Xerxes

Are you thinking that Mason Hawkins might be throwing some capital into FFH? He had been lightening up on FFH over the past year, but he certainly has taken high conviction positions in the past. Yeah others like Southeastern. I think SE was already in FFH based on their podcast few years. I wasn’t aware that he was unloading. If so he is probably back. He (or his associates) were also big on Fedex. There was a whole podcast on it with the CEO. I wonder what they did with it as it was a long term position for them.

I think with so many names out there trading at the discount, there has be to be substantial change in the story (other that we're sorry, we are trying to improve), for the investment flow to come in and lift FFH. I have no doubt that FFH is being bought on the cheap by hard core value investors. I think the exercise to do is simply to see if at $400 CAD a pop, there is more value in that basket today than there was in 2013, when last it was at the same price. But that lift that will bring it 1.1 book that will take time. At the AGM it was mentioned that there is about $1 billion left in monetization. Let's hope that takes care of few bad apples. My speculative scenario is that perhaps Alphabet would be interested in the Blackberry and its IP portfolio, now that its (Google) advertising dollars will have some headwinds and now that Blackberry can be said is cheap. ($4 billion market cap and $1 billion revenue) so 4 times sales. FFH bought shares of Alphabet. Completely unrelated but you never know ...

This is hilarious. Different softer style. Charlie Munger would have said: "that is how we like it; nothing to add" BTW if you have a link to the AGM transcript (FFH, FIH) please do share. I listened to them, but had a hard time hearing sometimes.

unless I heard wrong what was said on AGM, OMERS is the minority buyer of the airport.

If Exxon is a large, liquid holding, then Watsa has out-Buffeted Berkshire's illiquid OXY stock pick which walks and sounds like a Stelco. By all means, assuming large enough ,GOOG should be what APPLE is for Berkshire. A pillar of stability and growth.

Totally agree, he is a gentleman. On the Fairfax Africa, someone asked about potential dividends. I was thinking what kind of question is that, he gracefully answered even that question. Hopefully, with the team spread out and working from home that would help impede herd mentality.

I didn't mean it in a bad way, … just that his answer (which was about COVID 19 testing … I think) had nothing to do with the question. I understand that sometimes he needs to talk through his reasoning (like we all do sometimes) to get to his point and walk you through it. I don't think this was it, so yeah he probably heard wrong.

i had sent them an email during AGM asking them about the position sizing of Exxon vs. say BB's common shares. My question wasn't answered. Hopefully when the 13F comes out, (i think May) we see if they really bough the dip meaningfully or not. Overall, i think it was a good AGM, not a reassuring one that would put a floor under the stock but was happy to hear that they bought Alphabet and Exxon. On Alphabet also like to know what is the position sizing on that ? i personally own Alphabet for some years now, so i am not missing out on it, but wether they made $30 million purchase vs. a blackberry size tells me something about the change in their investment philosophy. i could do without the historical perspective of various indices. i like history but like to know how you performed and what are you are doing about it than knowing that crash happens. Totally agree with them that building intrinsic value through insurance liquidity injection has more value than buyback. Found it funny when Prem lost track of his thought as he was answering the question about deflation hedges. Reminds me of my dad, who likes to speak in public gathering and doesn't really listen to the question. :-)

at least, thats something IMHO, the difference between buffet wannabes and buffet is that the former quotes him a lot, while the latter stick to their guns no matter what. I think the initial idea of an African investment fund is great thing and a potential call option on Africa growth, but I would have never made that a separate ship from the rest of the FFH family. FIH is different as I think there is enough concentration and is large enough. incidentally, here is a great article in The Economist on Africa https://www.economist.com/special-report/2020/03/26/africa-is-changing-so-rapidly-it-is-becoming-hard-to-ignore My favorite part of the article "After centuries on the periphery, Africa is set to play a much more important role in global affairs, the global economy and the global imagination. Asia’s economic and population booms may continue to dominate the first part of this century, but Africa’s weight will grow in the second half....Demography is a big part of it. Africa’s population will almost certainly double by 2050, giving it more than a quarter of the world’s total. That alone commands attention. But if accompanied by matching growth in GDP, economies such as Nigeria could overtake France or Germany in size …."

Thanks … I ll have a look at A/R page 95. putting this in reverse, they said this yesterday in their COVID update "During the first quarter of 2020, Fairfax utilized approximately $400 million and $300 million of its cash and marketable securities to provide capital support to its insurance and reinsurance operations and to pay common and preferred share dividends, respectively." When FFH injects money into the subs for capital support, as oppose to receive dividends from them, is that akin to equity injection? If so when FFH does it for an entity like Allied World, which is co-owned with OMERS, does it mean that capital injection by FFH is pro-rated and matched by OMERS ? if FFH taking the full burden of that capital injection and OMERS not participating, that would mean that it is actually doing on its own behalf as well as OMERS, so in fact increasing its stake in Allied World as the expense of OMERS

Vinod had a great quote earlier in which he referred to Amazon and FFH. I own both for about 4 years or so (more or less), on FFH I have been averaging down on every purchase, on AMZN I have been averaging up on every purchase. I don't consider myself as an top-notch investor and I am sucker for a good story, but a top-notch investor would have probably looked at these two names and my record of averaging up/down at these two specific names, and would have said: this is obvious, don't average down on FFH, in fact sell FFH and buy more AMZN. Alas, i am who i am :-)

I think at this point, when it comes to the FFH optics Petec (like myself and others) would like to be wrong, wrong, wrong and then right ! :-)

