Pedro

Wondering if the below excerpt from the 2020 annual report is a sign that they sold some BB. An additional $1.5B to manage for Wade & Lawrence had to come from somewhere. Maybe a clue by Prem? or maybe me reaching/hearing what I want to hear.. Wade and Lawrence had an excellent year in 2020 managing $1.5 billion in invested assets. They did so well that we will give them another $1.5 billion to manage in 2021. At that rate, they will soon be managing the whole portfolio! (No clapping please!)

Sanjeev do we have a winner here? They sold some of the Brit does that count as a W? "Im going out to left field - My vote goes to a minority interest in one of the larger insurers who have consistently done well YOY. "

Sounds kneejerky sharper. The rationale for selling then rebuying makes me wonder if your just finding a reason to justify your actions. I wouldnt be comfortable sitting infront of clients explaining 180 this but to each his own.

If security costs more per unit then it's no suprise to me that Ford went with Android. Ford = cheaply made car in my car buying experience so I'm not suprised if their budget mentality would carry over to software purchases. Wade Burton selling his BB shares and not the mother ship would be concering to me. Wade is clipping 20% a year and if he's selling I would want to follow my lieutant's lead based on his past returns alone. I really wish FFH would issue a press release on the BB status but I'm impatient.

The 'lead' underwriter still does the technical work and the complex risks will still require personalized attention but the 'follow-only' syndicate can efficiently match the more commoditized risk products to alternative capital looking for uncorrelated (and reasonable) return. I've yet to see convincing evidence that blindly following a lead's term is a good strategy. Leads sometimes have very speicific niche expertise (ie refineries) where they underwrite well and price properly as evidence by their historical loss experience but too many time's I've seen the brokers choose who the lead is based on their pricing being the cheapest. If you are blindly following a lead terms without doing your own due diligence thats a receipe for failure so I'm super curious to see if KI suceeeds. Understanding who its following, at what prices and terms to me is going to be fun to watch cause if its profitable i have no doubt other syndicates will just say "well if KI's on I'll be on. The super comptuer knows best"

Anyone else a bit suprised FFH hasn't moved more on this BB news? One of their major holdings up almost 60% and FFH moving less than 2% seems odd.

No indication of the price ? Should we assume it's a small book that was sold? Wasn't Scott the man Prem mentioned is leading the Fairfax worldwide initiative? I asumed by the language in that press release that he is leaving FFH altogether. He may have had a required time to stay after the acquisition of allied so maybe his time was up but he seemed like someone they wanted to keep to run their global platform.

Lol retail crapco. Think they'll name it that? In going out to left field - My vote goes to a minority interest in one of the larger insurers who have consistently done well YOY. Similiar to what they did early in early 2000s with Lombard I believe. I could be off but I believe this was done years ago and then later bought back

I couldn't find the Intact thread so posting here. Moderators - feel free to move to appropiate area. https://www.bnnbloomberg.ca/u-k-s-rsa-gets-9-3-billion-takeover-proposal-from-intact-tryg-1.1518176

Yes - the increasing severity/frequency/payouts in cats was my #1 concern in the Fairfax 2030 thread. If the cats increase in frequency and severity then the hard market isn't as sexy for shareholders, its just paying catchup to the rising claims. Adding the Lloyds Covid rulings and then the Lloyds business in FFH may be facing some rough waters before year end.

Liking the thread and glad we have something to look back on to learn from. Lots of bull cases inverting below. Searching for the known unknowns to see both sides. Any other ideas? -cats rise at greater frequency/severity which makes the hardening market neeeding to keep up with increased costs. -history repeats itself and another poor directional long term bet hurts BV -succession in the bond area doesn't live up to bradstreets returns -equity investments remain Achilles heel -virus lawsuits become the new asbestos and drag on for decades increasing non cat claims costs -market doesn't like the lumpyness and continues to value at multiples below competition -insurance industry undergoes fast disruption from AI companies - although the Brit/Ki/Google seem like we are leading that game

