Xerxes

I should say that in October I did the unthinkable (buying on top of the chart) by adding to my FFH position at $1084 CAD raising that average cost from $500 CAD.

thanks. I am looking forward to watch this movie 4x a year (through quarterly releases) for the next several years, watching it adapt and change. This almost beats reading Tolkien’ work. One thing that can be a bull case for artificially high ROE (in absence of external and internal opportunities), is a major return of capital that would drop equity, giving that ROE a low base to be computed from.

somethings are worth it. others not

Viking while earning on earnings would be logical, they could simply choose to hold steady and build up capital and not go on risk curve with their annual “proceeds”. Pre Covid, they have demonstrated their patience. Their investment “greatest hits” all revolve around accumulating drypowder for a big swing. I don’t think it is illogical to assume that the surplus won’t be re-invested with same market rate, either because (1) rate peaked or (2) credit spread didn’t blow out or (3) internal opportunities in insurance subs are less available. We just don’t know any of this. In absence of (1), (2) and (3), it would either accumulate dropping that ROE overtime or do a return of capital.

Nothing of the sort. “Peter the Great” is a very well written history book on a great leader that pulled Russia out of medieval age through sheer force of personality. “Nicolas and Alexandra” covers its demise. That said, like any other history book it may pay dividend in unexpected ways through knowledge compounding. I personally find Orient and Asia an area of interest. Maybe not for investment in a financial sense. But just interesting. If Canadian-Chinese relation go back to normal, I hope one day to be able to travel to Tibet.

If that famous constant $150 per share per annum earning builds up against 2024 equity, as that equity goes up and accumulates then ROE would drop in year 3, as equity now has a larger base. So there is a case for FFH not trade at a premium multiple in the out year.

One could argue that Berkshire “water the flowers but keeps the weeds to”. Besides the big 5-6 equity names there is a whole bunch of tracking stocks. And this predates the inception of T & T mini portfolios.

The whole “not locking in duration” decision also had an impact on market share that FFH could grab at the right time as its peers got walloped. Would that increase in market share show up anywhere other than now larger pool of gross insurance premiums. Is there a positive scale factor in for such a non-centralized entity ?

Dinar, Israel is doing God’ work with Hamas. Without getting into specifics, it is not easy to do that without collateral. And the optics is bad for them. That said it is also a slaughterhouse. Two things can be truth at the same time.

I highly recommend this specific episode where the host is interviewing former Mossad director and another gentleman. You can hear the pain and anguish in their voice. The event clearly left a mark. they seem to be right on point on many issues that need to be resolved. It is a great listen specifically for non-Middle eastern folks such as North Americans and Europeans whose interest and understanding ebbs and flows depending on what else is exciting and popping in the world.

thank you. Sounds interesting.

Gulf War III is highly unlikely. Removing Houthi launchers surgically is not going to anything close to that. That said, Riyadh has a say in what U.S. can or cannot do in the peninsula. it’s after all its backyard and went to war for it. Optics is everything. The Western-oriented ME Arab governments cannot back down on Gaza (even though they soon rather see Hamas wiped out), by explicitly giving green light for U.S. explicit involvement in Yemen. That would be an endorsement of the slaughterhouse that is Gaza.

Finished now two of the four books. “Nicholas and Alexandra” was as an easy read as “Peter the Great”. Despite being shorter than the 1,000 pages long “Peter the Great”. <= (highly recommend) Will read “Catherine the Great” sometimes in 2024. I bet it will be another awesome read like that of Peter.

The AI machine continues to send useless updates on an irrelevant equity portfolio

“BP has changed course of its tanker fleet. The flow of Spice is being challenged. The Spice must flow undisrupted through the straight Bab Al Mandab. The “rule-based post-1945 world order” must be preserved. Spice is life. Send in the Sardaukar. Send in Beast Rabban. Kill all the Fremens. Squeeeeez them hard.” ~ Guild Navigator

2023 2024

I always wondered if the fellow Bijan Khosrowshahi (Fairfax International) is part of the greater Khosrowshahi clan, with Dara and his uncle (FutureShop founder). There is barely any info on Bijan on line.

If we were to put the FFH story in terms of two or three phases, phase [A] would be the re-pricing of assets, and using their optionally when the cost of capital went up. That phase is over. They got themselves a “pipeline” of value creation (duration extended) for couple of years. Let call that upcoming couple of years as phase [B]. And then the next phase [C] starts. Previously they indicated their game plan is (1) move to credit as spread opens up (2) return capital when it is no longer needed to feed the insurance sub. Idea (1) is unlikely in the short term. But who knows maybe in two years time macro will be different and spread will blow out. Which means more likely it will be return of capital (2), if nothing else happens. there is even an unsaid option (3): which is to crystallize the unrealized gain in the bonds upfront by selling out but also forgoing the interest payments. But option (3) and (1) go hand in hand. They would sell government bonds only to go to riskier asset if value/risk reward is there.

It is the “pivot party” and everyone is welcome. that is what I heard on radio

Ok I guess now we need to wait 15-20 years for the Saudi to make an offer for the airport.

I should add that the 1990-91 invasion of Kuwait, there was more to it than just land grab because Kuwait at one time was part of Mesopotamia. And I don’t mean oil. Sure Media likes to over blow everything “…., and with Kuwait he will have control over xxxxx blah blah “ like a finale episode of Game of Throne ending in a cliffhanger. The reality is that coming out of Iran-Iraq War, Saddam had two major problems: Firstly, he had a massive wartime army that was structurally build up over eight years, that he couldn’t just unravel with a magic wand. Most of these men would have no jobs, massive unemployment would create problems for an already war ravaged economy. They needed to be kept busy. Secondly, both the Kingdom and the Kuwait owed him money (I don’t remember the details anymore). He was sustained largely by the Gulf powers money but there was more to it. He bled for them, without him the tsunami would have broken through the dam toppling monarchies in its wake. … Now I am getting overdramatic

Was never a L3 fan. Not because of any great insight on my part. Just that it never seemed to have a core franchise like others. So it always seemed like a distant sixth behind the A&D majors. With all the wars and defense concerns that are happening, these guys don’t seem to be able to leverage their tilt toward short-cycle heavy side of the business. In contrast to the long-cycle business tilted five majors. Interestingly, L3 was a minor subsidiary of Lockheed at some point in the 90s from which it was carved out. And one of the “L” in L3 stands for “Lehman Brothers”. Say WHAT ?!?