Xerxes
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Posts posted by Xerxes
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Not exactly FFH news anymore (and from late summer): Government in Ireland is liquidating its last equity stake (13.9%) at the Bank of Ireland. Looks like FFH and Wilbur Ross's outfit cash infusion 10+ years prevented the collapse of that entity and in some ways contributed to the stability of the Irish economy. So some good came out of it.
Hoping to see the same framework for Greece in a not to distance future.
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Rest in peace
Not to be disrespectful and to post this question in this thread, but would his stake in Berkshire Hathaway Energy (BHE) be bought by Berkshire Hathaway.
I imagine that is one way for his Foundation to get the needed liquidity.
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13 hours ago, Viking said:
Xerxes, at the time Prem bought shares (June 2020) there was NO visibility on vaccine’s: efficacy level? When they would be approved by FDA? When they would be available for the public? So it was pretty much impossible to forecast economic growth moving forward. We all saw the shit show that played out in countries like Italy and Iran (or China). Lock downs were the order of the day.
In Oct 2020 Fairfax was trading under US$270 a share; well below the price level Prem had bought shares at. It was not until November that we got the crazy good news from Pfizer and Moderna. And then ‘value’ stocks (Fairfax and its equity holdings) rocked - the reopening trade was born.
When Prem bought Fairfax in June 2020 you have to value Fairfax with the information available at that time. And, yes, you value Fairfax today with what is KNOWN today; and we know we have vaccines that are very successful in combatting the virus. So Fairfax’s current business should be valued much, much higher. And its growth potential is MUCH higher today. Given what was known at the time of purchase (then and now) i think Fairfax is much cheaper at todays prices
Agreed on the first & second paragraph, but then again, when he bought it, it was 2 bets: (1) a bet with a leap of faith that the central bank action will be swift and there would a vaccine (though efficacy level completely unknown), therefore the BV - the anchor - which was then in the eye storm was depressed and (2) FFH operations would recover and do better thereafter. His thought process permeated the conference calls when he talked about the historical bounce back whenever that kind of 1-100 year event took place.
Today, the "recovered"-BV is normalized, so buying today, you are no longer making a bet with a leap of faith that the central bank action will be swift and there would a vaccine, as that is already in the bag. So what remains is an isolated bet on the FFH itself and its operations. So the discount is much narrower today when compared to the mid-2020, when you were being paid by the market an "additional discount" to take a macro* leap of faith.
That is kind of how i see it, sorry if i am not explaining it very well.
*perhaps we can say that after a decade of being off on deflation/short hedges, Prem got this particular macro call 100% right, as the risk/reward were heavily tilted in his favor. The wrinkle however is that FFH, the company, did not benefit from that macro call, he personally did + those of us who chose to put in additional fund.
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23 hours ago, Viking said:
KPO, a solid case can be made that shares are much ‘cheaper’ today than when Prem bought in June 2020.
Fairfax stock price: Prem’s = US$308; today = $413; increase = +$105
Book value March 31 ‘20 = $422; Q2 ‘21 = $540; BV increase = +$118
So just looking at BV it kind of looks close (stock is just as undervalued today as it was when Prem bought).
Perhaps cheaper or as undervalued today based on the BV metrics.
It is just that he bought it at "distress" level when BV (ie. the anchor of the relative valuation) was artificially depressed.
Today, the BV does not represent a distress value as its related ingredients have recovered. So it seems to me that it was definitely cheaper from absolute AND relative point of view when he bought it, once you 'normalize' that April-July 2020 BV to remove the impact of meteor hitting the economy.
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Is Inbetween a remake of Breaking Bad or vice versa.
I dont think we have that in Canada.
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The Fall list is heavy. Lots of work is needed to get through this:
10 Rings (Marvel movie) -- done
Sopranos prequel
007
Dune
Foundation Trilogy
Eternal (Marvel movie)
Spiderman multiverse (Marvel movie)
Dexter
Narcos Mexico Season 3
Mandalorian (no clue on release date)
Billions (part 2 of the last season ?)
