nwoodman

Excellent “Fairfax has built a very strong competitive position, through organic growth and strategic acquisitions, based on large and diversified re/insurance operations that are well established in their respective markets. Fairfax is one of the major global P/C re/insurers with $28.9 billion in gross premiums written (GPW) in 2023 (about $31.8 billion on a pro forma basis when including the $2.9 billion of GPW from the Gulf Insurance Group [GIG] acquisition in December 2023). We expect Fairfax's consolidated GPW to increase by about 15% in 2024 mostly driven by the GIG purchase. However, we believe the top line growth will likely moderate to about 5% in 2025-2026, supported by still favorable re/insurance.” https://disclosure.spglobal.com/ratings/pt/regulatory/article/-/view/type/HTML/id/3188808

Thanks, have you seen anything with respect to them gaining investment grade? I recall unencumbered vessels is part of the criteria. The summary I provided to the ATCO thread had this quote “Growing the Company's base of unencumbered assets is a fundamental objective in order to achieve an investment grade credit rating, as well as a potential source of liquidity through secured financing or asset sales”. I guess at this stage there would only be a deposit due to secure the build slot, so hopefully they gain an upgrade or two before having to finance another 1bn+ This game is economies of scale so once their borrowing cost is competitive coupled with their operational expertise, it gets very interesting.

Thanks @glider3834. Paywalled for me but available here https://archive.is/wOcd6 Key points - Seaspan is reportedly returning to ordering container ship newbuildings after nearly a 3 year pause. The orders are said to be worth $1.58 billion in total. - Seaspan has allegedly ordered 6 LNG dual-fueled 13,000 TEU ships from Chinese state-owned shipyard Hudong-Zhonghua, likely against charters to Ocean Network Express (ONE). The price is said to be at least $180 million per ship. - Seaspan has also reportedly ordered 4 methanol dual-fueled 9,000 TEU ships from private Chinese yard Yangzijiang Shipbuilding for about $125 million each, likely against charters to AP Moller-Maersk. The design is said to be the same as 6 Maersk methanol-fueled ships ordered from the same yard last year. - Deliveries of the 13,000 TEU ships are expected between early 2027-2028, while the 9,000 TEU vessels are due between late 2027-2028. - Seaspan did not order any container ships in 2022-2023 as liner companies were ordering ships directly themselves during that period. - In 2023, Seaspan made its first orders for 8 LNG-fueled car carriers from Chinese yards against 20-year charters to Hyundai Glovis, marking Seaspan's entry into the car carrier sector. - Seaspan has a current fleet of 176 container ships with more newbuilds delivering soon, many against charters to major liners like MSC, ONE and ZIM. It would be interesting to know the terms for the associated debt but good to see them locking in future growth.

Foran Mining released the results of their Winter drilling program on the Tesla deposit. As the mine is already feasible, Tesla is the icing on the cake. The close proximity to Macilvenna Bay sweetens the deal and in all probability it is likely to be an extension of the main deposit. Foran Mining is a ~250m position for Fairfax. https://foranmining.com/wp-content/uploads/2024/05/News-Release-Foran-Announces-Additional-Winter-Expansion-Drill-Results-at-the-Tesla-Zone.pdf "Our bold strategy to define the potential scale of Tesla during the winter ice-drilling campaign has effectively doubled the size of the mineralized footprint as our outstanding exploration results continue. The major down-dip step-out holes released today have provided some of the thickest and highest-grade results at Tesla to date, while once again affirming the consistent presence of the mineralized zone across significant strike and dip extents. The expanding scale of Tesla and its potential to continue beyond the currently drilled dimensions represents significant upside for Foran as we progress our flagship development project at the adjacent McIlvenna Bay Deposit High-grade drill results: Hole TS-24-20: 26.9m grading 1.23% Cu, 7.55% Zn, 38.4 g/t Ag and 0.20 g/t Au (3.67% CuEq) Hole TS-24-15: 11.8m grading 0.75% Cu, 8.22% Zn, 41.8 g/t Ag and 0.12 g/t Au (3.41% CuEq) McIlvenna Bay Project Probable Mineral Reserves: Total: 25.7 million tonnes Grades: 2.51% copper equivalent (CuEq), containing approximately 697 million pounds of copper and 1.4 billion pounds of zinc Indicated Resources: Total: 39 million tonnes Grades: 1.20% copper, 2.16% zinc, 0.41 g/t gold, and 14 g/t silver Inferred Resources: Total: 5 million tonnes Grades: 1.8% copper equivalent Bigstone Project Indicated Resources: Total: 1.98 million tonnes Grades: 2.22% copper equivalent, including 1.88% copper, 0.92% zinc, 0.25 g/t gold, and 9.5 g/t silver[1]. Inferred Resources: Total: 1.88 million tonnes Grades: 2.14% copper equivalent, including 1.35% copper, 2.75% zinc, 0.32 g/t gold, and 12.0 g/t silver. Tesla Zone (Part of McIlvenna Bay Project) Dimensions: Strike Length: 1,050 meters Dip Extent: 500 meters The zone remains open in all directions, indicating potential for further expansion

