nwoodman

+1 That’s my feeling too. A self proclaimed mistake of omission. If this is the one hopefully weighted more towards $1000 than $2000 per share. Buffett's longtime partner, Charlie Munger, also lamented not investing in Google. "We could see in our own operations how well that Google advertising was working," Munger told the crowd at Berkshire's annual shareholder meeting (2019) "And we just sat there sucking our thumbs." "I feel like a horse's ass for not identifying Google," he added. "I think Warren feels the same way. We screwed up." "He's saying, 'We blew it,'" Buffett added.

Similar topics to what was in his recent letter. Always enjoyable though. His comments on emerging market value resonate and may work out well for companies like FFH Cheers nwoodman

Continued to trim TSLA. Love the products, love the focus on great engineering, love Musks conceptual framework of first principals thinking. Just don’t like the price here as there is no margin for execution risk IMHO. Musk’s contribution to advancing the conversation around renewables and making engineering sexy deserves a top 5 place in the world’s rich list. Just not sure how much drops to the average shareholder...the voting machine is in overdrive at the moment, the weighing machine is due to kick in over the next few years. cheers nwoodman

Added more FFH,

Xerxes this comment intrigued me. I actually think many of Fairfax's investments could do 2-3x or more from these levels. Very rudimentary analysis on my behalf but Iam estimating FFH could be trading at $USD1000/share in 2025. The caveat as always is that they have to do sensible not "clever" things. Guess it also depends what we call a multi-bagger, in this day and age the expectation is set by Tesla so 20% compounding is pretty mediocre ;) “What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so.” Mark Twain cheers nwoodman Not disagreeing, but what's your back of the envelope route to $1000? And which currency are you talking, USD? USD450*1.14^4*1.4 P/B=>USD 1000. Basic Thesis: Underlying compounding in book translating to P/B expansion. Similar to most I expect. Underlying assets as pointed out by Viking (brilliant spreadsheet) and others are mostly moving in the right direction so I think book is greatly depressed. The thing that has really changed in my thesis is that Prem is starting to invest more in “roll your own”. Digit being the perfect example, I would argue Atlas is another even though it is well established but new management is everything. I much prefer him spying an early opportunity and providing a bit of mentorship and capital to grow something special. Much better in my opinion to the “turn around that never does approach”. Either way I think people do really enjoy working with him, this is half the battle. Cheers nwoodman

https://www.moneycontrol.com/news/business/digit-insurance-becomes-first-unicorn-of-2021-with-1-9-billion-valuation-6350981.html The terms are a bit mysterious. Looks like the same players so not sure this provides any real price discovery. Edit: Around 11 minutes in. Money was raised via the 10% PE investors they brought in last year, marks all round :) Very interesting to learn though that Kamesh pitched the idea to Ajit Jain and Buffett in 2011. Apparently still catching up with Ajit to this day https://www.timesnownews.com/videos/et-now/shows/digit-insurance-becomes-the-first-unicorn-of-2021-startup-central/86678 Cheers nwoodman

Xerxes this comment intrigued me. I actually think many of Fairfax's investments could do 2-3x or more from these levels. Very rudimentary analysis on my behalf but Iam estimating FFH could be trading at $USD1000/share in 2025. The caveat as always is that they have to do sensible not "clever" things. Guess it also depends what we call a multi-bagger, in this day and age the expectation is set by Tesla so 20% compounding is pretty mediocre ;) “What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so.” Mark Twain cheers nwoodman

https://bfsi.eletsonline.com/digit-is-aiming-to-expand-with-simple-and-relevant-products-vijay-kumar-ceo-principal-officer-digit-insurance/ Pretty amazing what Kamesh Goyal and team are doing here. It does make you wonder what multiple the Robinhood crowd would place on them. Lemonade (LMND) has in force premiums of around $200mm and is losing money. Market Cap $6.9B. Cheers Nwoodman

There may be some useful observations for some in this piece by MS in their outlook for the P&C industry for 2021. Happy New Year all Cheers nwoodman ardabo20201221135917.pdf ardabo20201221135917.pdf

