cwericb

This might be slightly off topic, but I see something else in the value of Fairfax that is not necessarily reflected in the short term share price. Contrary to most public corporations, for a long time Prem Watsa has paid himself an exceptionally modest salary - $600k - (not that I would turn it down mind you). His wage depends on dividends and his wealth on the value of the company. This gives shareholders confidence and trust that Mr. Watsa’s goals are the same as those of us who wish to own part of this company. This is the way it should be. How many public companies are run in such an honest and fair manner? I too get frustrated with the fluctuations in the share price, but the bottom line is that I have confidence that management’s goals are essentially the same as mine. He and the rest of us are all shareholders. That makes it a lot easier to sleep at night and handle the ups and downs. Not only do I not have this same faith in many other companies but I personally believe that the ludicrous incentive plans that were given to many CEO’s led to the rape of their companies and in turn was the leading cause of the recent meltdown. While company officials prospered, shareholders lost their shirts. When Mr. Watsa does well so will I.

Well you gotta hand it to Dundee, eh. That's quite a risky prediction saying that SFK might actually run all the way up to a buck. Oh yeah, the last trade was at $1.42 so it seems kind of a safe call. Of course since they had been predicting $0.50 - anything looks better. I would suggest that there are a number of members of this board that could get an analysts job at Dundee. I used to believe some of those guys until I learned the hard way how expensive that could be. Really, do they actually get paid for their opinions? My rant of the day.

.. and on the subject of Dundee's fearless predictions Google alerts just put this out ... "FEBRUARY 23, 2010, 7:58 A.M. ET. SFK Pulp Target Raised To C$1 From C$0.50 By Dundee"

SFK will release its 2009 fourth quarter and year-end results after market hours on Wednesday, February 24th, 2010

nodnub Not as yet, but I am concerned about that. It may be more psychological than reality on my part but if the share price is moving rapidly - as it does at times - a delay in buying or selling a small lot could prove expensive.

"199 out of every 200 investors should not be picking their own stocks" You are perhaps right, and this may be a little convoluted, but isn't that a good reason to own FFH?

"who cares about a temporary 5-10% pop from splitting the shares" I tend to disagree that the 5-10% increase would be temporary. That hasn't been my experience with other shares that have split. In fact I believe that the long term effect would tend to keep share price a little more in line with book value. On the other hand I definitely agree that there is money to be made with the volatility of FFH. I have been so tempted to sell every time FFH takes a big jump, but always resist in the fear that I may get left behind if it doesn't drop back. Guess I'm going to have to suck it up and start playing that game. But again as a small investor it's not so easy with the share price where it is. Condolences over your capital gains problems... ;D

So Sanjeev, what you are suggesting is that you would prefer a lower share price to ensure a better quality of shareholders. But isn’t that rather counterproductive? I mean the value of the company is generally the product of management - not the group intelligence of shareholders. Further, in watching the share price of Fairfax bounce around over the past few years doesn’t give one lot of confidence in the ability of the present shareholders to put a proper or consistent value on this company. While the value has been consistently increasing, the share price charts looks like my dog’s teeth. Let’s say splitting shares eventually leads to an average 5-10% increase in share value, don’t you think that would outweigh the fact that you would have a lesser quality of shareholders? And as far as volatility is concerned, this company can move 10% in a couple of days and all too frequently does. Hypothetically, lets say ownership of FFH was limited to a few dozen very knowledgeable shareholders, are you sure that the share price would rise quicker over time than if they were more widely held? What if if liquidity was lowered to the point where there was such a limited market there was no one to sell the shares to? The expertise of many members of this board is most impressive, but there is one rule of business that rarely fails. Any commodity, no matter what it’s value is only worth what someone will pay for it. When you limit your market, you limit the competition and thereby what people are willing to pay. Long term or short term, isn’t the reason any of us buy shares in any company is to make money? (Forgive me if I sound like Kevin O’Leary)

I hate to disagree with some members of this board because i have the utmost respect for their opinions, but the "split shares and I'm gone" concept seems to be a bit of an elitist position. Not everyone is a fund manager or can afford to own thousands of shares. There would seem to be very little downside in splitting shares from what I can see. From past experience it seems a given that when a stock splits, liquidity on the market improves, the shares become more available to the smaller investor and the price increases. There might also be some other spin off from having a wider base of shareholders. Now when I shop around for personal or company insurance I make it a point to consider FFH as an insurer. Why would any company who deals with the public want to keep a low profile? When investors complain about FFH shares selling for a lower ratio to book than some competitors, might that not that have something to do with its low profile? The more shareholders there are, the more people who will do their research and recognize the integrity of this company and the farsighted investments they make. That in itself will tend to snowball and help keep prices in the range where they should be. And if a stock split improves prices - what's wrong with that, isn't that why we invested in the first place? I often read where FFH shareholders say they don't really care about the short term pricing, but in my opinion, the higher the average price, the better because who knows when one might want to sell for any number of good reasons? As a small investor, I know that I for one would own more of FFH if it was selling for a lower price.

Seems that the FBI agent who cleared Fairfax is now pursuing SAC and Cohen. This is a very interesting article. http://www.iii.co.uk/news/?type=afxnews&articleid=7657202&subject=companies&action=article Lest anyone think Prem's claims against Cohen and friends are a little far fetched (letters to his church, crank calls, etc), those incidents seem to pale in comparison to some of the other things that were alleged to have happened at SAC. "In a lawsuit earlier that year Tong had charged that his male supervisor, Ping Jiang, then a top SAC trader, forced him to perform oral sex on him before completing a trade, according to people familiar with the investigation and court papers. Tong also alleged Jiang ordered him to take female hormones to turn him into "the ideal analyst/trader," combining both male and female characteristics, the court documents note." Sounds like Fairfax probably wasn't the only party getting screwed. Sorry, I couldn't resist that.