicing the bank position so it is a case of what other assets they can leverage. I doubt Fairfax think about the market cap or even book value of Fairfax India but what lien they get against the underlying assets. I also think FFH has to throw $2-3 bn into this to make it happen too. All a bit previous as there are no approvals. Still think this has the making of minor indigestion but the balance sheet is much bigger than when this was first flagged a couple of years ago. I can see why Prem is keen but it is like elephant hunting with a bow and arrow, you better not miss.

It’s probably worth reiterating that the Indian government is selling a 60.72% stake in IDBI Bank but it’s still a big number. It will dwarf the likes of Atlas and Eurobank. Given enthusiasm around the Indian thesis at the moment a book build should be more straight forward than even a couple of years ago. While it doesn’t really sit within an Anchorage IPO surely that has to be part of the answer. Prem obviously considers this a bit of a crown jewel, personally I find it a bit formidable. It’s going to be fascinating and I think it speaks volumes about their brand in India if they get the nod.

Kingswell also linked to this, you end up running out of superlatives : "Charlie Munger, who died in November within sight of his 100th birthday on Jan. 1, fell ill at his home in Santa Barbara. When he got to the hospital, a nurse asked him how he was. 'I’m dying,' he said. 'How are you?'" https://diocesela.org/the-bishops-blog/charlie-munger-memorial/

USD 10.9bn and counting, OMERS will be drooling

Thanks for this. Running the numbers through the machine offers the following progressions: Debt-to-Equity Ratio: 2023: 1.82 (Total Borrowings $8,046.7m / Equity $4,415.9m) 2022: 1.47 (Total Borrowings $6,078.6m / Equity $4,128.9m) 2021: 1.41 (Total Borrowings $4,971.1m / Equity $3,517.6m) Interest Coverage Ratio: 2023: 2.08 (OP $782.3m / IE $375.6m) 2022: 3.19 (OP $751.4m / IE $235.4m) 2021: 3.87 (OP $762.2m / IE $197.1m) Return on Assets (ROA): 2023: 2.94% (NP$403.0m / TA$13,713.0m) 2022: 5.51% (NP $622.3m / TA $11,302.4m) 2021: 3.79% (NP $400.5m / TA $10,569.6m) Operating Margin: 2023: 43.0% (OP$782.3m / Revenue $1,820.7m) 2022: 44.3% (OP $751.4m / Revenue $1,697.4m) 2021: 46.3% (OP $762.2m / Revenue $1,646.6m) Net Profit Margin: 2023: 22.1% (NP $403.0m / Revenue $1,820.7m) 2022: 36.7% (NP$622.3m / Revenue $1,697.4m) 2021: 24.3% (NP$400.5m / Revenue $1,646.6m) If interest rates were to decline then this looks to be a counterbalance to the interest income from the bond portfolio. As long as it can remain a profitable single digit grower while they consolidate the industry then that will be a good outcome. Happy to have this grind away and become “surprisingly” accretive later this decade. Edit: other key numbers where the trend is not really your friend, but there may be some timing issues associated with the fleet build out. Ultimately Prem is forecasting 400+m this year and 500m next year, seems plausible. Return on Equity (ROE):2023: 9.43%, 2022: 16.28%, 2021: 11.21% Return on Capital Employed (ROCE): 2023: 6.19%, 2022: 7.32%, 2021: 8.11% Return on Invested Capital (ROIC): 2023: 6.35%, 2022: 7.54%, 2021: 8.59% From the letter: "Upon completion of Poseidon's containership newbuild program, Poseidon is expected to deliver more than $2.5 billion of revenue and $1.9 billion of adjusted EBITDA.“ "Poseidon is expected to make net earnings in excess of $400 million in 2024 and $500 million in 2025. We carry our 43% ownership in Poseidon at $1.7 billion – 10x 2024 expected earnings or 8x 2025 expected earnings."

Fascinating. They have alluded to this previously but this is much more granular and removes any doubt as to who the facilitator is. It’s certainly not without its challenges but done well the upside is significant. Fairfax the Facilitator…kind of has that ring to it like “Maximus the Merciful”.

