sholland

I believe the Strait of Hormuz will remain effectively closed for a long time.

Depends on how long the SoH stays closed. Seems to me that losing >10% of the world’s daily oil flow for much longer crashes the world’s economy, not to mention the hits to LNG, fertilizer, helium, etc. Could be even worse if more attacks to more infrastructure. I am holding lots of cash. If I am wrong and peace breaks out soon then I pay some opportunity cost, but if I am right then cash will be king.

I expect that the Strait of Hormuz will be jammed up indefinitely. Talk of the strait being reopened in the timeframe of weeks seems fanciful to me. This could be the biggest energy crisis ever. I believe that the best way to play my variant perception is with a large block of cash and to wait for opportunities to arise as losing 10% of the world’s oil volumes shocks the foundation of the world economy. If I am wrong and peace breaks out soon then holding cash should be only a small lost opportunity cost.

I am at 1/3. I believe Prem is over 90%. I am also curious how others think. Depends upon what other opportunities you are weighing the opportunity cost against. PS - Welcome to the board!

https://oilprice.com/Energy/Natural-Gas/Qatar-LNG-Hit-Turns-Into-Multi-Year-Crisis.html 17% of Qatar’s LNG export capacity offline for 3-5 years.

Kelly Partners Group

Small trading sardine in Sable Offshore Corp. Production restart happened over the weekend.

I am having the same problem as @zhuanquan Prem said “…about $150 per share after taxes, interest expense, corporate overhead, and other costs.” $6440 pre-tax income minus $3151 of investment gains minus the 2025 tax rate of 18% is $129 per share, not $150. (I am pretty sure that tax rate is different between operating income and investment income, but I don’t have a better number and it doesn’t matter that much anyways.) @Parsad I don’t understand how you are saying that we are double counting corporate overhead and interest expenses. Perhaps I can understand not counting corporate overhead dedicated to investment functions (don’t think that is what Prem is saying, but maybe). I do not understand how interest expenses on non-insurance companies is double counting.

Yes, it’s in the annual letter

$35.5B market cap divided by $70.0B portfolio minus $10.5B total debt (excluding debt at consolidated non-insurance companies which is non-recourse) = 60% (40% discount). This seems like a decent sanity check with the high quality underwriting that Fairfax has.

Worth watching. I would surprised if the percentage allocated to mortgages and RE changes much because of the acquisition of KW.

As a mechanical engineer who has used CAD for over 30 years, it is hard for me to fathom AI/LLMs reducing the number of CAD seats. When I used to work in R&D I used to say if we knew what we were doing we wouldn’t call it research. New designs are very much an iterative process with lots of testing. Even after product launch it was a rare drawing that didn’t have any revisions. Perhaps the manufacturing engineers wouldn’t need as many seats as I could imagine AI figuring out how to manufacture the designs, but that seems like a marginal impact in the distant future.

There are over two dozen small nuclear research reactors located at universities across the U.S. I don’t think SMRs would be any special security problem.

Sold all my Chapters Group. Still trading at a cheery consensus while Constellation Software and Topicus have had large draw downs and both now roughly half the P/S multiple of Chapters.

“China is investing twice as much as the U.S. in power pants, storage, and infrastructure.”

summary of my post from 12 hours ago: IPO is not to raise money for Fannie or Freddie, but rather to monetize the government’s stake. FHFA director Bill Pulte expects IPO to happen and F2 to remain in Conservatorship. At least one bank proposed IPOing shares senior to the government’s senior preferred shares. Administration officials “show no interest” in relaxing the current capital structure. (Lynchpin of Ackman’s and Burry’s theses)

IIRC @ERICOPOLY started off as you indicated, but in the middle switched to being all-in with margin with put options as insurance.

I am skeptical that 2026 will be a good year for $FNMA or $FMCC shareholders (common or preferred) for the following reasons: IPO is not to raise money for shareholders, but rather to monetize the government’s stake. https://www.foxbusiness.com/economy/wall-street-banks-race-win-trump-admins-favor-massive-fannie-mae-freddie-mac-ipo-deal.amp FHFA director Bill Pulte expects IPO to happen and F2 to remain in Conservatorship. https://x.com/newslambert/status/1986995246681538617?s=61&t=JDX-Ceei0dDpGB_SEntfPQ At least one bank proposed IPOing shares senior to the government’s senior preferred shares. https://www.wsj.com/finance/banking/fannie-freddie-ipo-big-banks-6d8884aa?mod=Searchresults&pos=1&page=1 Administration officials “show no interest” in relaxing the current capital structure. (Lynchpin of Ackman’s and Burry’s theses) https://themortgagepoint.com/2025/06/11/mba-ceo-projects-unlikely-future-for-fannie-freddie/

“With each investment you make, you should have the courage and the conviction to place at least ten percent of your net worth in that stock.” - Warren Buffett If you are not willing to put at least 10% into an idea then the margin of safety is too narrow. That philosophy means a maximum of 10 stocks.

I learned a new phrase - “cannibal buyout” - do a buyout with a partner and then over time buyout the partner.

more on float being worth more then equity:

My recommendation to a newbie in Fairfax would be to just look at the price to book value (currently at 1.6x) as that is the primary metric that the market uses. Understand that the current high return on equity (ROE) justifies a P/B of 2x to 2.5x. Also understand that management is aiming to increase book value 15% per year. Finally I would recommend getting comfortable with Fairfax’s representation of book value. The accounting for an insurance company is somewhat complex and even if you study the accounting for years and understand it backwards and forwards you still can’t get around the challenge that the largest portion of your liabilities are an estimate. There is a huge element of trust that goes into investing in an insurance company. Furthermore, managerial talent has a disproportionate impact on the outcomes. Therefore it is important to look for a long track record of having a conservative balance sheet.

I may trim Chapters Group in the near future.

@SafetyinNumbers Where does your valuation metric of P/B based on forward ROE / 7 come from? Based on your following comment you made on 12/12/2024 am I correct in assuming that you empirically derived it based on FFH peers?

My $6.60 per share of TTSH still has not arrived (Fidelity). I see the shares, but they have been reassigned a value of zero.