MMM20

Yeah my bad, I shouldn't have called you out for that... edited.

I gotta take a victory lap here. Almost ~5x on my biggest position since Jan '21 which has made up for a lot of dumb mistakes. It's now trading around what I'd previously considered a fair P/B if we're talking about a ~15% normalized ROE through cycles, but that's an extremely simplistic heuristic that misses the key changes under the hood over the past few years. Nowadays I still think it's too cheap by half, but I might cut it in half anyway. And now that I've posted this, I'm sure the next 50% drawdown is right around the corner.

“I don’t remember a month or a quarter gone by where Greg didn’t have a question or a clarity or a thought,” said NetJets CEO Adam Johnson. “And I have to remind myself that he’s doing that 60 times [across all of Berkshire’s subsidiaries].” https://omaha.com/news/local/business/article_5a02fb17-e783-4060-8e8e-d270cd70e019.html

This is the path to rerating nirvana.

Right, so I'm starting from the assumption that he won't touch certain things while WEB is still around. Maybe I'm wrong about that.

Has anyone taken a stab at quantifying the potential boost to earnings from Abel taking over and getting more hands on?

BRK is trading around intrinsic value and 2 standard deviations above two decade average P/E and P/B. I'm increasingly wondering if BRK is the proverbial 14-year-old thoroughbred still trading like she's in her prime. I'm tempted to sell to a token position, fully aware that would've been a horrible mistake for BRK's entire history.

Totally agree. If you're effectively outsourcing some / all of your portfolio, I think it's become underrated to invert - to seek out another investor who shares your north star / framework (let's say a long-term value-oriented approach) but whose expression is very different, who owns things you wouldn't own yourself. Maybe it's hard for many b/c you gotta put your ego aside to some degree. That's what diversification means to me at least!

Haven’t they empowered junior members of the team to make small investments like that? I assume it’s that and don’t read much into it but maybe I’m wrong.

You dispute that some investors don’t own Fairfax because it’s outside their circle of competence?

^this

Top performer for the past 20 years. And still the statistically cheapest of the bunch.

That’s obviously a quintuple lindy upward-facing dog constellation situation formation. Extremely bullish.

I'm sure 9/10 investors wouldn't guess Fairfax is top 10. Still misunderstood, underrated and undervalued.

Any chance you can share the first page?

Maybe this is not the right place for this, but high yield has widened out ~272bps since year-end to ~10%+ spreads (with ~3-4 year weighted average duration) per Damodaran. I think that's starting to look attractive and I'm tempted to dip a toe in. That's got me wondering if Fairfax is getting more active on the credit side or staying patient for a fat pitch in high quality credit. I'm guessing the latter but curious about the board's take on it. https://aswathdamodaran.substack.com/p/anatomy-of-a-crisis-tariffs-markets

I'm thinking more about the big picture for FFH these days at what I believe is another new all-time high (at least in USD... and what a ballast). How are folks here thinking about valuation on normalized earnings? Let's assume normalized combined through cycles is closer to 100% than 94%, let's say ~99%. Is that still a reasonable assumption for a high-quality insurance operation through long-term cycles? I guess that assumes nothing has fundamentally/structurally changed about the business, eg fewer new entrants responding to strong prices b/c of higher regulatory burdens or something along those lines. Plugging in reasonable expectations for equity and bond returns from these starting points for valuations, that would put Fairfax at ~14-15x normalized lookthrough P/E, which pencils to ~10-12% per share long term compounding from this point. Agree/disagree?

The "plummeting" thing gets me. We get a 10% S&P 500 drawdown about once a year and a 20% drawdown once every few years. Fairfax trades where it did about a month and a half ago! I guess I'm just barely old enough to remember -50% in the GFC and maybe that's a blessing and a curse - sort of a light version of a Depression baby. I think Fairfax is worth ~US$2500-3000+ so I don't really understand trading around a drop from ~US$1500 to ~US$1350. Not much has changed. I was maxed out size-wise at ~US$1500 and I'm still maxed out now.

So now on pace for almost 10% total annual shareholder yield? Am I missing something?

Right, so maybe more like +7-15% to FFH BVPS unless I’m missing something about minority interest? Thanks!

If the Bangalore airport fair value is really understated by ~2-3x, would FFH’s book value upon the airport IPO be up +10-20% from that alone? Is that roughly right?

The right answer is probably “noise” / unwinding of index add speculation, but I did see that Andy Barnard sold almost C$5mm of stock last week. Of course, that’s only ~5% for him and insiders sell for many reasons.

It’s clearly a well managed bank but the catch is it’s Egypt where inflation is ~25%. They say “unfortunately” the depreciation of the currency has taken returns from 21% in local FX to 1% in dollars, but that’s exactly what we should expect - we gotta adjust nominal returns expectations for the local FX depreciation given 20%+ inflation differentials. Not monopoly money but close! That doesn’t mean it can’t be a good investment.

It's a sizing question more than a binary one.