Succession (new season ?)
Might be missing
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The Keg has been more or less busy this summer. Maybe not to full full capacity but seemed busy.
Harvey's is always busy as a take out joint. It seemed busy in Montreal even at the depth of the pandemic with its drive-through re-assuring its customer with the same tasty burgers.
Tim Hortons, on the other hand, (not Watsa property but a Ackman property) except for drive-through lost a good chunk of its business. Used to be a hang out place for a more senior customer base.
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^^
One could argue that they already "used up" that $129 million inflow fund to more or less fully fund the $105 million tender offer buyback from August.
Only difference is that it was done in reverse orders: do the tender offer first at very attractive low P/BV and then get the funding for it in Sept from OMERS valuing BIA airport like a fully ripe peach.
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I should say that i had invested all of Alibaba divestment dollars when i sold in Spring '21 into Atlas.
There was a time when I dreaded anything remotely related to the Baltic Index, but somehow it feels clearer now.
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2 hours ago, Parsad said:
Today, she has a net worth of about $4M! Is she a good investor? Is she a better investor than Warren Buffett, because she just destroyed his numbers? Is she a better investor than almost anyone on this message board? By your standards, the answer would be yes! Cheers!
she rocks ! (for now)
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Interestingly, I am more than half way through the book "Greatest Trade" that covers Paulson's shorts in 07-09.
Say what you will, many people saw the pending doom as well in real-estate, but either were too early, botched the trade or didn't swing for the fences. He was smart enough to nail the shorts in 08-09 and bet big, but not smart enough to see the rise of mega-techs and underperformed in the subsequent decade.
it goes to shows how differently investors are wired for different occasions.
Sometimes the best of them need to sit tight for years, until they see something that make sense for them, while the peanut gallery roll their eyes and opine.
Paulson' comment on gold intrigues me.
Bloomberg Wealth interview with Paulson (the full interview) should be posted in the next few days.
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Only if Buffett was weird like that (or more often), we could catch BRK at substantial discount now and then.
Last time he was weird was in 1999-2000 (before I was following any of this) and he was weird again in 2020.
Weird defined as being against the whatever is common wisdom at the time for whatever reason.
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I don’t think we will see any buyback (ala FIH tender offer). Not that they cannot do it but with the framework of having certain net cash on balance sheet that means that they cannot borrow the fund to do a large buyback.
also buyback (a large one) will re-lever the company as it shrinks the equity base.
I think large buybacks will come eventually but will be through excess free cash flow and not at the expense of re-levering the business. I think this clear through *signalling* they have done.
The comment about Teledyne few years ago was just Prem looking ahead into the next decade as the business moves from an asset gatherer machine into working value per share. He sent the wrong signal as he didn’t put timetable on it. But I truly believe he means going there.
A business that has been sending frequent *signals* about large buyback has been IAC, that has made frequent scripted comment on CNBC, earning calls etc that they had bought half of their shares post-quad split 10 years ago. And surprise surprise the post-Vimeo spin news flow is close to zero with drips, which to me it says they are content with their share price dropping. Who knows maybe they ll buy back ANGI.
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On 8/26/2021 at 8:21 PM, Viking said:
Xerxes, i actually followed Fairfax into Blackberry (RIM) when they made their initial purchase. By the third RIM conference call i could tell the two people running RIM were in over their heads. I sold my position at a loss (about 15% if i remember correctly). RIM turned out to be one of my best investment decisions ever i mean this seriously). Because it taught me about the cell phone industry. I think it was 12 months later that Apple got dirt cheap and i backed up the truck. Apple became by biggest winner ever with currency tailwinds also helping (Can was mid to low $0.90’s when i bought). From Apple (in terms of concentrated position) i toggled to the big US banks, initially JPM and then BAC. If you read the old BAC threads (2016/17?) i was beating the drum back then for BAC just like i am now for Fairfax today.