Petec / StubbleJumper What is the link between cash at holding co. ... and the $40 billion portfolio ? I understand that the debt they are raising, recap of insurance entities, dividends, buybacks, and the money they are getting by selling run-off business, and the buyout of the minorities are all financed through the holding company cash. That is clear. What about the return on the $40 billion portfolio ? the returns generated by $40 billion portfolio are either unrealized (so not usable just yet), realized (some phantom accounting return but some real gain as well) or through dividend/interest streams. How does the interest/dividend generated by the portfolio flow back to the company holding co. I am trying to understand the mechanics of how one side of the business (portfolio) is funding the overall FFH business (i.e. holding co. cash position)

I don’t think this sold off because anyone’s scared the parent drew the revolver. It sold off because it’s an small illiquid closed end fund invested in illiquid/private foreign companies in the biggest recession ever. I bought my holding back for half the price - superb value. The illiquidity air pocket are also aggravated by the very high US dollar.

yeah Thinking back to that era (though slightly pre-Lehman), I recall the stalwarts were Exxon and Chevron in the financial media circles … the same way Amazon is holding up now and now those companies are in the gutter. I hope 10 years from now, it won't be bitcoin … maybe gold will be the asset class that will have the last laugh when it reaches $6,000 / ounce due to a massive sovereign crisis and Marc Bristow will be the face stability in that massive market downturn ….. Marc, who ? :-)

For those of us who are less familiar about the insurance side, what is the normal gross premium growth rate, if 12% is considered exceptional. A high gross premium growth rate, doesn't it just mean that you are just trying to grow market share, at a cost that it might cost you profitability ?

Thx $2.9 billion plowed into high-yield. That is 7% of the 40% portfolio.

It should be clarified the voluntary actuals cuts are way below that number. the rest of the so-called "cuts" are economically driven cuts by higher-cost producers that no longer have a viable option. Bottom line I guess it doesn't matter, the Kingdom and Kremlin's intend was to have some supply-side destruction through economically driven cuts by higher-cost producers. 5 years down the line, I suspect the duo will be looking at a much larger, centralized U.S.-based oil and gas industry. The resources in the Permian basin are there and wont disappear because the Saudi market share strategy; the small E&P players, companies themselves, holding those assets may go bankrupt being unable to utilize the assets, but those assets can easily move under a stronger name through consolidation. In time, the short term gain of wiping out smaller U.S. E&P players would mean a larger player consolidating on the other end.

It should be clarified the voluntary actuals cuts are way below that number. the rest of the so-called "cuts" are economically driven cuts by higher-cost producers that no longer have a viable option. Bottom line I guess it doesn't matter, the Kingdom and Kremlin's intend was to have some supply-side destruction through economically driven cuts by higher-cost producers. 5 years down the line, I suspect the duo will be looking at a much larger, centralized U.S.-based oil and gas industry.

I offer a different perspective on FFH buybacks ... Notwithstanding their limited financial capacity to do all the things that they want to do, if the market is discounting FFH book value by a large margin, them deciding to prioritize buyback of their own shares ahead of everything else (i.e. other financial obligations), is akin to them averaging down on their current equity portfolio picks indirectly since it is the drop in their equities picks that overwhelm FFH own share price to begin with. So, the question for FFH management would be … is their current equities picks (larger ones anyways) are worth indirectly "averaging" down (through FFH buyback) given the new market paradigm shift or has there been a permanent loss of intrinsic value on same major names, where the trade-off to do FFH buyback (i.e. averaging down their equity picks across the board indirectly) is no longer worth it,,, and it makes since to average down on specific names or open new position. I suspect, we all also have the same dilemma in our own portfolio, … given all we know now, do we buyback our own portfolio in its entirety as a lower price, or be opportunistic on key names and new names. So FFH buyback calculus might revolve around the same thing … looking forward to Thursday :-)

Agreed. I think though it more of an opportunistic buy on an asset class they know well. Small bet though. The whole bet is at $1 billion on the four o&g companies. In contrast, they gave about $45 billion to Masa Son's vision fund through equity and pref equity. On a different note, interestingly Norway sovereign fund, in contrast to 2018 where it was buying the dip, as been off loading its equity to fulfill its obligation with its government. I agree it was smart. It'll always be a temptation to trade the asset class they know (and can manipulate). Maybe nothing wrong with that, but wonder if they've only recently come to the realization? There has been an internal tug of war I think within PIF, Aramco etc as to how best invest. With MBS pushing more for Unicorn investments (Vision fund, Uber and Tesla) and the old guard pushing for more earthly ideas. I recall an article on WSJ from last year that was talking about how investments in solar energy had a lot of opposition from than Aramco chair (he lost his job mid-2019). Now with PIF selling out Tesla before its monster rally, abundance of bargains in the old economy and not committing to Vision Fund 2 to me that means the pendulum has swung back in favour of earthly ideas. That said, I think they will keep Uber. I realize that Uber gets lots of flak as one of the larger unicorns. Personally I believe in Dara, the super app potential that Uber has and the portfolio of optionality it has.

Agreed. I think though it more of an opportunistic buy on an asset class they know well. Small bet though. The whole bet is at $1 billion on the four o&g companies. In contrast, they gave about $45 billion to Masa Son's vision fund through equity and pref equity. On a different note, interestingly Norway sovereign fund, in contrast to 2018 where it was buying the dip, as been off loading its equity to fulfill its obligation with its government.

Saudis Take Big Stakes in European Oil Companies Looks like PIF is finally able to put money to work on tangible assets at depressed prices as oppose to Masa Son's intangible https://www.wsj.com/articles/saudis-take-big-stakes-european-oil-companies-11586382353?mod=hp_lista_pos1

if not posted already https://www.wsj.com/articles/warren-buffetts-death-spiral-deal-11586192660

https://business.financialpost.com/investing/saudi-arabia-has-bought-8-stake-in-worlds-biggest-cruise-operator-carnival-for-bargain-basement-price Not exactly the world's savviest investors, but still ...