Thanks @Viking,although line ball I’d say, it sounds like this year’s AGM get together was one to remember. Aiming to make it next year though

Lolla: The story of Lollapalooza on Paramount+. A trip down memory lane, never got to one but have seen many of the bands featured in the early days. Was fortunate enough to see Jane’s Addiction on their recent tour and Perry is still rocking. Worth a watch.

Thanks @glider3834 this is “getting better all the time” (sung to the Beatles tune). A quick recap via Perplexity with some extra notes Intro Eurobank, a major Greek bank, is in the process of acquiring a majority stake in Hellenic Bank, the second-largest bank in Cyprus. Here are the key details about this takeover, including economic aspects and share prices: Eurobank's Stake in Hellenic Bank Initial Stake: Eurobank initially acquired a 29.2% stake in Hellenic Bank in June 2021 by buying shares from a fund manager (€1.80?). Recent Acquisitions: In August 2023, Eurobank signed agreements to acquire an additional 26.1% stake from major shareholders like Pimco, Senvest, and Wargaming Group (€2.35). This would increase Eurobank's total stake to 55.3%. Regulatory Approvals: The Cyprus Competition Commission has approved this 26.1% stake acquisition, concluding it does not harm market competition. Further approvals are pending from the Central Bank of Cyprus, European Central Bank, and the insurance supervisor. Mandatory Public Offer Legal Requirement: After acquiring the 55.3% stake, Eurobank is required by Cypriot law to make a mandatory public offer to purchase the remaining shares of Hellenic Bank from minority shareholders . Investment Estimate: The total investment by Eurobank could reach up to €800 million (and the rest) if all remaining shareholders tender their shares in the public offer. Economic Rationale and Benefits Strategic Alignment: The acquisition aligns with Eurobank's strategy to strengthen its presence in core markets like Cyprus and increase profits from international operations. Economic Confidence: It is seen as a vote of confidence in the Cypriot economy's prospects after recovering from the 2012-13 financial crisis. Synergies: Combining Eurobank Cyprus and Hellenic Bank would create the largest banking group in Cyprus with expected synergies in costs and revenues. Usually hate this term but it could be material as management remains mum on this. Utilization of Liquidity: Eurobank aims to utilize Hellenic Bank's excess liquidity to support lending and projects in Cyprus and the broader region. Share Prices and Financial Performance Hellenic Bank Share Price: See share price graph below, its up around 14% with a current market cap €1.11bn Eurobank's Purchase Price: Eurobank agreed to acquire shares at €2.35 each in its recent transactions. Hellenic Bank's Financial Health: Hellenic Bank reported a net profit margin of 31.54% and a debt/equity ratio of 31.7%. The bank's earnings for the trailing twelve months (TTM) were €176.14 million, with a revenue of €558.47 million. For reference they just did €93.3m for the quarter! Mainly due to NII https://www.hellenicbank.com/en/group/results-and-reporting Next Steps and Challenges Regulatory Approvals: After regulatory approvals, Eurobank will launch the mandatory public offer, likely in Q2 2024. Merger Plans: Eurobank's ultimate goal is to fully merge the two banks in Cyprus, but this requires agreement from Hellenic's remaining major shareholders like Demetra Holdings. Shareholder Challenges: One shareholder, Demetra Holdings, has challenged the competition approval, potentially delaying the merger process. Future Synergies: The timing and structure of the merger, as well as potential synergies, will be clarified after the public offer and new Hellenic Bank management. Can’t wait to see what this looks like when fully integrated

Tinkerered with some ALS.TO. I think there is some asymmetry but ultimately it’s a a bit of a lottery ticket. Breaks all my rules but the CEO seems to have a good handle on the cyclical nature of the business. Intriguing.

