nwoodman

These guys are executing beautifully. The new CFO’s supplementary spreadsheets are super helpful too https://ir.atlascorporation.com/earning-reports?cat=42. Their core strategy of foregoing short term pricing power for longer term dependable cashflows that in turn drive down the cost of borrowing is Sokol to a tee. All this, before he has even sunk his teeth into a sector he really understands. Exciting times and I just hope Fairfax stays in the background and doesn’t try to do anything cute. Just let Sokol and co do their thing and it will be a $5bn+ position for Fairfax in less than a decade.

No disagreement from me. Ops and investments will do well, perhaps surprisingly so. I would be amazed if they don’t have an Ajit replacement in the wings, that even if only 80% as competent, will do well. All things considered there is a valuation that I would sell my shares, I hope it never gets there, and this behemoth just keeps chug, chugging along.

Everyone else has summed this up well. All things being equal, a conservative 8% CAGR is a high probability, a market hiccup of “non central bank intervention regression to the mean” in the next five years may see this rise to 10-12%. The inevitable demise of one, then both of the most talented didactic business brains, we will see in our lifetimes might create some short term opportunities. This company is indeed set up to reward the long term, rational investor. It Is the only asset that I own, that I am happy to margin against. This creates some good opportunities over time as you start playing with the unrealised tax owing on your holding. The benefit of the slightly lower but predictable compounder is not to be underestimated.

https://www.berkshirehathaway.com/news/aug0721.pdf https://www.berkshirehathaway.com/qtrly/2ndqtr21.pdf

Absolutely, if you want a laugh you should check out their quarterly earnings report. Despite previous comparisons it is the first time I have glanced at it. If I was ever to do a pairs trade, Long FFH short LMND would be it.

Just for reference, current market cap for LMND is 5bn ($80/share after hours) Lemonade (NYSE:LMND) stock drops 8.8% after the digital-forward insurance company after the tech-driven insurer still has no date for launching its auto insurance product, the "timing of which is hard to tie down," the company said. Q2 GAAP loss per share of $0.90 matches the consensus estimate. Boosts guidance for full-year revenue to $123M-125M, up from its previous range of $117M-120M; consensus estimate is $118.9M. Sees in-force premium at Dec. 31 of $380M-384M, up from $376M-382M it expected previously. Still sees year adjusted EBITDA loss of $169M-173M. For Q3 2021, Lemonade (LMND) expects in-force premium at Sept. 30 of $336.0M-339.0M; compares with $296.8M at June 30, 2021. Sees Q3 revenue of $32.5M-33.5M vs. consensus of $32.2M. Expects Q3 gross earned premium of $76.5M-77.5M; compares with $66.9M in Q2. For Q2 2021, premium per customer of $246 increases from $229 in Q1. Q2 adjusted EBITDA loss of $40.4M widened from a loss of $18.2M in Q2 2020. Q2 total revenue of $28.2M beats the average analyst estimate of $26.8M and declined from $29.9M in the year-ago quarter. Net loss ratio of 80% rose from 70% a year ago.

No ceiling as far as I know. Fairfax could conceivably be given a Fintech multiple by the market (I wish). Can’t speak for others but I consider fair value to be 1.2-1.3x’s as it stands. That has worked OK for me in the past. My preference would be that they compound a believable book value at 15% and forever trade at 1x’s book

at the upper end of the P/B range for the last 10 years too. Longer term graph shown for comparative purposes

Another possible data point. Not even an an insurer just an aggregator https://techcrunch.com/2021/08/01/indian-online-insurer-policybazaar-files-for-ipo-seeks-to-raise-over-800-million/ In papers submitted to the market regulator in India, PolicyBazaar said it is looking to raise $504 million by issuing new shares while the rest will be driven by sale of shares by existing investors. Local media reports said the startup is looking to raise at a valuation of up to $6 billion.

I am quite bullish on Digit but a $200m raise that in turn gives a $3.5bn mark is still price discovery lite. I remember seeing an interview with Kamesh Goyal, where he indicated the first raise (that got them to unicorn status) was about price discovery. The second raise of $200m, is certainly a little more material but not by much . I don’t recall if the actual % amount that was purchased for 200m was disclosed. Based on the note in the quarterly, and comments in the CC it looks like Fairfax has at least attempted to discount the valuation of the raise a little, which is welcome. “During June 2021, the company's associate Go Digit Infoworks Services Private Limited ("Digit") entered into agreements with certain third party investors whereby its general insurance subsidiary Go Digit Insurance Limited ("Digit Insurance") will raise approximately $200 (14.9 billion Indian rupees) of new equity shares, valuing Digit Insurance at approximately $3.5 billion (259.5 billion Indian rupees) (the "transaction fair value"). The transactions are subject to customary closing conditions and regulatory approval, and are expected to close in the third quarter of 2021. The company estimated the fair value of Digit at June 30, 2021 using a probability weighted valuation model, attributing 60% weighting to the fair value determined through an internal discounted cash flow analysis and 40% weighting to the risk-adjusted transaction fair value, which resulted in the company recording a net unrealized gain of $425.0 (inclusive of foreign exchange losses of $13.7) on its investment in Digit compulsory convertible preferred shares. Increasing (decreasing) the weighting of the transaction fair value by 5% would increase (decrease) the net unrealized gain by $54.4 ($54.4). The company also holds a 49.0% equity accounted interest in Digit as described in note 6.” It is still only the 1st innings for Digit, while it is looking good I can understand the market’s reticence. Then again you pay a high price for a cheery consensus as WEB would say.

