MMM20

It was just really bad luck that they were locked up at that exact point in time, wasn't it? I'm personally grateful for that b/c it's what made me take a harder look at FFH and I think continues to contribute to keeping the stock cheap even as it now shrunk to what, ~1% of GAV? ~2%? All the major drivers have gone so right for FFH and yet we still hear about BB from people who gave up on Fairfax last decade. Hopefully we'll look back in a few more years and realize that whole thing was a huge blessing in disguise for newcomers, even now.

Agreed. Thanks!

Not to get off topic here but do you mean the mortgage market looks oversold at 8%? Can you explain the mechanics of how mortgage rates spike higher if the market is anticipating rates dropping and mass refinancings? (If that’s even true.) I guess it’s sorta relevant to Fairfax’s big deal with Kennedy Wilson.

Give it two or three days. There's often a lag for some reason. Efficient markets!

To be clear, I'm talking about trimming FFH ~20-30% higher to buy back FIH at today's price. 100% counting my chickens before they hatch.

I am still in this camp and occasionally lose sleep over it, if I'm being honest with myself. The one thing that keeps me up at night is that FFH is not truly anti-fragile and we're still overdue for The Big One. I might just trim ~10% to buy some FIH. Hard to go too wrong.

I've just been a tad bit early with these things, giving Mr Market a little too much credit. Can I toot my own horn yet on some of the more aggressively bullish posts in '21 / early '22? Famous last words, but I think this is shaping up to a ~6-10x over ~4-6 years sort of return from when Prem loaded up on shares personally and the market reaction was a mix of indifference, disdain, and "what's that crazy old canadian doing now? he did blackberry lol." I'm still here for the narrative shift and 1.5-2x BVPS...inject it into my veins. That said, even with all the strength in these results and the still seemingly super cheap valuation...is it time to start taking a little risk off the table if this pricing cycle is finally nearing its last legs? Are we finally at/near the peak of the hard market? If so, will Fairfax properly adjust and free up gobs of capital to return to shareholders? Has the real Teledyne-ing begun? Thank you all for sharing your ideas and work. This has been a massive ballast for my portfolio over the past couple years. Now back to keeping the emotion and horn tooting out of it.

Should be +30% tomorrow. I’ll settle for +10%.

Fair enough. Just amazed that investors are still willing to lend the Greek govt money at ~4% ish with e.g. US mortgages at ~8%. But I guess I shouldn’t throw rocks from my American glass house. Gonna be interesting to watch Eurobank’s contribution to FFH over the next few years.

Via https://www.hamiltonlane.com/insight/weekly-research-briefing/current-animal-spirits Pretty incredible that the UST 10yr > Greece 10yr

So what are the odds FFH trades at a premium to MKL by, let's say, year end 2024? I hear rates are still going up

I respect the full Kelly criterion sizing. I don’t have the risk tolerance for that. Anything about FFH at 75% keep you up at night? What do you think could go wrong? How do you know when to cut it down or exit? I’m constantly a bit paranoid I’m missing something. “It ain’t what you don’t know that kills you…”

I added ~10% to my already way too big position today and about ready to pound the table again to friends in the industry. No one will listen this time too

Voting machine in the short run.

"Overall, it's still a tough environment for our insurance risk-bearing partners. They are grappling with stubbornly high loss cost inflation and more catastrophe losses at higher reinsurance attachment points. So when I roll it all together, we are not seeing and don't expect a meaningful slowdown in primary P/C rate increases. And thus, we remain steadfast and focused on helping our clients navigate and mitigate premium increases." - Arthur J Gallagher (AJG ) CEO Patrick Gallagher

@UK yeah my bad, I should've quoted or tagged @Spooky @Jaygo

Are those prefs a better risk/reward than the common at a ~18-20% earnings yield? I agree they look good (especially vs. FFH's fixed rate prefs @ ~6%) but I think Fairfax has a long runway for ROIC > WACC (most of which, again I'm a broken record, is float-based leverage at ~0% cost) so I still want 100% common.

I'm just trying to understand what point @Spooky @Jaygo were making

Is the concern here that foreign flows out of Canadian equities would put technical pressure on FFH stock in the coming years? Sounds like it would be a buying opportunity given that Fairfax is a global business but maybe I'm missing the point. Thx.

from deep in the archives... Vol 1 Santangel's Review - Teton Capital.pdf

Recent VIC writeup on Eurobank by Quincy Lee of Ancient Art/Teton Advisors (one of my favorites to track) https://www.valueinvestorsclub.com/idea/Eurobank/7301771925 "In the two years since my last Eurobank writeup, the stock has doubled while the Nasdaq is down 8%. The same thing will probably happen again the next two years to be quite honest. Probably none of you bought it, and probably won’t this time either. Anyway, I still like it today and haven’t sold a single share." Prem is right there with you Quincy... And same thing applies to FFH...

Berkshire’s “bond” portfolio is really the utility and the railroad. Need to get outside the narrow accounting definitions to compare the two. Rising discount rates probably wouldn't be kind to the valuations of those businesses if they were individually publicly traded. I'm guessing FFH is taking advantage of current rates to extend duration a bit closer to peers with real mid term rates now at ~2%+, but I'm operating under the assumption that inflation has been ~2-3% for a while now and that FFH knows it too.

Style drift in what sense? (I thought they were just doing the same old thing and it was falling more and more out of popular favor in a ZIRP world - but I have been a shareholder for less than three years)

Here's the corresponding updated valuation on P/B (for what it's worth) with MKL thrown in. BRK (~1.5x) and FFH (~1x) are both valued at roughly the same multiples now as they were to start the millennium. I think to some extent it speaks to the fact that most investors prefer a smooth ~10% to a lumpy ~15% (long term looking forward IMHO) because it's just easier to sleep at night and hold on through thick and thin.

@gfp yeah I guess so - I would just say BRK’s portfolio is still much longer duration overall when you include the equities and think about it from an overall asset allocation perspective. BRK is more sensitive to higher discount rates lowering the NPVs of AAPL, GEICO, the utility, and the railroad, but of course still a cash machine and can reinvest at lower valuations so still arguably a counter cyclical element to intrinsic value. FFH is still more than half cash and short term bonds and a much higher proportion of ~0 cost float. So while historically they haven’t had anything close to BRK’s FCFE (vs market cap) to redeploy, it seems to me that’s changed over the past couple years and FFH is in a similar position of strength now, albeit with both 1) an overall “lower risk” portfolio heavy in cash and short term bonds and 2) higher float leverage so still inherently much more downside in a 100 year flood (and much higher upside too especially from this valuation) Am I way off with this?