value_hunter
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Posts posted by value_hunter
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Seems Fairfax bought back $200m CAD shares in Mar.
https://ceo.ca/api/sedi/?symbol=ffh&amount=&transaction=&insider=
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12 hours ago, Xerxes said:
For Canadian, if foreign holdings (aside U.S.) reaches a watermark threshold of $100,000, additional disclosure is required by Revenue Canada. Even if there are no realized gain or losses. And even if it passes $100,000 and dips back below.
Actually it's cost based not fair value based. Also Canadian companies like FFH, issue foreign currency share are not treated as foreign property.
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23 minutes ago, Ross812 said:
Seeking alpha is reporting an earnings miss of $4.23. Not sure where the ~$177 estimate is coming from...
Yahoo's estimate is C$70.74 which is USD$52. meet.
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Some interesting questions: If FFH purposely overvalue their asset, will that lead a higher tax or earlier tax payment? If FFH has the motive to consistently inflate their asset value why when some chances came but they chose not to. The bottom line is whether Fairfax is trustful. I found the following comment from Seekingalpha is very interesting.
Doc HopeyYesterday, 4:53 PM@zenamaste1995 When FFH sold its Pet insurance business for $1.4 bn in late 2022, FFh had to book a gain of $1.2 bn. Fairfax bought the pet insurance business for $30 mn (or was it $50 mn? From memory) less than two deacades before the sale.
Essentially nobody, not even the people following Fairfax over years, were really aware, that Fairfax even owned that business.
And here’s the question: Don’t you think that creative accountants would have advertised such an asset way more than FFH did? Why haven‘t they? Were they oversleeping this $1.2 bn opportunity for letting Fairfax shine?
Or is it more like, Fairfax tries to grow intrinsic value (not book value), tries to avoid taxes and is advertising way less than others over its whole history?ReplyLike(1) -
Are shorts covering now? Looks like no chance to buy it cheap any more.
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23 minutes ago, Parsad said:
Hmmm, I wonder who the TRS counterparty is? I wonder if Muddy Waters does work for them? Cheers!
Do you think the TRS counterparty will benefit from the price drop? Shouldn't they already hedged on this?
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3 hours ago, LC said:
Yes - but that’s just part of the picture (which you have done a really great job illustrating to this entire board).Rates going down would of course present reinvestment risk for FFHs large fixed income portfolio. And similarly on the flip side, rate increases provide an opportunity.
And it’s important to note management has done a great job taking advantage of 2023’s rise in rates.
But what will falling rates do to the rest of the income streams? I’d imagine the equity portfolio would rise. And low rates would be a barrier to entry in the insurance market.
At the end of the day whether I think rates will rise or drop (I don’t have a strong opinion but I lean towards ‘higher for longer’), I think it presents opportunities to Fairfax either way. And management has done a good job these past few years on the big decisions (I have a more mixed opinion of them on the smaller deals eg blackberry, KW, etc).
Why are you concerned about KW deal? Just because of the recent price drop? Or you think the KW deal is fundamentally flawed?
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52 minutes ago, Spekulatius said:
The leverage on $KW is bonkers. I owned some bonds a while ago and even those seem hairy. They are yielding ~9.3% now (4.75% 2030) down from ~11%. Not for me.
Debts are 100% fixed or hedged. Plus Fairfax won't let it go under.
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added KW
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If you hold FFH.to in Canadian account, will the broker/bank charge 2.5% exchange fee for the dividend?
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Any news for big drop(3%+) today?
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17 hours ago, Thrifty3000 said:
Yeah, was surprised to see a pullback on premium growth. Maybe they're just being conservative in the third quarter and waiting to back up the truck on higher volume in Q4 and Jan1.
Did you notice this footnote?
(2) Excluding Ki Insurance, gross premiums written decreased by 4.0% and 4.6% in the third quarter and first nine months of 2023 and net premiums written decreased by 9.5% and 1.2% in the third quarter and first nine months of 2023. Excluding Ki Insurance, the combined ratios were 92.4% and 93.1% in the third quarter and first nine months of 2023 and 114.8% and 101.2% in the third quarter and first nine months of 2022.
That maybe Brit sold part of its business to Amynta for $400M in May and affect premium written. Q3 brit's premium written dropped 8%. That's also explain Q3 overall net premium written only increase 5% not 6-8% as previous quarters.
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51 minutes ago, TwoCitiesCapital said:
Perhaps. That did happen in 2020, but Fairfax was sitting at 0 for a long time before that happened as the Fed paused in 2018 and then began cutting long before any blow out occurred in 2020. I liked the moves they did in 2020 - just imagine how much bigger they'd have been had they owned a few years of duration going into it and had actually booked gains on the bonds sold AND on the ones purchased instead of just sitting in cash. Imagine what it would have looked like to have had an additional $1-2 billion in cash from the increased interest received from 2018-2020. It would have been hugely impactful.
Secondly, 3-years of duration is hardly taking undue risks. Nor am I looking for it for purposes of appeasing the market.
It helps with business planning knowing you have that $1B coming in consistently. It helps give you the confidence to take those risky/lumpy bets when the world is falling apart because you can use the $1B to do it while knowing there's another $1B coming right behind it if it continues to deteriorate. And lastly you get the optionality of a duration kicker which may allow you to front load $2-3B by selling some of duration to buy credit that has blown out.