UK website for the ruling, due to be handed down at 10:30am on Tuesday 15 September 2020 https://www.fca.org.uk/firms/business-interruption-insurance#latest-updates cheers nwoodman The Court found in favour of the arguments advanced for policyholders by the FCA on the majority of the key issues. Christopher Woolard, Interim Chief Executive of the FCA, commented: ‘We brought the test case in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market. We are pleased that the Court has substantially found in favour of the arguments we presented on the majority of the key issues. Today’s judgment is a significant step in resolving the uncertainty being faced by policyholders. We are grateful to the court for delivering the judgment quickly and the speed with which it was reached reflects well on all parties. ‘Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. Our aim throughout this court action has been to get clarity for as wide a range of parties as possible, as quickly as possible and today’s judgment removes a large number of those roadblocks to successful claims, as well as clarifying those that may not be successful. ‘Insurers should reflect on the clarity provided here and, irrespective of any possible appeals, consider the steps they can take now to progress claims of the type that the judgment says should be paid. They should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps. ‘If any parties do appeal the judgment, we would expect that to be done in as rapid a manner as possible in line with the agreement that we made with insurers at the start of this process. As we have recognised from the start of this case, thousands of small firms and potentially hundreds of thousands of jobs are relying on this.’

UK website for the ruling, due to be handed down at 10:30am on Tuesday 15 September 2020 https://www.fca.org.uk/firms/business-interruption-insurance#latest-updates cheers nwoodman

A couple of aricles/transcripts on Atlas Mara's new CEO, John Staley (from when he was at Equity Bank). The future of banking in Africa lies with banks, not fintech During a panel discussion today at the annual AfricaCom event in Cape Town, Staley said, “In the future, banking in Africa will be done by banks.” He argued that most fintech companies are focusing on unsustainable business models based on payments and loans. “Payments to me is a race to zero. We are fast heading to zero [transaction costs]… Amazon wants to sell goods, but they want to do the payment for free. Google wants to get money from marketing, but they want to do the payment for free.” https://www.howwemadeitinafrica.com/future-banking-africa-lies-banks-not-fintech/56695/ John Staley: Keynote Address - Insights on How the Poor Spend Money Where do I think this whole thing is going, and where do we as a bank think this whole thing is going and what have we done? You all know, drive around Kenya you see a lot of Equity bank agents. It's been a huge success. We're doing over 70% of all of our cash in and cash out transactions at banking agents. Do you know what our average cash in and cash out is at our banking agents? Average withdrawal is about KShs. 6,000. Average deposit is about KShs. 8,000. Do you think we're reaching the poor who are spending KShs. 8,000 in a whole month? We're not - we're tapping the top-end. That money is moving and that's the money we're tapping, we're not getting to the bottom end of the market, and we are doing the best, go and have a look. When we started off, there were only MPESA agents. Go and have a look … if you have an M-PESA agent, and our agents are more cash flow positive than M-PESA agents so we need less. So we have done a great job. We realized it was all about communication, so we roll out an MVNO, it's the fastest growing MVNO (Mobile Virtual Network Operator) in the world. But we're operating in an environment where Safaricom controls 92% of revenue. In most jurisdictions in the world if a Telco gets to 25% there is a problem. Safaricom controls 92% so I better not say anymore than that because I'll get into trouble but we have a problem in this country. Why did a bank have to become a Telco? Because we needed affordable access to a channel. We needed affordable access to USSD, which is the channel that poor people use. In Kenya, we've got banking apps. Most of you sitting in this room will have a banking app from NIC, Equity or somebody. You know what, 90% of all of our transactions still happen on the USSD channel, you know *247* whatever, that's how our transactions happen, because poor people don't have smartphones. http://asintl.org/John-Staley-Transcript.pdf Are Banks the Future of Banking? Africa Board Fellows Deliberate The chief officer of finance, innovation and payments at Equity Bank in Kenya, John Staley, strongly stands in favor of banks. He recently argued that banks are in it for the long-term and that fintech companies will come and go – or get absorbed by the banking industry. Where does Staley’s confidence come from? He points to business models and access to capital. According to Staley, payments services are not a sustainable business model. He believes the race to eliminate fees from payments that is taking place among large players will drive out any profitability for the small-scale fintech enterprises whose profit streams rely on them. He envisions more and more banks and larger companies like Google and Amazon eliminating transaction costs for customers altogether, creating a general unwillingness among customers to pay fees. Secondly, successful loan schemes require large sums of money for the long-term. John questions fintech companies’ abilities to maintain the required amount of liquidity for their loan portfolios. With John’s views as a backdrop, we wanted to know what other players think about this critical, even existential, question. We asked our alumni and current fellows of the Africa Board Fellowship program, a group of banking professionals across Africa with more than a century of cumulative banking experience, to answer the question: Are banks the future of banking? The shortage of support for Mr. Staley’s convictions was surprising. The fellows poked holes in his view using specific examples of policy or innovations that undermine his two main arguments. https://cfi-blog.org/2017/02/01/are-banks-the-future-of-banking-africa-board-fellows-deliberate/ Staley sounds highly competent and in tune with his market. Africa has plenty of challenges but I can see why patient investors such as Fairfax would find this appealing. From the Fairfax Africa Q1 presentation Sub-Saharan African financial services group founded and listed on the London Stock Exchange in 2013 Provides commercial banking, markets and treasury, and FinTech solutions for corporate and retail clients Broad footprint: Operates and controls banks in six countries (Botswana, Mozambique, Rwanda, Tanzania, Zambia and Zimbabwe), plus 48% noncontrol position in Nigeria, Africa’s largest banking market outside South Africa Deep value opportunity Diversified footprint in attractive banking markets Long-term vision of creating pan-African financial services platform High growth potential in African financial services sector broadly Entry point into attractive high-growth Nigerian market [/img] https://s21.q4cdn.com/604175076/files/doc_presentations/2018/05/2018-Fairfax-Africa-AGM.PDF