Isnt the concern that the equity investments have been poor choices? If increasing the float= giving more money to a team not managing the equity investments well then isn't it better to repurchase the shares with the additional float than than giving the team more money to buy equities? Sorry to beat this topic to death, I just cant wrap my head around being aggressive with the repurchses here at these levels. If the argument is that its better to increase the float, arent peoples concerns here that the float is going to poor equity choices so isnt' it better to retire shares then have them use the float to buy what they think are good deals? TwoCitiesCapital Hero Member ***** Posts: 2677 View Profile Email Personal Message (Offline) Re: Fairfax 2020 « Reply #545 on: August 18, 2020, 01:47:12 PM » Quote Quote from: Pedro on August 18, 2020, 12:11:37 PM This could use a tender offer or some sort of action to get this back to BV. 0.71X BV seems like something that should be taken advantage of via tendering or big buybacks. Wouldn't Tempteton do that? Prem's decision is to grow the insurance companies instead. If they can do so profitably, the additional float is worth more in the long-term than a one-time repurchase would be. The gains from float are compounded returns with attractive economics and the flexibility to do buybacks later, if still attractive, where the gain from the buyback is a one-off return with no flexibility to increase economic return of the company beyond that. Also, the increased profitability could be the catalyst to rerate the share where a buyback isn't guaranteed to cause any re-rating. The "guaranteed" return is just the increase in BV/share which the market may, or may not, take notice of. I'm ok with the limited buyback approach if they can capitalize on a hardening insurance market and expand float by 30-50% instead - I just feel it was disingenuous of them to use Templeton as the comparison if they're not going to act at the scale that would imply.

This could use a tender offer or some sort of action to get this back to BV. 0.71X BV seems like something that should be taken advantage of via tendering or big buybacks. Wouldn't Tempteton do that?

"i think the statement made by FFH implies possibly a degree of conservatism reflecting the underlying uncertainty and long-tail nature of future claims." I agree & would add that FFH has continued favourable reserve development YOY so convservative reserving is their historical norm.

Gotcha. Thanks for explaining clearly - i can see the oncern here, specially if Nordstar was looking at divesting assests too.

I read the competing bid by Modern Media Holdings Inc's to be more likely to break up the company since the future asset contigency sales is in their deal. I read the Nordstar bid as committing to keep the paper intact. Isn't the seller within the right to choose which company to sell to based on the way the new buyer will run the business? In this case keeping the business operating and not stripping it was part of the reason why Nordstar was chosen. I might be misunderstanding but I dont see the egregious action by the owners for their baby to be in the hands of like minded buyers.

I'm expecting the ongoing monetization of smaller investments/non core/non insurance assets to be at losses. Hope I'm wrong and there's a multi-bagger in there. I hope they use the $18M to buyback shares.

Intact didn't have a standard virus exclusion across policies according to the q1 call. . If lawyers are going to win, they are going to win from them for not having a clear exclusion in the contact. I wouldn't swing at that pitch. Not good underwriting controls in place

Can someone call up Mitsui and get them to offer 4X BV for all of FFH like they did for First Capital? That would be a nice way to expand their broad global partnership. https://www.fairfax.ca/news/press-releases/press-release-details/2017/Fairfax-and-Mitsui-Sumitomo-Insurance--Enter-into-Strategic-Alliance-and-Sale-of-First-Capital/default.aspx

Wade Burton has had a 19.5% compound return over 10 years. Just imagine how different FFH would look today if Wade had been the leader of the FFH investment team during this entire period. I've listened to Wade speak before. He's sharp. How does a human with record like this stay in the bullpen when the starting pitching is hitting batters. Give him the saddle and stay out of his way. I don't imagine FFH shares make up a large % of his portfolio when you make a 19.5% compounded return over a decade. It's impressive they've kept him. I hope it is evidence of good culture & the deep bench Prem talks about

Which subs do you believe received the capital? How would the average investor determine for themselves in an annual or quarterly report which subs are cutting it close to requiring capital? Any walk thorough or guidance would be greatly appreciated.

My experience is that direct (fire) and indirect (BI) losses caused by a virus will be excluded in insurer/commonly used commercial property insurance policies. I see insurer wordings being consistent in excluding this peril. It's the non traditional wordings where ambiguity can arise. Those wordings are abundant in soft markets. It's impossible for the average investor to know because you can't access each individual wording to see the verbiage. It will be interesting to see Q1 loss ratios & reserve levels across the industry. I anticipate analysts will try and get companies to nail down their COVID BI loss estimates. No doubt there will be clients upset with their insurer and broker for not covering nor explaining the exclusions to them when they purchased BI cover. Lawyers will be happy. https://www.ckom.com/2020/04/04/class-action-lawsuit-filed-against-insurers-refusing-to-pay-business-interruption-insurance/

Long time listener, first time caller. The topic of this thread made me bite the bullet and pay the entry fee. For the first time in 6 years, I feel that I may have something of value to contribute to this beautiful forum. I’ve read all I can on the topic of 100 baggers; my attached notes are compilation of all the important points I’ve taken away from the readings. Nothing here is my original ideas, I’m not smart enough so I take no credit other than jotting down what I deem as important. I hope some find useful. FIH.TO & TRU.TO are my only two potential multi bagger holdings. Sadly some others I've invested in are no longer publicly traded. Thanks for some of your ideas on this thread. I'm deep down the rabbit hole on some of them. Happy Hunting. bagger_notes.docx