Isn’t it crazy and looking back over the last three years it was infuriating. I’ll bet in the next 3 years it will be why bother. Then in 5 years that was a no brainer triple or 5 bagger. It is the way.

https://finance.yahoo.com/quote/GODIGIT.NS First day of trade..for posterity. Ended at around 5x’s GWP Some recent contemporaries, take it or leave it in terms of relevancy Lemonade Inc. (LMND) IPO Date: July 2, 2020 IPO Price: $29 per share Opening Price: $50.06 per share Closing Price on First Day: $69.41 per share First Day Gain: +139.3% GWP Multiple: 13.8 Most Recent Stock Price: $14.50 Root Inc. (ROOT) IPO Date: October 28, 2020 IPO Price: $27 per share Opening Price: $27 per share Closing Price on First Day: $27.00 per share First Day Performance: 0% GWP Multiple: 14.9 Most Recent Stock Price: $3.20 Oscar Health (OSCR) IPO Date: March 3, 2021 IPO Price: $39 per share Opening Price: $36 per share Closing Price on First Day: $34.80 per share First Day Loss: -10.77% GWP Multiple: 3.3 Most Recent Stock Price: $6.70 Hippo Holdings (HIPO) (via SPAC Merger with Reinvent Technology Partners Z) Merger Close Date: August 3, 2021 Initial Trading Price: $10.00 per share (SPAC standard price) Closing Price on First Day: $8.50 per share First Day Loss: -15% GWP Multiple: 12.3 Most Recent Stock Price: $1.60 Summary Lemonade Inc. (LMND): Had a highly successful debut with a 139.3% gain but is currently trading at $14.50, a 50.0% loss from its IPO price. Root Inc. (ROOT): Had a flat debut with no change in stock price on the first day, currently trading at $3.20, an 88.1% loss from its IPO price. Oscar Health (OSCR): Experienced a decline of 10.77% on its first day and is now trading at $6.70, an 82.8% loss from its IPO price. Hippo Holdings (HIPO): Saw a 15% decline on its first day after the SPAC merger and is now trading at $1.60, an 84.0% loss from its initial trading price. My take (but really what a bunch of smart people who actually matter): Fairfax (Digit) gets one chance to do this right and be accretive to all stakeholders. I think they have threaded the needle.

@Viking another great post. I am firmly in the camp of high prices solves the issue of high prices when it comes to commodities. However, as you point out, there is money to be made with the right investing framework and patience. The thing that strikes me about these recent investments is that they are very supportive of the view that Fairfax’s network and deal flow is in very good shape. I find it quite interesting that along with their investment in Altius came a board seat for Roger Lace. The board seat in itself is not that big a deal but for a relatively small investment they chose Roger for that gig. It might be bit of a stretch but do you get the meadow foods idea from an interest in a potash royalty company. It’s probably more of a case of “opportunities come to a prepared mind’ but it’s truly fascinating to watch it all unfold. As you have been saying, the investment model has evolved from the crappy turnaround to those more consistent with idea of the “100 year company’’. The recent copper thread got me watching a few of the recent interviews with Brian Dalton, Altius’ CEO/President. A fascinating guy and I can see why he would resonate with the team at Fairfax.

FWIW current Grey Market Pricing (GMP) stands at 9.6% above the allotment price ahead of Thursday’s listing https://www.investorgain.com/report/live-ipo-gmp/331/

Timely post. Been starting to get my head around this because of Fairfax’s investment in Foran Mining. I was listening to this podcast with Arvind Sanger. Had some useful stats on Copper and worth a listen. He argues that we need more copper over the next 20 years than we have found in human history. https://podcasts.apple.com/au/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000655863672 “Arvind Sanger is the founder and managing partner of Geosphere Capital Management, a global long-short equity hedge fund focused on natural resources and industrial companies worldwide.”