Richie Boucher (ex BoI) was granted a seat on the board late last year (October 2017), probably early days for him to make a big difference. However going forwards I believe his involvement as well as the rest of the Fairfax team could be transformational.

A most pleasing development "The Board expects profit after tax for the year to significantly exceed the current market expectations and guidance previously stating that "we are targeting reported earnings for 2017 to be more than double the level achieved in 2016" of $8.4 million. Profit after tax of around $40 million, with projected earnings per share of $0.35." https://finance.yahoo.com/news/atlas-mara-limited-atma-trading-133300605.html

Final approvals received for the new insurance venture in India "A day after the Rs 5,600 crore initial public offer (IPO) of ICICI Lombard General Insurance sailed through successfully, the Insurance Regulatory and Development Authority of India (IRDAI) has granted the final approval to the new general insurance company Go Digit General Insurance floated by India-born Prem Watsa, who controls Fairfax, the parent firm of Lombard." http://indianexpress.com/article/business/prem-watsa-gets-irdai-nod-for-new-insurance-venture-4853484/

Looks like the float is going well "At the top-end of the price band, ICICI Lombard, a joint venture between private sector lender ICICI Bank and Canada's Fairfax Financial Holdings, will be valued at nearly Rs 30,000 crore." http://www.business-standard.com/article/markets/icici-lombard-ipo-subscribed-67-a-day-before-close-117091800724_1.html Values FFH's 12% stake realized at around $USD550-560m and the residual 9.9% stake at $USD450-460m. cheers nwoodman

That is fantastic news. I knew he had been offered a position but very happy to hear he has accepted. Cheers nwoodman

