naboo

It will make me nervous to see FFH use most of its cash to buy at this level. FFH should have opportunity to purchase back below book value.

I recalculated the FFH total shares. $10 in cash $14 in shares at fixed rate of 0.030392 Fairfax/ 1 Allied $30 in shares at variable rate based on price (currently at 0.068862 Fairfax/ 1 Allied) Amended deal terms: $28 in cash $14 in shares at fixed rate of 0.030392 Fairfax/ 1 Allied $12 in shares at variable rate based on price (currently at 0.068862 Fairfax/ 1 Allied) .068862 * (30-18)/30 = 0.0275448 + 0.030392= 0.0579368 (convert rate FFH/AWH) AWH shares outstanding 87,484,665. 87,484,665 * 0.0579368 = 5,068,582 shares FFH. 23,079,000 + 5,068,582 = 28,147,582 FFH outstanding shares after merge. Can we expect $20/share book value increase this quarter? If you use my ratio above: 0.0579368 28 + 420 * .057968 = $52.35, AWH is still fair valued.

does anybody have the final share count after Allied World deal is done?

Spekulatius, you scare the shit out of me.

http://finance.yahoo.com/news/fairfax-said-raise-500-million-160226082.html

+10 Even you feel that way, don't say it.

I just wonder whether PW learned his lesson and is back to real business.

"Be Fearful When Others Are Greedy and Greedy When Others Are Fearful". It takes guts to buy FFH when it is going down 1 to 3% everyday. ;D ;D ;D

FFH should start thinking to buyback their shares.

"We hedged our equity investments to protect our shareholders' capital from exposure to the impact of deteriorating economic fundamentals," said Prem Watsa, Chairman and CEO of Fairfax. "We constantly monitor these hedge positions relative to economic fundamentals. We believe the U.S. election may result in fundamental changes that may bolster economic growth and business development. As a result, there is the potential for a longer term rally in U.S equity markets that reduces the need for the capital preservation protection of equity hedging." My understanding is the hedge is equity hedge, but it was also for overall market/fundamentals. Since FFH changed their view, bond selling and hedge reduction is reflected to the change.

I agree with Sanj said. FFH sold the bond at not perfect, but very good time (around 1.75), now they have tons of cash in hands. If they didn't sell the hedge, that won't be the hedge any more, that's shorting the market. Let's see how market reacts in long term. FFH now is only 1.1x times book with strong underwriting and $10B cash.

We might see a temporary strong dollar but QE4 seems inevitable.

Agreed. I consider the FFH is balanced company and can live in any market condition. The insurance part is much better than years ago, the investment gets a little bumpy but is still too early to call. Overall FFH is a safe play and I am buying more.

Does anybody have an estimate of Fort McMurray loss? I know "there are people who try to use models (to estimate insured losses) and the models have proven to be inaccurate", but I still did a rough estimate by comparing to other insurance companies and the Slave Lake fire 2011. In 2011 Slave lake, NorthBridge lost USD$17.6M with a higher quarterly written premium. Today, IFC reported loss estimate about CAD$ 130M to CAD$ 160M, they have 15% in Alberta market. I had no data of Northbridge's percentage, then I checked their written premium, they were about 1/9 of IFC. so Northbridge might have around CAD$ 14M to 20M (USD$ 11M to 16M) loss in this event.

I bought some today.

In the current situation, the market could go deep south at any time. I am with Prem, the hedge may bring us good returns in near future. The only thing I am not satisfied with is FFH's equity holdings. Why Prem bought them was the question for the past, but why Prem still holds them, that is the question for now.

My thought was the interest rate hike will hurt FFH bond portfolio. FED implies there will be a "GO" this time.

I have the exact same question.

so you are talking about USD$700/share now. Way to go!

Is FFH moving up toooooo fast? :-\ :-\ :-\

http://www.fairfax.ca/news/press-releases/press-release-details/2014/Fairfax-Financial-Holdings-Limited-Second-Quarter-Financial-Results/default.aspx

Now it should be the time to sell some FFH. 1.3 times book.

I wonder after the past couple of tough years, is there anybody who still has over 40% in FFH like me?

First time in 15 years, we might see FFH.to at C$500

Corner of berkshire & fairfax becomes corner of Berkshire & Altius. :)