Bryggen
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Posts posted by Bryggen
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Super interesting to get the history of the company and issues faces back then.
Are the Finite re still a concern? How was this resolved ?
Thanks for sharing.
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Oh great! Buying more dogshit!
Btw it's real, just got an email from a buddy of mine that works there. The guys are prepping their resumes to leave after they get vested by this deal.
Not sure it would be a bad deal depending on what they pay for BB. I think they can sell this as a whole or in parts for much more in just few years. Leaving it grow without the pressure of the market should benefit. I think there is potential in the cybersecurity space and that BB has value overall.
As for your tip, I am always very careful when I hear those i.e. '' a friend says...'' ;)
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Fairfax Held Talks to Acquire Remaining Shares of BlackBerry (BB) - Source
Surprised? Not really. Positive? Probably.
Thoughts?
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Where's Exxon? I could have sworn he said Exxon on the call, even mentioned what the dividend was yielding at the time (I think 10%).
Prem did mention Exxon by name at the Annual Meeting conference call. He made reference to a 10% dividend rate. If they bought it in March and already sold it a few weeks later, they might have made a quick 20% or 25%.
SJ
Could it be that they purchased after March 31st which is the current filing date? The call was few weeks after that, right? That could explain why it isn't showing.
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Tracking Prem Watsa's Fairfax Financial Holdings Portfolio - Q1 2020 Update
https://seekingalpha.com/article/4349793
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Another Fool article on Fairfax. Simplistic and positive view.
https://ca.finance.yahoo.com/news/canada-warren-buffett-why-now-160053674.html
I may be seeking confirmation bias, but interesting.
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Thanks SJ for your very informative answer to my question/concern.
On another matter, glad FFH got out of this on time a year ago:
We don't have any positions left, isn't?
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From CNBB : ''Coronavirus will be the largest loss on record for insurers, Lloyd’s of London says''
Would Fairfax insurance businesses face such a large loss as well?
Bry
Throwing that one in again to get you guys' input. Could Fairfax insurance businesses face similar losses? As large as Lloyd's?
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From CNBC : ''Coronavirus will be the largest loss on record for insurers, Lloyd’s of London says''
Would Fairfax insurance businesses face such a large loss as well?
Bry
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Clearly a very polarized name with very diverse and interesting point of views.
Much like the Tesla thread but without the Muskism.
Covid 19 changed the chessboard, I rather wait to see what the new generation would be doing. Starting by this quarter 13F. I like to think I should not underestimate someone who built a multi billion dollar business and his capacity to learn from mistakes.
I sold Nvidia few weeks ago after a good run from $130 ish.
At least that is what I tell to comfort myself when I look at my melting FFH holding ....
Feeling better that I am not alone watching my FFH holding melting ;)
You aren't alone. FRFHF is my largest holding, followed by WFC. I’ve still managed to break even over the past year due to large positions in mining stocks such as NG (purchased in early 2019 and sold recently for 150% gain) and SGGDX (purchased throughout 2019 and up 70%). Now, I’m trying to figure out where to go from here. I’m tempted to keep averaging into my losing positions but am afraid that I’ll box myself into becoming too concentrated.
The bearish arguments provided by Viking, Bearprowler, and others are very compelling, and would probably be enough to convince me to sell if I didn't think that the things they point out (terrible investment results, low interest rates, etc) are already factored into the price. Those would have been great reasons to have already exited (as Viking and Bearprowler did I believe, at much higher prices), but they may or may not be good reasons to sell going forward. I've followed Fairfax for about 15 years and have never seen sentiment as negative as it is now. While it could get worse, I wouldn't want to bet on it getting worse, not at these prices.
If you ask me - and I am a newbie - I give lots of weight to Parsad's comments. Maybe it is some confirmation bias, but it is appealing to me, credible, and make sense when you have a long time horizon. I do trust they have a great safety net with their valuable assets as Parsad commented. That alone should calm us down a bit and allow us to see the big picture. This company isn't going bankrupt tomorrow. A comment that was also made today is to trust a guy that has built a multi billions dollars company; I also buy that one. Yes, our bearish friends also have valid comments, but I am convinced Prem and his team are working hard to weather the storm and head in the right direction on solid ground going forward. They aren't going to stand still here.
I value different opinions and the beauty of it is that is generates a debate of ideas like this one. You then have the information you need to make your own decision. Mine is to hold and maybe add a little as it gets closer to 300 although I hope not ! Parsad said it all when he said it will eventually revert back close to BV. I can afford to wait. I am happy with 2 years ( or a little more!).