To answer your question directly, yes, i would have been much better off holding my Apple position and pulling a Rip Van Winkle
However, i do not look at things that way. When i make investment decisions i try and learn and flush. And move on. I don’t spend much time thinking about what could have been. When i sell out of positions i tend to move on (can’t remember the last time i posted on BAC). My portfolio has done very well over the years (average return has been about 15%) so my returns after selling my Apple position has still been solid. That is all i care about.
The big move in Apple shares the past 2 years is primarily multiple explosion. So when i hear people talk about Fairfax and how its crazy low multiple today is permanent i am not so sure
Definitely one of a few learnings taken from my experience with Apple shares.
fair enough.
I am watching this show called “what if” on Disney+. Sometimes it is worth looking at that. -
To summarize, (as I see it) we are betting that the business is moving from “empire-building mode” to “harvesting mode” and later as earnings (real earning not paper earning) builds up in some years “to shrink the equity base mode”.
We are very much done with the “empire building cycle” stage in the life cycle. There was an intermission (short thesis gone wrong) between that an the next stage, but that is largely over as well.
The chairman was obviaouly aware of all the levers he had available to pull when he made the $130 million bet.
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Viking.
out of curiosity I recall you had said that in 2013 you made a big bet on Apple (after FFH got into BB) and did really well.
did you ever back-calculated your %, say today, had you held whatever you had in Apple and completely untouched.
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Viking
you will probably find this interesting. There is a podcast called YAVB with an episodes on lumber. Interestingly there are lots of references to Paul Rivett and Resolute. you will probably enjoy it
Was listening to it on and off while on a flight to Vancouver (so far an interesting city).
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On 8/16/2021 at 1:41 PM, John Hjorth said:
Xerxes,
YDRC, thank you.
Cheers
I had to google YDRC
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IIRC
Repurchase of shares (when above BV) will push down the BVPS
Repurchase of shares (when below BV) will push up the BVPS
Of course, repurchase of shares above or below intrinsic value has no bearing on the accounting.
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Cash is cash in my opinion. Whether it is conventional dividend or return of capital special-like dividend, the dividend cash flows. I am personally not too much concern about their different accounting treatment.
That being said, while I am all about FFH building businesses or financing them, i don't care that much about the recent growth of dividend stream they receive, because from my perspective they are just moving on the risk-curve for that extra juice. This is not Berkshire investing in an income-machine like Coca Cola and letting that dividend to growth. But nor it should be, I guess, so I wouldn't put to much stock on the dividend growth attribute nor would I window dress it. If it is there, it is just a bonus.
The elusive premium to BV that everyone dreams about requires Berkshire-like quality level investment, otherwise it wont be a "sticky" premium. Nor should it be, after all, if as per FFH management own comment "results will be lumpy" statement is truth, so will premium on the BV be "lumpy" too.
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I am just reading this after many years of holding unto it.
I am one-third through. It is a great book on the history of the family, the city of Turin and the company.
Wish i had it read it many years ago.
Movies and TV shows (general recommendation thread)
in General Discussion
Posted
Same here, that giant Apple cash hoard is better spent to have a sticky Apple services (like this type of TV show) than buybacks. I was never an Apple subs but I am now.
I have read the Foundation trilogy three times, and have read the entire Foundation-Robots-Empire arc twice.
The Foundation is NOT easily made into a TV show given that it spans over hundreds of years, so at time i got annoyed by some scenes and force interaction in Episode 1 and 2.
What I found very interesting is that some characters from later books that Asimov wrote in the 90s (prelude to Foundation etc.) are shown in Episode 1 and 2, that were NOT in the original Foundation trilogy written in the 60s. That shows AppleTV+ creative team is thinking big and looks like they are looking at 80-episodes show covering Foundation-Robots-Empire into one Arc.