Dinar

Fairfax this morning at the open

Prepare for fireworks today, Muddy Waters with a short report on Fairfax

Don't forget there is a lot of debt, if I remember correctly, L 40bn, now you do have a stake in ITC that is worth around L 15bn, but if you look at it on EV/EBIT basis, the multiple is not cheap 6x EBIT or 8x post tax.

If I am not mistaken, the US business is 50% of EBIT, and I would guess that 90-95% is cigarettes.

I'd be careful here. 10% volume declines in the US business are serious business. I was hoping that it'd stop in 2023, but it has continued in 2024.

I agree. I would suggest vocational schools for many, so that they can learn trades and make hundreds of thousands a year, and very strict immigration restrictions.

So how many millions of cleaning ladies and construction workers can the country absorb? A million a year? Two, three?

Except that they are begging on the streets on NYC and getting free food handouts at neighborhood churches. They don't speak English, and don't have any marketable skills. The world has changed. One hundred years ago, there was plenty of work for unskilled people, today there is very little. As for how great Polish, Irish or German or English immigration was, why don't you ask American Indians whether they are glad that all these people came over here?

What is exactly the property tax that the illegal is paying and what is the cost of the kids attending public school? Who is paying for the health insurance for the family? Given that the cost of the educating a kid in public school is at least $15K per annum, and the cost of health insurance is at least several thousand per person per annum, is the family really paying $30K per annum in property tax? Yes, the family is a drain on the economy under any honest accounting, before taking into account the fact that the family depresses wages and increases cost of housing for the working class.

Talk to people in the Section 8 office in NY, go to doctors' offices in immigrant neighborhoods and see what medical insurance they use, go to immigrant neighborhoods and see how many pay with EBT (food stamps.) Try to hire a Russian speaking nanny in NYC on the books, and you will be surprised how difficult it is. A friend tried and out of three dozen offers he made, not a single one was accepted. They were all on the dole (Medicaid, food stamps, subsidized housing), or working officially as home attendants for forty hours a week already...

https://nypost.com/2024/02/05/metro/migrant-moped-crew-busted-after-stealing-cellphones-right-out-of-nyers-hands-sources/ No crime either from immigrants.

You clearly have not been to immigrant neighborhoods. When 70 year olds come over, and immediately get Medicaid, subsidized housing, food stamps, supplemental security income and home attendants, that's a drain on the economy. (And yes, I personally know a few examples.) Work for everyone? When unskilled wages are less than government benefits, why would people work? Fifteen years ago Economist magazine published a study that stated that a woman with two kids in NYC would need to make over $100K per annum before she was better of financially working than being on the dole in NYC. Today, the figure would be over $200K. How many single mothers with kids can make over $200K?

The problem is that for many low income Americans, it does not pay to hold down a job, since due to withdrawal of benefits + income tax, marginal tax rates could easily be 70-80%+. Think someone making $19K in NY and on Medicaid, then income goes to $30K and you lose Medicaid.

Actually, that is not true. It is if you import Phds in STEM and doctors & nurses. Not true if you import people without a high school education and no skills. Also, immigration drastically reduces wages for workers in the US and leads to social problems as people cannot find work or welfare pays more. Why hire an American comp sci major for $100K when an Indian or Russian or Chinese immigrant will do the job for $50K? Why hire an American high school drop out for $20 dollars an hour when an African immigrant will work harder for $5 or $10 per hour? Then watch the unskilled Americans go on welfare, and engage in alcoholism and drugs.

https://www.nyc.gov/office-of-the-mayor/news/583-23/as-city-nears-arrival-100-000-asylum-seekers-since-last-spring-mayor-adams-lays-out-updated#/0 Free food, lodging, medical care, schools, et cetera.

Actually it depends on what Trump does. If he does everything that you say, but guts social programs and eliminates income tax for singles with income under say $50K, $100K if single+kids, and say $100K for married couple, and $200K for married couple with kids, then you will have massive increase in the labor force keeping a lid on wages, and much lower budget deficit as social spending plummets while GDP grows sharply, and federal income taxes increase. Keep in mind, immigration is a massive drag on the economy right now. Look how much NYC is spending on illegal immigrants - billions a year.

I am sorry, but I do not get the attraction. Let's assume normalized revenues = $14bn, let's assume that (EBITDA - cap ex) / sales can = 40%, which would imply a 50% operating ratio, I doubt that the company can achieve it but let me dream... Then, let's assume annual EBITDA - cap ex can grow at 1% + inflation per annum purely driven by pricing, then, using a real r = 6%, value: 20 * 14bn * 0.4 = $112bn before debt and tax, or $100bn post debt and $75bn post tax, using 226mM s/o, that is $331 per share. What am I missing? @dealraker?

I just violated it - I sold my HCA

This guy doesn't know his history. Last time USSR attacked Finland, it was clobbered. Finns will give the Russian army a bloody nose. Post Ukraine invasion, Russia will not invade anyone - its army isn't capable of winning a war.

There is a tax angle that is not being discussed. When a dividend gets paid and you own shares, in the US, it can be a qualified dividend, which puts you either into a 15% or 20% federal tax bracket on dividends + 3.8% Obama tax. If you had lent out your shares, then it is NOT a qualified dividend, but instead payment in lieu of dividend, and can be taxed as high 37.8% + Obama tax.

You guys do not take into account taxes. Paying 3-4% interest that is not deductible to receive 5-6% that is taxable depending on your tax bracket could be a negative cash flow event.

Charlie, if you provide the purchase date and price, I will run the return for you on bloomberg

I have seen it many times. I never enrolled for regular accounts because of adverse tax treatment, but may make sense for IRAs. IBKR tried to get me enrolled, but they promised 5 basis points a year in lending income, so I passed

If you mark to market their investments particularly the investment in Fairfax India, and private investments held through Fairfax india, including the airport, the tangible book value is closer to $1100 per share. Also, AJG Gallagher was very bullish on the call yesterday regarding insurance pricing for the next several years.

In my opinion, the purchase of Gen Re by Buffett was brilliant.