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I suspect we will have one more down swing here through the 2nd quarter...from the posts above, we are getting closer to capitulation, as the bears are all growling and even some of the bulls are getting frustrated. You've hit bottom when people just give up...probably around high 290's.
- People are complaining about Fairfax India and Fairfax Africa...one has been about 5-6 years and one has been about 2-3 years. Do you know how long it took Fairfax Asia to become the fantastic deal it was when we sold...13 years!
- I hear complaints about Eurobank...but we saw the same thing with Bank of Ireland which was a winner.
- Whining about insurance...we're writing at 96% across the board for several years...do you guys remember when we could barely break 105% for 8 years!
- We have a ton of bonds and cash, while debt to equity is below 35%...about $1.5B in the holding company...do you remember when we borrowed $300M from Cundill, Southeastern and Markel?!
- While Seaspan is breakeven right now, can anyone deny that this going to be a winner 10-15 years from now?
- Yes, we are having challenges with BB, but this is a business that for all intents and purposes should have been bankrupt already...if the board had listened to Prem and hired John Chen in the beginning, BB would be sitting on another $1B in cash and wouldn't have wasted 18 months since Fairfax originally bought the stock. Yeah, they should have avoided it, but shit happens...at least they dealing with it!
- You have a young portfolio team but with alot of experience, and you still have the old dogs like Brian and Prem paving the way...I think non-bond investments will do better this decade than last!
- It's trading at 60 cents on the tangible dollar...yet people are scared it might go down to 50 cents on the tangible dollar before it eventually goes back to par...that's the psychology right now from you guys!
As a distressed value investor, I'm almost always early in and early out...that's just the nature of the beast. So I don't care if Fairfax falls another $100 in the next 6 months...as long as it's back at par 2 years from now! Cheers!
Very thoughtful comments Parsad. Thanks!
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Clearly a very polarized name with very diverse and interesting point of views.
Much like the Tesla thread but without the Muskism.
Covid 19 changed the chessboard, I rather wait to see what the new generation would be doing. Starting by this quarter 13F. I like to think I should not underestimate someone who built a multi billion dollar business and his capacity to learn from mistakes.
I sold Nvidia few weeks ago after a good run from $130 ish.
At least that is what I tell to comfort myself when I look at my melting FFH holding ....
Feeling better that I am not alone watching my FFH holding melting ;)
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When is this going to stop?
Just after the last potential seller throws in the towel!
Low interest rates (all else equal) mean less income from float. So yes, bad.
Covid 19 has two impacts:
1) big recession means less demand for insurance.
2) potentially higher claims although Fairfax don't think they are badly affected.
But who knows why the stock is getting (even) cheaper today. Might be Powell's comments, might be because Eurobank is down 10%, or it might just be because there are more sellers than buyers today.
Bryggen, I am sorry you are experiencing this pain however a few of us on here (myself included) attempted to warn shareholders and those considering becoming shareholders to stay away from owning the shares of this company. Before I write anything further please understand that there are a few on here that will continue to strongly advocate for investing in Fairfax. They will cite the "undervalued" nature of their major equity holdings, the fixed income yield pick up during the bottom in mid-March, the long term track record of Prem and team, the hardening market, the vastly improved underwriting results and of course the fair and friendly culture. In my view, none of these reasons is sufficient to overcome the many deficiencies that have existed at Fairfax for several years and which are now being exposed for what they are. For every positive point put forward by those who still believe and advocate for investing in Fairfax's shares are equal and in my view more compelling reasons for not doing so.
The company is now swimming in debt, it never had a strong capital structure however it is now simply awful. Its long term holdings in Eurobank, Resolute Forest, Stelco to name just a few are likely impaired beyond repair. I fear a similar fate for Recipe and the myriad of its private holdings in the retail space. These were low margin businesses at the best of times and that was before any additional costs that Covid will impose on all retail establishments. Fairfax Africa and India have been so very disappointing for shareholders in those companies as well as for shareholders of Fairfax who have watched their seed capital into these entities melt away. Furthermore, the low interest rates will hamper all insurance companies going forward. God help any existing shareholders if we have an active hurricane season this year.
You now have a decision to make. Continue to hold and believe in the long term value of Fairfax (that was hard for me to write) or sell your shares now and redeploy the proceeds into other more compelling opportunities. The choice is yours. I have made mine!
Thanks for your honest input. Not reassuring, but I would rather honesty.
