sholland

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:

You say $140 per share, but Prem said $125 per share in the annual letter. Has something changed?

As it says below Mark Calabria’s picture in the 11/19/2019 issue of the WSJ, the plan was to do an IPO in 2021 or 2022. In a recent interview Mark Calabria said w/o the pandemic the GSEs would be out of Conservatorship. https://www.bloomberg.com/news/audio/2024-06-11/calabria-on-fannie-freddie-conservatorships-votes-and-verdicts

The Wall Street Journal

I know this is over a year old, but I assume a similar situation happens every year that pricing is favorable (I don’t know about this year). I believe that were only 4 hurricanes in the last 100 years that would have caused BRK to be on the hook for the entire $15B: Historical examples (source August 2012 Karen Clark report Repeat of 1926 Miami Hurricane is estimated to cost $125B in insured losses Repeat of 1928 Great Okeechobie Hurricane is estimated to cost insurers $65B Repeat of 1947 Fort Lauderdale Hurricane is estimated to cost insurers $50B Repeat of 1992 Hurricane Andrew estimated to cost insurers $50B Pretty good bet to make $7B in the good years and be on the hook for up to $15B in the rare bad years. Total cost to insurers would be spread out to other reinsurers so a $50B industry event probably wouldn’t cost BRK $15B.