@ValueMaven thanks for the link. Transcribed the Fairfax section below as it is relatively short. As @gfp pointed out, the interview is from February. It’s interesting that they intended to look into the insurance operations, is 3 months long enough? Freddy Brick is a partner at Muddy Waters Capital LLC ("Muddy Waters").Mr. Brick began at Muddy Waters in 2014 and has led Muddy Waters' investments in resource-related issuers since 2017. Editor's Note: This interview took place on February 23rd, 2024. G&D: We could dive into the ideas and could go into your two most recent shorts. We can start with Fairfax (TSE: FFH). Do you want to walk us through your thesis on that one? FB: Ah Fairfax.Everything I'm saying here is just my opinion. We believe Fairfax based on my review of the data is incredibly aggressive with respect to marking its book. And much of this is allowed, which we never said it wasn't. We just see a great deal of intellectual dishonesty. In Fairfax, what we see is significant areas where there's subjectivity. So, while the company would like to say, "Oh, well value is where something ends up and it's not about where it's marked today. And we have this wonderful way of determining intrinsic value and it's completely devoid from a market price." If that were the case, I would think the intellectual honest thing to do is marking very conservatively. And when lo and behold you reach that tangible, whether it's a takeout or crystallization, you take the markup then. What we see in many cases is actually the inverse. Where there's significant subjectivity, which is deviated from an observable price, which to my mind is always a better mark. In my opinion, many of their investments haven't perform as well And that's a pattern over 10 plus years. I think the sell side would like to characterize this as Muddy Waters cherry-picked a few examples and that's really not what we did. We actually identified a pattern of behavior. We believe there are a lot of things that are dressed up as sales, which are financing transactions. And again, we think this is probably done to benefit leverage metrics. But when you see tons of aggression all over the book from the publicly observable financials, you really must question what else is going on. And we didn't really touch on the insurance operations,which we're also looking into. G&D: The research report is very specific that it's targeting the holding company, not the subsidiary-level businesses. Do you have a view on the subsidiary-level businesses? FB: Yes, we do. There are good investments and bad investments. For example, we can all intellectually debate about Digit's value. The issue we take is with the approach to marking it.With successive higher VC rounds Digit was marked up. And then lo and behold, we have a pretty significant financial crash in terms of multiples of VC-backed companies. We have a number of IPOs in India that massively underperformed and then they're very slow to take the mark-down.And so intellectually, again, if the approach care about the marks,' why didn't you take the marks down as fast as you take the marks up? Our gripe is more with the intellectual approach. And not, as characterized by the sell side that, "Oh, Muddy Water has said that Fairfax made some bad investments." Everyone has bad investments. If you take for example, Exco [Resources]. Exco is an example of throwing bad money after good for over a decade. They first invested in equity, then they did some debt. They went through a bankruptcy process, which we believe for a long time the debt was aggressively marked during that bankruptcy process.There's an observable price where the shares are trading in the OTC market, and they choose to market at a higher price because of their own fair value metrics.Why are you doing this if you're not fussed about day-to-day profitability in the business? Why wouldn't you just take the most conservative approach every time? Then we get to the board, two of his children sit on the board.I believe John Templeton's niece sits on the board. Prem is very open about John Templeton being a great mentor of his. Three other members of the board are I think over the age of 80 or have been on the board for 15 to 20 years. And this is important in the context of these being the people that are supposed to hold this accountable. People think of Fairfax as this big company, it's got a $35 billion market cap. It's very small in terms of people.. And I think that's important in the context of how these things were allowed to happen because there's no real accountability at the board level, in my opinion

Whiplash, for the first time. While watching the kids have both commented how good it is. Damn, I must have been asleep in 2014/2015 or whenever it started streaming on Netflix. It easily goes into my top 20 movies of all time. Jazz is life. https://www.rottentomatoes.com/m/whiplash_2014

Excellent. I was following the QIB interest that @Haryana kindly posted above, it filled out nicely from what I saw earlier today. This looks to be a “rip roaring success”

I just hope they hang in there. The flipping of Micron and leaving coin on the table while hanging onto BlackBerry is a head scratcher. Hopefully they flipped into the recent strength. Eurobank open was a little insipid but starting to reflect the good results. A couple of points away from crossing over the $3bn mark

A brief summary of the Q&A section of the Eurobank CC. Transcript attached 1. Loan growth: Eurobank delivered loan growth in Q1 driven by corporate loans in Greece and retail in Bulgaria. The pipeline looks good and the bank is confident it will reach its full year targets. Quote: "Overall, we are quite confident that will reach our target for the year that it is a net credit growth of EUR 1.3 billion in Greece and EUR 1 billion in Southeastern Europe, overall EUR 2.3 billion for the group..." 2. Net interest income: NII was strong in Q1, flat q/q but up 13.7% y/y, driven by loan and bond growth offsetting higher deposit costs. Q1 NII points to potentially beating full year guidance but it's too early to revise targets. Quote: "Overall, the big picture for NII is that Q1 was better than our expectation... Q1 actually points to a better than budget performance. However, it is quite early in the year and at the moment we are not revising our forecast." 3. Asset quality: NPE ratio is expected to remain around 3% for 2024 with potential for cost of risk to come in lower than the <80bps guidance. Quote: "Overall, we expect that the NPE ratio for the full year 2024 to remain at the current levels. So circa 3%... As you can see on Page 32, the first quarter, cost of risk decrease to 68 basis points from 85 basis points in 2023... We may move lower than this initial guidance, but as Harris mentioned, we will provide you a full update." 4. Hellenic Bank: Eurobank expects to get regulatory approvals and close the increase to a 55% stake in Hellenic in the coming weeks. Hellenic's results will be consolidated from Q3. Quote: "Over the next few weeks, we should receive the pending approvals and we should be able to close the outstanding transactions driving our percentage at 55%... subject to the regulatory approvals in the second quarter, we should also record any negative goodwill that we may have from the pending transactions." 5. Capital return: The proposed dividend payout ratio for 2023 profits is 30% all in cash, targeting 40% in 2024 potentially via a mix of cash dividends and buybacks. Quote: "For the shareholder reward of this year out of 2023 financial results, as I mentioned in my introduction, we have proposed 30% payout ratio all in cash dividend... for next year, we envisage a higher payout ratio towards 40%. And in 2026, this may reach towards 50%... for next year and the following, we may consider a mix of cash dividend and share buyback." EUROB - Transcripts.pdf