I am now curious to hear from the others on it ;)
Bry
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Stock at a 52 weeks low today....
When is this going to stop?
Am I right to say that low interest rates impacts negatively their insurance businesses?
How is COVID-19 also impact them?
I assume that is the reason for the drop as well as the lost in the confidence people have on their investments.
I wouldn't lie saying I am a very unhappy shareholder these days.
Trying to understand to make some sense out of it, if any sense at all !
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Unrelated Q1 13F seem to be due on Friday and Thursday for FFH and BRK.
It would be interesting to know what are top personal ownership of FFH management. How much of their wealth is tied to FFH percentage wise.
About FFH dividends, if that thing is turn off permanently it helps keep a good chunk of cash in and puts an incentive to increase value per share for the large owner-operator as oppose to live off dividends. Heck, the dividend outlay should in fact be used instead for share repurchase.
With many long-term Fairfax shareholders hitting retirement, including former employees, the dividend gives them additional retirement income without selling their shares...
Those retired must be concerned with the share price as well. I support the dividend payment and glad to hear Prem won't give that up. Now, focus has to be on doing everything they need to show the market they will weather-the-storm and can do well on the investment side going forward. Then and only then, we will see our share regain ''some'' value.
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Quick question from a newbie: what is the premium paid for having Buffett as a CEO? Another way to ask the same thing is how much could we expect the share price to go down the day WEB steps down? That is if there will be an impact, but I suspect it would.
Curious to hear you on that.
Thanks!
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More coverage on FFH- BNN:
https://www.bnnbloomberg.ca/video/brian-acker-discusses-fairfax-financial~1955386
These guys don't want to get their feet wet on stating an opinion on the company, it was obvious. Interesting.
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I wish Prem could write that clearly. The section on value investing is good.
Also annoying to see RFP announce a $100m buyback and not execute any of it in 1Q.
Yes, good read; having followed Francis for many years it is good to understand what he is doing thinking. Nice that he admitted a number of errors and said the poor multi year performance was primarily due to poor stock selection.
I am not sure how value investing and resource stocks fit in the same sentence (predicated on predicting where natural gas and oil prices are going)?
At Dec 31 he had 50% in Associates Fund in financials and another bunch in BRK; very concentrated (although he said he was selling banks in Q1). Looking at his multi year results i think he was a little late to the party.
Goes to show the importance of being inquisitive, open minded and to keep learning to be a successful long term investor. Evolution is important to surviving.
Love your quote ''Goes to show the importance of being inquisitive, open minded and to keep learning to be a successful long term investor. Evolution is important to surviving.''
I will keep it and put it up on my office's wall :)
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Interesting article on FFH found today on Yahoo Finance.
Biased? I tend to buy what he says.
Thoughts?
https://ca.finance.yahoo.com/news/2-000-invest-bet-canada-115024446.html
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Find attached CHOU's latest letter to unit holders for the Chou Funds.
I thought worth sharing since some of his holdings are the same as FFH and I liked his candid and honest view on some of them. Furthermore, he shares his view on the COVID-19 crisis and value investing.
Enjoy!
Bry
?choufunds.com:pdf:Chou%20Funds%202019%20Annual%20Report.pdf
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Yes, it’s pretty normal for an analyst to cover the same stock for a long time. Dwelle knows Fairfax well.
Thanks Petec.
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Also interesting noting RBC's report published May 2nd:
''While results are likely to be pressured over the near term, Fairfax continues to see good underwriting and operating results, particularly at OdysseyRe. The transformative Allied World acquisition, along with a number of smaller acquisitions, will meaningfully expand Fairfax's global footprint and we expect it to bring notable top-line and bottom-line growth. Our thesis is that Fairfax’s long-term track record of double-digit book value growth will continue and the current valuation provides an attractive risk-reward entry point for those willing to back the company’s long-term investment track record. Fairfax has a deep cash position and ample access to capital, which gives it the flexibility to be opportunistic as well as patient.''
Trying to put this with you guys' analysis together. This report seems positive while some opinion of yours are more bleak.
Newbie trying to figure out where to stand. Read: Buy more and sit on my ass. ;)
Maybe RBC was the outfit that extended the $2B revolver to FFH? ::)
SJ
Interestingly, the author of this report was also pro-Fairfax back in 2006, but working out of a Washington DC firm: Mark Dwelle. Normal to have the same guy following/ promoting FFH over the years....? I have some investigator DNA. Maybe overthinking ;)
January 2006
https://www.theglobeandmail.com/report-on-business/rob-magazine/short-shrift/article702684/
"The third quarter served as a real-world 'field test' of the financial strength of Fairfax, a test the company comfortably passed," says Mark Dwelle, an equity analyst with Ferris, Baker Watts, Inc., a Washington, D.C.-based investment bank that has long rated Fairfax a "buy."