Thanks again Glider, I have added the IRDAI monthly non-life GWP numbers link to this thread, to make it easier (for me) to find https://www.irdai.gov.in/ADMINCMS/cms/frmGeneral_List.aspx?DF=MBFN&mid=3.2.8 under Home >> Insurers >> General >> Monthly business figures

Investment gains to one side, the insurance results were stellar, Good stuff Fairfax. Agree with Crip, hopefully they have been able to pull the trigger on more share repurchases in July

Thanks for this and all the other posters Greg, Speke, Eric etc. that challenge and provide a contrarian/anti-group think perspective . Equal thanks to Sanj, Viking, Daphnee etc. At the end of the day we will draw our own conclusions but Sanjeev you must be proud to have cultivated this culture. Still superior to ML/AI as far as I am concerned . Looking forward to the earnings release

This is key. From the 2018 AR "I mentioned to you last year that we are focused on buying back our shares over the next ten years as and when we get the opportunity to do so at attractive prices. Henry Singleton from Teledyne was our hero as he reduced shares outstanding from approximately 88 million to 12 million over about 15 years. We began that process by buying back 1.1 million shares since we began in the fourth quarter of 2017 up until early 2019 – about half for cancellation and half for various long term incentive plans we have across our company. This was after we increased our ownership of Brit to 89% from 73% while having the funds ready to increase our ownership of Eurolife from 50% to 80% in August 2019" The next couple of quarters will be key in terms of whether this is just more platitudes. All things considered, I cannot think of when Fairfax's share price has been more attractive. Sure last year was cheaper on a P/B basis but on a relative basis compared to other opportunities it was cheapish. Now compared to other opportunities I think it is a screaming buy. Viking's comments are spot on, "You can't see the future through a rearview mirror". However, managements actions, given the circumstances, will be key for me. Given they were hamstrung last year, the TRS play was a very good start

Looks like the IPO market is running hot in India despite the many challenges. Hopefully augers well for Chemplast Sanmar and Anchorage Zomato Soars 80% in Debut of India’s New Tech Generation Zomato’s first-day performance will serve as a barometer for India’s budding tech scene of unprofitable unicorns, which has produced a coterie of up-and-coming giants from Ant Group Co.-backed Paytm to Walmart Inc.’s Flipkart Online Services Pvt. Also backed by Jack Ma’s Ant, Zomato’s debut comes amid investor concern that India’s markets are a bubble waiting to burst and valuations have outstripped fundamentals. Optimism about India is tempered by one of the worst coronavirus outbreaks in the world, which threatens to erode decades of economic gains. Investors also have to contend with political risks, with Narendra Modi’s government clamping down on foreign retailers, social media giants and streaming companies. For many others, the potential outweighs the downsides. With almost half its 1.3 billion people accessing the internet via smartphones, a bet on Zomato represents optimism that India’s tech upstarts could go the way of the U.S. or China, particularly as India’s internet infrastructure remains nascent and consumers are just getting used to buying online. “This is how it is supposed to work. Nine out of 10 will fail,” Goyal, who is barred from commenting in the run-up to the listing, said in an earlier interview. “But the one that thrives will be a spectacular success.”

Thanks Glider, catching up on some reading and came across your post. This is a fantastic resource What would be great to know is how much of Digit’s market share are new customers to insurance. I have a sneaking suspicion that even though Covid has been diabolical for India, it has introduced a decent set of the population to the need for insurance. Couple this with the low friction option that is Digit and its game on!

More FFH for me too. Given information available, just too compelling (for me) to ignore at these levels.

https://www.wsj.com/articles/berkshire-hathaway-to-buy-500-million-stake-in-brazils-nubank-11623153600 Brazil’s digital bank operator Nu Pagamentos SA said Berkshire Hathaway Inc. BRK.B -1.05% agreed to buy $500 million of its shares, as digital banking expands quickly in Latin America’s largest economy. The investment is accompanied by another, $250 million deal that includes various domestic and foreign investors, Nu said. Both deals were signed late Friday and put the company’s value at $30 billion, Nu said. The São Paulo-based, privately held firm operates via its Nubank brand. It is the largest fintech in Latin America and one of the largest in the world, with 40 million users in Brazil, Mexico and Colombia, the company said. It has raised around $2 billion since its inception in 2013, Nu said. The company said Berkshire’s is the largest single investment it has ever received. Nu didn’t disclose the size of any investor’s stake. Todd Combs?

Some very sensible observations regarding a lock in but I do hope you are wrong. Jump Prem!. Arch, 1 thousand, 2 thousand, 3 thousand……

More USAP. Not difficult to see a decent ramp in aero as things return to post covid normal. Price target simply book of $20+. Operational leverage is the key https://www.thestreet.com/investing/boeing-general-electric-leap-as-airbus-boosts-production-targets

USAP

FFH

Thank-you. Watched it yesterday and found it inspiring and frustrating at the same time. Read your transcription today and got twice as much from it in a tenth of the time. Great work Matt!

+1 although purchase was via HKSE (9988.HK)

Morgan Stanley are out with a long form primer on India. A good read over a morning coffee. The work Fairfax has put into establishing their “hunting license” should really start to pay off over the coming years. india_20210405_0000.pdf