Xerxes

You are absolutely right on lumpy results. While I always took note of that, somehow I failed to register that BRK had never said. Though they (BRK) have been sayings … we don't care about reported earning but we care about long term economic growth per share. Speaking of which, is it safe to assume that the last time that lumpy side was to the upside was the 2008-09 short … and perhaps Odessy (don't know the full story there, but folks were talking about in this thread). And also as the new generation takes over, I think that would mean less lumpiness … and more steady growth.

Pedro/KFS I am not familiar of the team working their equities side. Do you know how much dollar value or percentage he is managing. high double digit is pretty impressive. Who knows maybe he was shorting Resolute Forest on leverage ? for me the key is going to be the Q1 13F; i don't expect FFH loading up the truck during the drawdown. But I very much care about their position sizing of the two names that they chose to 'market' during the AGM: i.e. Exxon and Google. For me that would be key and indicative of new direction. Based on a board member recommendation on a different thread, I listened to two Google Talk videos with Thomas Russo. Very interesting with his concepts of capacity to suffer. In some ways, that capacity to suffer applies to us FFH shareholders, I never expected major growth (have other growth engines in my portfolio); rather wanted a modest/steady but continuous growth. Let's hope there is light at the end of tunnel.

Looks like Greg Abdel and Buffet would be answering the Q&A … no Munger Nothing to add !

Viking, my non-scientific but philosophical view is that the pendulum always swings back … It may be rough for FFH, but I think both BRK and FFH had about the same peak-to-trough drop. FFH a bit more. Just like FFH got a few large businesses impacted, BRK has a whole host of entities impacted as well (Coka Cola, Airlines, etc.). They are both not investing heavily in equities in the dip it seems (from what we know); FFH b/c it cannot (perhaps), BRK because it doesn't want to. I think as long as both names remain diversified within your own personal portfolio, that ought to do it. I personally greatly admire the collection of old economy assets Fairfax India has. EM will always be a challenge, … until it isn't a challenge anymore. Then people will flock back to India, they would call it "like investing in China in 2001" and that theme will go on, until pendulum swings back and it is no longer "like investing in China in 2001" etc. it is like investing in Chili in 2019. Unfortunately the pendulum swing happens over many years and it doesn't swing back in a way we can forecast. I work in the aerospace industry for more than a decade; we have been doing well... our industry has been growing by this much X CAGR, i.e. Airbus pumping out +50 A.320 per month (I don't work for Airbus, but just an example), and that was baseline of all forecast … all was well, life was good …. well until suddenly it isn't (i.e. Covid).

I will give my opinion. The current downdraft on the share price is probably due to some and of points below. - anticipating a mark-to-market decline on BV due to the positions that are marked-to-market (i.e. BB etc.) - liquidity concern with holding company - the trading liquidity becomes apparent during market downturn - FX rate USD:CAD; share price today in $CAD is the same as in 2013, but with a very different FX rate. - systematic concern with larger holdings that are equity accounted (Recipe, Seanspan, Eurobank) all of which are getting a covid broadside hit of the above, (1) and (5) are general market condition, so will reverse in time. And then it becomes function of good those individual picks were as oppose to correlation racing to 1. (4) and (3) you cannot do anything about it. (2) is probably is no concern based on previous posters

I recall listening to Buffet interview back in March and I felt an unease with his uneasiness about Covid’s impact. Anyways, I hold BRK because they are different. And if they are not doing anything, as we are still in the early innings how the wheels would come off, I am ok with that. If I wanted a mediocre conglomerate that buys and sells at the wrong time, the GE of old would be of a great option.

There is a discount between market and IV. The discount needs to be attributed to something. I chose to think that the discount attributed to the misc. list of small businesses that BRK carries. (All of which do have positive value on their own as stand-alones, but not collectively between the four walls of BRK) Someone else might take the market value, deduct cash ($130B), deduct best estimate of the of the misc. list small businesses, deduct the market value of the larger portfolio companies ($200B) and arrive to the conclusion that the two major groves (i.e. railroad + MidAmerican) are undervalued. Therefore, i.e. $8.3B @ 10X P/E. instead of 16 multiple. The discount is due to something, and I chose to believe is the due to the drag of misc. list of entities that are on "permanent display" on Buffet's canvas as a proof for future 'larger' opportunities that we are not a hedge-fund and that once in the family your are in the family. Therefore, that semi-permanent discount to me is akin to a "marketing expense". BRK has traded at a premium against BV most of the time in the past 20 years (except at times of great market dislocation, I think). Can we also say that BRK has traded at a premium against intrinsic value most of the time in the past 20 years. By the way, I don't know the answer to that question, but I suspect the answer is either (1) no or (2) mostly no as we don't have a reliable data on intrinsic value as it is a range. If the discount is sufficiently very large, BRK will buy back its own shares. If there is a strong belief that discount will close. Why there aren't major trading houses doing a long-short on BRK. Going long BRK and shorting the some of sub-assemblies, thus isolating the bet on the discount closure. Instead most folks tend to just go long BRK (like myself) thus seeing the discount (a big portion of which i believe is permanent) as a margin of safety then doing an isolated bet on narrowing the discount. That is how I see it and I do realise what I written above could be seen as a stretch.

The list of the stuff one gets for free is like the negative pricing on the barrel of oil. Better left in the ground. The value of those small businesses (cost against market value) to BRK I think is more akin to “marketing expense” for the greater BRK conglomerate. Marketing expense so that BRK can continue to advertise itself as the home of last resort to whoever wants to sell and that BRK will keep you whole. (I.e not a hedge fund) So if the calculated number represents true intrinsic value, than the market discount is justified and represents the “marketing cost”. I probably don’t make sense but that is how I see it.

I think making Amazon a pillar in the portfolio like Apple would be the right hedge against headwinds in all of its various consumer businesses.

I checked on the net, Q4 was on Feb 14th Using the same lead time, it ought to be around May 14th for Q1. Or around there. I think for BRK the F13 also is mid-May after the 03rd May AGM.

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 ? :-)