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Points I took away from FFH 2019 Annual Letter:
1. The letter lacks integrity. Starts with 2019 was a great year for FFH and continues mostly with unbridled optimism throughout. Reality is shareholder return for 5 & 10 years have been terrible - he doesn't openly admit it and doesn't admit frustration with it and lay out a plan to change it. If one cares for their shareholders, he would be more contrite about the returns he has delivered.
2. Ends letter with : "Over our 34-year history, we have always operated at Fairfax with a small team which, with great integrity, team spirit and no egos, protects our company from unexpected downside risks and which takes advantage of opportunities when they arise". Well, after reading a decade plus of his annual letters, I've changed my mind - he's not showing integrity/honesty and his writing has consistently exhibited egotistical behaviour and FFH has not been able to take advantage of opportunities like others have.
3. Insurance business is doing very well, has improved significantly and is successfully generating no cost float and is the jewel of FFH
4. I’m glad that he has openly admitted that BB, Exco, and Resolute were mistakes – he is more open about this today than in the past
5. Believes, “India is the best country to invest in long term”. OK, but no explanation as to why. Not genuine.
6. Believes Modi re-election will turn around Indian economy. Again, no explanation as to why especially given that was the thought at time of Modi’s first election and it didn’t come to fruition. Again not genuine in his writing.
7. Over 5 years intrinsic value has compounded by <5%/yr & share price <1%/yr. Over 10 yrs: IV - 3.2%/yr & share price at 5.2%/yr. Prem’s only comment on stock price is : “In last 4 years stock price has not gone up with intrinsic value, but it will happen again” - with no explanation. What about the fact that IV is only up 3.2%/year over 10 years?
8. On investments: “shows that Fairfax’s investment results have been consistently very good since inception, with the exception of the 2011 – 2016 time period, when we treaded water” - how can he say “consistently very good” as investment returns over 33 years have been 8%/yr and over past 10 years have been <5%/yr ? Isn’t the point of his investing prowess to do better than the index? How can he say “very good”?
9. “So when the correction happens (and it may be happening as we speak), we expect value stocks to provide better protection on the downside”. A week after the report comes out, we are in a correction. From what I see, when there is a correction, everything goes down – BRK & FFH are down just as much as tech stocks.
10. Committed to buying back shares over next 10 years
Being optimistic is one thing. Not being in touch with reality and getting people to invest in you/your business by shrilling dishonest optimism is getting to be on the Ponzi scheme side of things. As a long term shareholder, I am so disappointed in this man.
@Sanjeev: You have been a big supporter and believer in Prem Watsa’s honesty and integrity. This website's name is in homage to FFH. Watsa has shown his belief in you and invested in you. I’d appreciate your thoughts to above comments. Would also love it if there was a way to get FFH to reply.
InvestMd: you are going pretty strong at it questioning the integrity of management associating them with possible fraudulent activities (re: ''Ponzi scheme side of things''). Aren't going at bit a bit harsh on that one?
Just saying....
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As a newbie on this board, I would like to know if there is a post on this board where Fairfax business model is explained in a nutshell? It is a fairly complex / unconventional structure, so a summary of how it operates or even a chart allowing us to visualize it would be great!
I get the essential of what they owned and how they use the float to invest, etc, but I would like to deepen my understanding on the flow of the funds they received, use for investment, and how they are capped to keep cash reserves for the subs etc.
If no one ever did it; then, we need a volunteer! ;)
Thanks and this place is the best place I found to have great information on Fairfax. It is unbelievable the amount of infos and valuable insight found here and you guys know your stuff. This isn't Seeking Alpha and Yahoo Finance boards lol. This is the real shit.
Kudos to all of you!
Bry
Shorting Fairfax in 2006
in Fairfax Financial
Posted
Also interesting to see that Wade Burton was quoted in the article way before he got to Fairfax. I guess he is a long time believer in the company.
@Parsad: I totally feel your frustration. Believe me, I know what these crooks are about and they deserve much more punishment than what they got. At least this is now part of the past. If anything, this whole story about the shorts made Fairfax stronger as they were able to strongly deny the allegations. In my opinion, this forced them to do some explanation that raised their integrity as a business since they had to be transparent on what was questioned from their operations.