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Patient Investor

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  1. On Thursday, Standard and Poor's raised Fairfax's credit ratings. The insurance operating company financial strength rating was changed to "A" from "A-" . The holding company issuer credit rating was raised to "BBB" from "BBB-" with a stable outlook in both cases. This is continuing tangible evidence of the improved operations and outlook at Fairfax. A market price still substantively book value per share does not seem justified given these facts.
  2. Everyone knows how to coach the Toronto Maple Leafs better than the Coach of the Toronto Maple Leafs! While anyone is entitled their own opinion, the results were excellent. Period!
  3. I believe that Fairfax was required to issue a press release regarding the share purchases by Prem Watsa. Per the most recent information circular filed March 6 2020, the Sixty Two Investment Company owns 50,620 subordinate voting shares and 1,548,000 multiple voting shares, representing 41.9 percent of the total votes attached to all classes of shares and Prem Watsa, Chairman and CEO, controls Sixty Two and himself beneficially owns an additional 258,790 subordinate voting shares for a total of 42.5 percent of the total votes prior to the latest purchase. As an insider and a significant shareholder (only one over 10 percent) and as a material event they would be required to make the disclosure.
  4. Spekulatius, Just a clarification......The $8,484 shareholder equity and $370 per share book value you referenced in your post is in USD not Canadian.
  5. BIAL does not trade. Fairfax is buying another 10% for $200 million (USD). This values BIAL at $2 Billion. When this latest purchase closes Fairfax India will own 48% with a value of $960 million (based on the latest purchase price) All in, Fairfax India will have spent $579 million to acquire this position. This implies a gain of $381 million. Fairfax owns approximately 30% of Fairfax India so the implied gain at the Fairfax level is $114 million. I am not saying this will flow into book value immediately but it does illustrate the increased value Fairfax is creating.
  6. Here are some rough numbers of gains/losses since March 31st as of yesterday (all in USD millions)........Blackberry $174 ; Eurobank $154 ; IBM loss of $25 ; Kennedy Wilson loss of $35; Grivalia $34; Mytilineos $7; Tembec $21. This totals over $11 per share pretax. We know they will have a realized gain of approximately $248 from ICICI Lombard when the Warburg Pincus transaction closes and a further $454 in fair value increases for the part they are not selling based on this new price. On a look through basis Quess Corp. adds $160 and BIAL on a look through basis adds another $114. While all of this clearly won't go into book value at June 30th, you are still looking at total value gains pretax of more than $1.3 billion or $57 per share! Of interest, the share price (in USD) is down $25 per share despite adding $57 per share in gains. As Benjamin Graham stated, "In the short run, the market is a voting machine but in the long run, the market is a weighing machine." Fairfax is basically trading at hard book value on an adjusted basis! This seems attractive to me.
  7. Chrispy.........Don't forget about Eurobank in your list. The share price is currently 0.87 Euros up from 0.57 at March 31st. That represents approximately a $120 million USD pretax gain!
  8. As of the latest proxy circular from December of 2016, Fairfax owns 19,991,044 Tembec shares. Since March 31st, the Tembec share price has moved from $2.98 to $4.18 currently representing a pretax gain of almost $24 million CAD. It just seems like Fairfax has a lot of things going their way right now.
  9. Here are my thoughts on this transaction. Fairfax owns 34.6% of ICICI Lombard at a valuation for the entire company of $3.1 billion (in USD) or $1.07 billion for its 34.6%. The carrying cost of ICICI Lombard in the year end financial statements was $371 million. This sale of approximately 35% of their holding (i.e. 12.18% divided by 34.6%) will generate proceeds of approximately $378 million which is more than the carrying cost at year end for the entire position. This suggests that the realized gain will be approximately $248 million (pretax) or $10.75 per share. Equally importantly, the fair value of the remaining ICICI Lombard shares will be approximately $695 million (i.e. 22% of $3.1 billion) suggesting an unrealized gain of approximately $450 million or $19.50 per share. This transaction shows the significant value that can be attributed to the associates that aren't reflected in Fairfax's book value per share. Even if you reduce these amounts for taxes or the higher share count after the Allied World transaction closes these numbers are still quite large! This is just my opinion but I don't think that investors are properly valuing the significant value of the Fairfax investments in the associates.
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