ICICI Lombard OK withinvestor backing rival co Mumbai: ICICI Lombard is beefing up its digital platform to consolidate its position as the country's largest private non-life insurer even as partner Fairfax Financial Holdings prepares to pick up 49% stake in a rival non-life startup Digit. However, the private insurer does not see any conflict in Fairfax being the biggest shareholder by retaining close to 10% stake in ICICI Lombard. Speaking to TOI, ICICI Lombard MD & CEO Bhargav Dasgupta said that the settlement with Fairfax has been amicable. "They are extremely bullish on general insurance — their core business — and they are very bullish on India. Fairfax was very keen to hold 49% in their India business," Dasgupta said. However, this was not possible as ICICI Bank's stated objective was to list its insurance subsidiaries. "Since they had to obviously dilute because of the IPO, it made sense for them to invest in a business where they could hold 49%," he added. ICICI Lombard has been the first general insurer to file for an IPO through which Fairfax and ICICI Bank are diluting their shareholding by 12% and 7% respectively. "The company has 8.5% share of the Rs 1.28-lakh-crore non-life industry and has been growing at a compounded annual rate of 26.7% from FY15 to FY17" said Dasgupta. The non-life venture is valued by analysts at around Rs 30,000 crore. Going by current valuations the IPO is likely to raise Rs 5,700 crore. http://timesofindia.indiatimes.com/business/india-business/icici-lombard-ok-withinvestor-backing-rival-co/articleshow/60266918.cms

That was my take too. It seems like it was too good a deal to pass on and at 3.3xbook and 25% of future business they grudgingly accepted. Prem was adamant that proceeds from the sale of First Capital and ICICI Lombard would be used to repurchase shares. Prem indicated that they can only pay out OMERS et al after 3 years or so and that the short term priority was buy backs. Details of the Mitsui "partnership" are to be fleshed out over the next few weeks but he sounded excited about it

Slides http://s1.q4cdn.com/579586326/files/doc_downloads/2017/2017.08-Investor-Presentation.pdf

Stunning!

Interesting article on IIFL, a very impressive home run for Fairfax https://www.outlookbusiness.com/specials/the-outperformers_2017/prudent-financier-3679 "With that principled stance, the story can only get better going forward. IIFL’s strong and increasing retail presence already sets a robust foundation for future growth. With a collection infrastructure already in place, operating leverage will come into play, and as it has a bouquet of financial products to offer, there is tremendous scope to cross-sell to retail clients. Bank or non-bank, the next five years for IIFL may well be better than the past five. Prem Watsa, after all, is not playing for short-term gain."

Makes excellent sense if Fairfax is involved with HAL. Ensures they are then involved with all major air traffic serving Bangalore http://m.deccanherald.com/articles.php?name=http%3A%2F%2Fwww.deccanherald.com%2Fcontent%2F627485%2Fhal-fairfax-keen-reopen-old.html "Fairfax is looking at a solid business model so that operation of the old airport becomes viable. Besides running the airport, Fairfax is ready to get involved in operating a maintenance, repair and overhaul (MRO) facility or a special economic zone (SEZ) for aerospace industries," said a government source privy to this development. The possibility of HAL airport resuming operation for domestic flights is currently slim due to the concession agreement signed between the civil aviation ministry and private airport operator. As per the agreement, a second airport within a radius of 150 km from the Kempegowda International Airport (KIA) at Devanahalli is not permitted. However, this clause is likely to be relaxed if Fairfax Group, which is operating KIA, does not oppose the move to operate a second airport. Recently, HAL wrote to the Ministry of Civil Aviation requesting its inclusion in the list of airports identified for regional connectivity scheme UDAN, so that domestic travel can be made affordable. "I would like to inform you that HAL has written to the civil aviation ministry to include the airport in the list of airports under UDAN. Currently, HAL is not in the list. HAL has the airport infrastructure in Bengaluru to undertake domestic flight operations 24/7," a HAL spokesperson said. The move by HAL is viewed by aviation industry experts as a step to lure Fairfax to start operating domestic flights from the defence ministry-owned HAL airport. Commenting on the development, Karnataka Tourism Minister Priyank Kharge said the state government is ready to cooperate with the Centre and Fairfax to run the HAL airport in a profitable way. "It will boost the tourism and industrial sectors of the state. The central business district of Bengaluru is looking at an airport which eases traffic and expands connectivity,” Kharge said.

All good points but at this stage any alternative to the current game of chicken between two sociopaths is worthy of consideration. Surely Trump's rhetoric is trying to position China into applying more influence, if not, then it is quite terrifying cheers nwoodman

Excellent ideas! cheers nwoodman