Correct me if I am wrong. Why they have to sit for 12-18 month (wait for mature) to rotate to long duration bond if they see extreme interest cut coming? Can they just sell their short duration bond (with gain) and buy long duration(with loss) right away so they can lock in long duration?
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Seems every move Fairfax takes the market views as negative. No trust at all.
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1 hour ago, petec said:
Surely you should multiply CR by Premiums written, not float? Sorry if I’m being thick.if use premiums earned ($16.5 B), we will get around $0.82B income just from insurance operation. That's still very impressive.
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2 hours ago, MMM20 said:
$500 or bust!+1
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46 minutes ago, TwoCitiesCapital said:
They're not committed to buying every share tendered - they're committed to spending a specific $ amount. And you're guaranteed to get the price you tendered for OR better if you get filled.
They accumulation of shares starts from lowest ask up to the highest ask until the $1 billion is exhausted. To avoid punishing shareholders for bidding on the low end, all shareholders will receive the highest incremental price that exhausts the $1 billion.
Fairfax is tendering for $1 billion worth of shares. Below is a hypothetical
700,000 shares tendered at $460
700,000 shares tendered at $470
800,000 shares tendered at $475
1,000,000 shares tendered at $500
In this scenario, Fairfax buying power is exhausted in the $475 level. Everyone who tendered at $460 and $470 get filled for for $475 which was the last incremental price of the tender that exhausted the cash. The people who tendered for $475 will get pro-rata allocations where ~88% of the shares get tendered for $475.
The remaining 12% tendered in the $475 bucket and the 1,000,000 shares in the $500 bucket go unfilled. The benefit of bidding lower is a guaranteed fill for your entire allotment knowing that you'll get filled at that price or a better one if the offer is oversubscribed. The risk of bidding high is that you don't get filled if enough people were willing to accept a lower price.
My understanding is all bid $460-$475 will be pro-rata, not $460-$470 will get full filled and $475 get pro-rata.
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Anybody has idea how much hit Fairfax will get for the worst in the history of Kentucky tornado?
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What's the chance of the over subscribe and tender price is around $460? If the stock price is constantly below $450, are many people willing to accept tender price of $460?
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My understanding is the tender will pay in USD. If you choose CAD, there will be some exchange fee. Anyone have idea, how much the spread Computershare Trust Company of Canada will charge? Is it better to convert FFH.TO Toronto list to FRFHF in advance?
The exchange rate that will be used to convert payments from United States dollars into Canadian dollars
will be the rate established by Computershare Trust Company of Canada, in its capacity as foreign exchange service
provider, on the date the funds are converted, which rate will be based on the prevailing market rate on that date. The
risk of any fluctuations in such rates, including risks relating to the particular date and time at which funds are
converted, will be solely borne by the Shareholder. Computershare Trust Company of Canada will act as principal in
such currency conversion transactions. Computershare Trust Company of Canada may earn a commercially reasonable
spread between its exchange rate and the rate used by any counterparty from which it purchases the elected currency. -
6 minutes ago, StubbleJumper said:
It depends on your tax bracket and whether you are able to immediately apply the capital loss to offset gains in the past 3 years, or whether you need to carry it forward for some period of time before being able to use it.
But, just for giggles and farts, assume that we are dealing with an Ontario taxpayer in the CAD$100k+ tax bracket, and that he bought his FFH shares for US$400 and the buy-back ends up being US$500.
If he tenders:
The first tax impact is that the guy pays tax on the eligible dividend of US$500-252=248. So, gross that up by 38%, pay tax at 46% and then take the 25% dividend tax credit. It's a considerable tax bill of about US$70/sh.
Then, as you noted, the second step is to get the capital loss, so take proceeds of US$252 subtract the ACB of US$400 and you get a capital loss of US$148/sh. Apply the 50% inclusion rate, and you can carry back US$74 of losses against capital gains from previous years, which at a tax rate of 46% would we worth about US$34.
So, call it a net tax bill of ~US$36.
If he just sells:
On the other hand, if the guy were able to just dump his shares on the market at US$500, he'd have a capital gain of US$500-$400=$100. Apply the 50% inclusion and tax at 46% and he would be dinged for about US$23 in capital gains tax.
As you go into progressively higher tax brackets, the arithmetic becomes even more unfavourable for tendering. And, if you are tendering a meaningful amount of shares (let's say 100+), you'll almost certainly be bumped into another tax bracket!
SJ
That works for lower tax bracket. Thanks, SJ.
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1 minute ago, StubbleJumper said:
Absolutely it would be excellent for a Canadian taxpayer who earns less than ~CAD$50k. But, how many FFH shareholders are in that tax bracket?
SJ
And you can also claim capital loss since the sell price will be adjusted to $252. I think this will probably be better than just claim whole gain (excess) as capital gain. What do you think?
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1 hour ago, StubbleJumper said:
The issuer bid circular has been posted to SEDAR (attached). Paid-up capital is US$252/sh. So, if the tender goes through at the high-end of the bracket there will be a deemed dividend of US$500-$252=$248/sh.
SJ
For Canadian, this gain will be treated as eligible dividend, not capital gain, right? Will this even be better as you get dividend tax credit which you may pay 0 tax if you are in the low bracket tax.
Fairfax India new issue
in Fairfax Financial
Posted
They bough some in Mar.
https://ceo.ca/api/sedi/?symbol=fih&amount=&transaction=&insider=