@Crip1 it was more the final line “No technology investment for me!” that we were referring to. No arguments from me in terms of contrition, and even closure on an era.

Agree it was kind of a strange way to conclude. Micron, Ki and even Digit would suggest that it is in their wheelhouse.

Minor add 7974 Nintendo

Really does read like closure and not just on BlackBerry… “That brings me to a major mea culpa! We began investing in Blackberry in 2010 and helped John Chen become CEO in November 2013 by investing $500 million in a convertible debenture at the same time. Blackberry had come down from $148 per share (down 95%) and had $10 billion in sales. I joined the Board in 2013. Our total investment in BlackBerry early in 2014 was $1.375 billion ($500 million in the convertible and $787 million in common shares). When John joined the company, BlackBerry reported a loss of $1.0 billion - in one quarter and most analysts were predicting bankruptcy! BlackBerry was indeed in difficulty! John saved the company by quickly bringing it to breakeven on a cash basis and then on a net income basis. No CEO worked harder but, unfortunately, John could not make it grow! Revenues for the year ending February 2023 were $656 million. John retired from the company at the end of his contract on November 14, 2023 and I retired from the Board on February 15, 2024. We got our money back on our convertible ($167 million in 2020, $183 million in 2023 and $150 million in 2024) plus cumulative interest income of approximately $200 million. Our common stock position as of 2023 ($162 million or 8% of the company) which was acquired at a cost of $17.16 per share was valued on our balance sheet at $3.54 per share. Another horrendous investment by your Chairman. To make matters worse, imagine if we had invested it in the FAANG stocks! The opportunity cost to you our shareholder was huge! Please don't do the calculation! No technology investment for me!”

Lots to digest but this comment on Atlas/Poseidon was super helpful for me "Poseidon is expected to make net earnings in excess of $400 million in 2024 and $500 million in 2025. We carry our 43% ownership in Poseidon at $1.7 billion – 10x 2024 expected earnings or 8x 2025 expected earnings." Any confirmation that it is going to be accretive and growing is very welcome

Yep, he has stepped it up this year. Touches on just about everything that has been tossed around on this board and more. Outstanding

Agree with you and @Viking on the share count, I grabbed an old spreadsheet from my downloads folder, that will teach me. https://www.eurobankholdings.gr/en/investor-relations/shareholders/shareholding-structure A decent chunk of change that will improve their cashflow dramatically.

Eurobank moving to a 50% payout means close to $200m a year in cash coming to Fairfax. That is staggering. Buffett talks about the Coca Cola dividend, Euro bank will be in that league 1166m shares x €0.15 x 1.09 €/USS = USD 190.6

Eurobank Earnings are out EPS of 0.31 for the year Looking to transition to 50% payout over the next couple of years “In a lower interest rates environment, Eurobank aims to generate resilient returns to shareholders, which will be further enhanced by the full integration of Hellenic Bank in Cyprus, capitalizing on the strong franchise in Greece, organic growth and strategic initiatives in Cyprus and Bulgaria. The ROE' is expected to reach 18% in 2024 and circa 15% beyond 2024, while the payout ratio will gradually increase towards 50% of profits in 20264. Eurobank, as a regional bank with diversified earnings stream, aims to ensure top line growth amid a lower rates environment, with non-Greek operations contributing c. 50% to the Group core profit in 2026. The 2024-2026 financial goals are as follows: https://www.eurobankholdings.gr/-/media/holding/omilos/enimerosi-ependuton/enimerosi-metoxon-eurobank/oikonomika-apotelesmata-part-01/2023/fy-2023/4q2023-results-pr-eng.pdf Edit: MS take on earnings attached EUROBANK_20240307_1929.PDF

No particular insight but this looks like a “public hanging” to me. Not good, but I can’t see Fairfax stepping with a line of credit if this is more than regulatory violations.

Not sure what to make of this but the market has whacked them again today. Sounds like it has been ongoing and the RBI has had enough.