Eurobank reported some impressive results. MS report on earnings attached. Key take aways: Eurobank beat MSe and consensus by 22% and 19%, respectively, when adjusting for one-offs (VES costs). Reported net income was 17% ahead of MSe. The beat was largely driven by better non-interest income and provisions. Provisions were 8% lower than MSe and consensus, with a CoR of 68bps (down 20bps QoQ), driven by an improvement in Greece provisioning. Eurobank has sent an official application to the SSM with a proposed payout of 30%, corresponding to a dividend higher than EUR9 cents per share. This implies a dividend yield of 4.3%. Eurobank expects a (potential) approval to come in June, and dividend distribution in late July. EUROBANK_20240516_1722.PDF

The reports you are after are now published here: https://www.gicouncil.in/statistics/industry-statistics/flash-figures/

True, I thought it was a move in the right direction though

Thanks, these are always fascinating. Micron turned out to be a good trade, although they left a bit of money on the table. Date of Disposition: March 26, 2024 Number of Shares Sold: 572,934 Total Consideration: $60,018,937 Book/Adjusted Carrying Value: $48,894,188 Realized Gain: $29,262,819 Average Sale Price per Share: Approximately $104.76

True, but we are not talking a paltry amount. I think this is a 80-90c on the dollar repurchase that has been well considered.

This sounds about right to me. Thinking about it over the last day I concluded that Prem left enough on the table to ensure that the optics of a direct buyback by the company will look good in a years time.

There was an interesting article in The Ken today regarding health insurance in Digit’s mix. Summary: Summary 1. Go Digit, India's first insurtech unicorn, is launching its IPO on May 15 at a $3 billion valuation, lower than its last private valuation of $3.5 billion. 2. Go Digit's business mix is shifting, with motor insurance premiums falling from 93% to 70% of total premiums and health insurance premiums growing 26.8X from Rs 48 crore (3% of total premiums) in FY20 to Rs 1,288 crore (16% of total premiums) in FY24. 3. However, 96% of Go Digit's health insurance premiums come from the less profitable group insurance segment, concerning industry experts. 4. Go Digit's focus on group health insurance has led to a higher incurred claim ratio (93% in Q3 FY24) and a combined ratio of 109%, while competitors like Star Health are pivoting to more profitable retail policies. 5. According to industry insiders, insurers often focus on group health insurance as a "low-hanging fruit" to grow their topline and market share quickly, even if profitability suffers. 6. Go Digit remains committed to group health insurance in the near term, expecting to rely heavily on corporate clients for a substantial portion of its health insurance premium revenue. 7. Some believe Go Digit's strategy could work if it targets the right corporate segments, such as IT and startups willing to pay well for employee health benefits. 8. As a public company, Go Digit will face pressure to deliver both growth and profitability in the challenging group health insurance segment. 9. Founder Kamesh Goyal acknowledges that success in the stock market, like in life, is not a linear climb, and Go Digit will need to prove its ability to buck industry trends profitably. Personally I think the pie is growing so fast it doesn’t really matter. Also I would see the health data you are gathering for the Life business and vice versa as material. This quote is salient for their future retail book of business: “But why isn’t a venture capital-backed internet company like Go Digit giving top priority to retail customers just yet, especially when many are singing its praises? “Go Digit has the best mobile app among all general insurers, and getting health insurance through it was incredibly convenient,” said a 32-year-old Chennai-based financial analyst who got introduced to the insurer through a short-term Covid-19 insurance provided by their employer. They have been renewing their policy for the past four years, paying Rs 20,000 (US$240) annually for Rs 20 lakh (US$24,000) coverage, which includes modern treatments like robotic surgeries. Go Digit wanted to build brand recognition through corporate clients before diving into retail, but the shift won’t be a breeze. “It’s easy to attract users for motor insurance, but health or life insurance requires trust in the company,” as the Gurugram-based insurtech employee put it. IMHO if there is one insurance executive that gets this, it is Kamesh Goyal