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MMM20

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  1. Agreed, added today too. Maybe the smart move is to size up FFH to the point it’s borderline uncomfortably big and also buy some OOTM puts on a broad index to hedge the ‘world falls apart’ risk
  2. True, I'm assuming it'll be undersubscribed. i think that's a fair bet but of course won't necessarily be the case.
  3. Makes sense. Only question is how we handicap the risk of a material modification to the terms at this point? I know deals break all the time in sharp down markets but I have a hard time seeing that here unless things truly fall apart over the next few weeks. But stranger things have surely happened. I own a lot (for me) and plan to hold for a long time. But might size it up even more for short term trade.
  4. With odd lots first in line, why wouldn’t I tell all my friends to buy 99 shares at <$450 to tender at $500? Of course the deal could be modified but seems like the closest thing to a guaranteed 10%+ return I’ve seen, admittedly not necessarily scalable!
  5. MMM20

    Digit

    "Digit Insurance aiming for deeper market penetration" https://telanganatoday.com/digit-insurance-aiming-for-deeper-market-penetration
  6. Out ahead of that, no? "Berkshire Hathaway Energy is growing its renewable energy portfolio and continues to de-risk its balance sheet related to carbon-based generation assets. As of December 31, 2020, only 6% of our overall net investment in property, plant and equipment was invested in coal generation assets and 6% was invested in natural gas generation assets" https://www.brkenergy.com/assets/pdf/eei-presentations/2021-eei-presentation.pdf
  7. If/when Greg comes around on Prem, that’s when I sell my last FFH share. Only half joking.
  8. And sell Digit just in case it’s really a 10-50 bagger from here. Wouldn’t want that sort of concentration. The models tell us that’s too risky.
  9. Sort of off topic but it’ll be interesting if this characterization is still out there if Digit doubles its business over the next couple years and is raising money at a $10B+ valuation. Might be a low probability event but then suddenly you’d have a massive winner “hottest indian startup” inside of a maybe still “poorly constructed/capitalized” FFH at like 5x earnings. I’m probably too bullish on Digit but you must admit it’s a wild setup. That sort of option value seems mispriced IMHO even at $500, but hey, maybe digit ends up a 0 and the crap reverts. Who knows. Or maybe FFH buys back 30-50% of the company over the next couple years with “stunts” + operating cash.
  10. Maybe FFH buys back 20% of shares outstanding over the next couple years, eh? Sure it’s not $50B but in relative terms it’s about the same magnitude. FFH remains small enough that a puny few billion can move the needle. Remains to be seen whether the operating earnings come through in a big way next year so they can fund it without creative financing. If it turns out that way… well, maybe we’ll live to see 1x bv.
  11. Does anyone have a good explanation for why Fairfax seems to pick the complicated route when the simple one would do just fine? Why not just sell 5% of Odyssey to the highest bidder- or something approximating it? Why risk the optics of a related party transaction? Wouldn't this clear up some of the overhang with respect to the CPPIB/OMERS relationship and perceived sweetheart deals at above market interest rates? Just seems clear that straightforward minority sale and FFH buyback would've been the better route? What am I missing?
  12. So 2021 year-end BVPS might be ~$800/sh? Can that be right?
  13. I think this is in reference to my post. So, round numbers, FFH is up 15x on Digit. It now represents ~20-25% of FFH's market cap. Digit is growing like a weed in a huge and rapidly growing market. Dyed in the wool deep value guys like Prem and his loyal followers are notoriously terrible at recognizing this sort of opportunity. Ironic then, isn't it, that nearly 3/4ths of Digit's ownership happens to be embedded in FFH? What if Digit does, in fact, have a better mousetrap and ends up a massive low cost operator in the not-too-distant future? Where might that put the Digit piece vs. the hypothetical FFH stub? Maybe it ends up just a thought exercise but my point was that I don't dismiss the possibility of it playing out that way, especially after Sequoia's investment. And yet FFH trades at an all-time low valuation. Fun. I'll take the gift from Mr. Market and see how it plays out.
  14. @Gregmalare you short the stock? do you disagree that the valuation is at a ~20-year low? have you said what price you think would be fair? I think most people here just believe it’s at an all time low and something closer to 1x current economic book would result in a decent long term return from there. this incorporates all the issues you’ve outlined. if it were brk or mkl, maybe we’d be arguing for 2x bv. are you saying it’s effectively worth 0 because eventually they’ll blow themselves up with dumb management?
  15. Hi all. I'm new to the forum and to deep diving on FFH. I've followed it on and off for 10+ years but took a hard look after the whole BB situation and Sequoia's investment in Digit. By my math, FFH's underlying stock/business holdings are now +$4B vs. 12/31/2020. And giving them credit for the capitalized value of growth in insurance float, maybe the uplift is +$5B to the equity at this point. (Obviously much of this has not flowed through to the reports - I'll just note that pro forma BVPS growth over the trailing 3/5-ish years is actually quite good adjusting for the yet-unreported performance, for what it's worth to the algos among us.) The Indian investments including Digit represent well over half of the current market value now. Even if 0.8-0.9x P/B is fair, that's a +50% from today on the marked-to-market book value. And do we have a potential Naspers/Tencent redux on our hands with Digit? I'm not sure how to handicap that, but it seems like a real possibility. From a starting point of an all-time low (post-9/11) valuation, the risk/reward seems skewed to the upside with that sort of optionality built in. How do we think about the true share count? Would it be fair to include the TRS effectively as a buyback in our modeling? This would give us a current share count of ~24.4M, right? That gives me the following range of outcomes (bear with me on the last line): It must have been tough to be a FFH shareholder post-GFC. I understand why plenty of shareholders are not happy. Here's hoping that the ability to bring fresh eyes to this situation is an asset. Appreciate the helpful discussion. Thanks all.
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