sholland

Yes, it does assume that all FCF is reinvested. See 2017 President’s letter.

I traded in and out in 2008 for a big gain. I traded in and out in 2013ish for a modest gain. Thanks to reading Viking’s posts it’s been a continuous holding since November 2023. While I am at it I want to thank @Viking for posting his book! I enjoyed reading it over the course of 5 days last week, and it prompted me to increase my position. All of my positions started out as 10% positions.

When (if) Fannie and Freddie are released from Conservatorship then the intrinsic value of the preferred shares will be equal to the liquidation preferences with perhaps a 85%-95% discount similar to what Citigroup shareholders got when their preferred shares were converted to common shares. (They may trade a little differently based on the different dividend rates.) I believe the logic of the 85%-95% discount is that the older preferred shares received a lot of dividends and the newer preferred shares received fewer dividends. This will require a 2/3rd vote of approval from preferred shareholders. I thought the 2/3rds vote applied to all preferred shareholders, but @orthopa said above that not all (I have not read all the preferred stock certificates- only the ones I have owned).

I don’t have a best idea for 2025. My largest position is cash and cash equivalents. I am waiting for one of those 20 punches that Buffett talks about.

Valuation method #3 is novel to me and I was wondering if I could solicit the board to help me process this. So BVPS is a rough proxy for the liquidation value of the business with the float being returned to policyholders. But Fairfax is a high quality insurer that is not being liquidated and the float is stable (steadily growing actually) so one could value the float like the face value of bonds that you continuously reinvest at maturity. Am I missing anything?

Tariffs on Canadian oil isn’t going to happen for reasons very well articulated in this short video:

FMNAT dividend = 8.25%, but is less liquid FMNAS dividend = 7.75% FMCKJ dividend = 7.875% https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/stock-info/series_T_05152008.pdf https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/stock-info/series_s_12062007.pdf https://www.freddiemac.com/investors/pdf/FtFPrefStock-oc.pdf

http://www.timelessinvestor.com/wp-content/uploads/2019/10/Blueprint-for-Restoring-Safety-and-Soundness-to-the-GSEs-Final-1.pdf @Sunrider here is the latest copy of the Moelis blueprint

Just to add some color, this is what Peter Clarke had to say about Viking’s assumption #2 during the 3Q24 CC:

I believe that I once read that the only reason Fairfax established a dividend is because Prem personally wanted more money, but didn’t think it was fair to shareholders to increase his compensation. The dividend is a way for Prem to get more money while shareholders get the same too.

Buffett gets monthly numbers on all the businesses. Buffett and Munger believe that have having honest and able managers and getting out of their way (bureaucracy is like a cancer) is the reason that Berkshire works so well.

https://en.wikipedia.org/wiki/List_of_largest_private_non-governmental_companies_by_revenue

My thought also.

to answer the question posed by the original poster - if you are having any doubts you probably shouldn’t do it. 52 second YouTube video below: