valuecfa

Well, AFAIK if there are exchange listed preferreds, ORH must continue to regularly file documents at the SEC. Just rambling here, but i don't think they do have to continue to file ORH SEC filings, as the preferreds are now under the full faith and credit of FFH.

It is a yield investment, which is stil a pretty nice yield. I believe it has nothing to do with being called.

Well, someone has to not be telling the truth. Either he is a shareholder or he is not. Your reply (Matt) suggest they are good managers. I assume that you believe the shareholder is misrepresenting himself? If he truly is a shareholder, than i would say that there may be some dire corporate governance issues. ~I have no familiarity with the company or the situation other than from the links/replies on this thread.

Sorry, my humor can be quite dry sometimes I believe the kid (whom is really annoying) made a small fortune in the markets through sheer luck, and then lost it all shortly thereafter. I think CNBC even once touted him as the next so and so one day, back when he was on his lucky streak. Ahh, the media. As for Calistri...I second John's remarks. Let's keep her picks under wraps. :D

http://sec.gov/Archives/edgar/data/915191/000095012309041716/o56955sctovc.htm Let's get that deal closed at $60! (Now that most of us have sold our ORH shares)

Tim Sykes -Up 474% since Nov. 2007. -Provides a great introduction on how to short sell penny stocks.

I've sold out of ORH as well. Though I think a higher price is very likely it is not worth the risk for a chance for an extra 5 - 8% above current market price. Congrats to those that participated. :D

Prem does. Otherwise you should hit him with a 2x4 for not selling. lol, that was funny. It's also pretty funny how the market is laying out the odds as 100% the deal closes higher, and significantly higher based on the current premium in the market. I would have figured the Arb funds (that might not follow the 2 companies too closely) would have closed this gap.

This is just an opinion, but I believe Fairfax being the good capital allocators that they are, will not use a dilutive equity offering to the tune of $1 Billion and just sit on it, or use it to retire debt. That would be a very poor use of capital, for a financially strong & smart firm (that is also undervalued) to issue all that expensive equity to pay cheap debt. I think more likely Fairfax will try to negotiate the best price possible with minority ORH shareholders, and there will be some back and forth price talk, not dissimilar to the way northbridge was negotiated. (I believe Fairfax, at one point in the negotiation, said their price was final and then subsequently raised their price). It just makes much better financial sense to get the deal done at a fair price than, than to dilute shareholders and sit on the cash and pay down debt. I think Fairfax shareholders would be MUCH more upset if they diluted shareholders for nothing (or for poor reasons that don't make sense). Better to pay a fair price for a good business than issue all that equity and sit on it. But that is just my opinion.

Farifax plays game of chicken: Fairfax Financial Holdings Ltd. (FFH) announced plans to sell $1 billion in stock as it bulks up financing for its proposed $965 million acquisition of the rest of rival insurer Odyssey Re Holdings Corp. (ORH). Fairfax plans to sell 2.9 million shares at $347, its closing price Friday on the New York Stock Exchange. The shares also trade in Toronto, where the insurance holding company is based. Fairfax, which currently holds 73% of Odyssey, late Friday announced it was offering $60 a share for the remaining stake. Odyssey on Tuesday said it was reviewing the bid. Its shares jumped 25% premarket to $62.50. If the acquisition isn't completed, Fairfax plans to use the proceeds to boost its cash position, increase short-term investments, retire debt and other corporate purposes. Fairfax's businesses include property and casualty insurance, reinsurance and investment management. Like Fairfax is going to issue $1 billion in undervalued shares just to retire some debt, make short-term investments, and boost cash position. A little bit of posturing here if you ask me. I think they are realizing ORH shareholders aren't that happy with the offer price. Even at a current share price of $62.50 (above offering price) there is not much selling pressure. I will be very interested to see what the independent special committee comes up with.

Spoken like a true banker ;D

Holders of the series A or B preferred shares are not entitled to vote on any sale of all or substantially all of the assets of OdysseyRe, and I am not aware of any change in Delaware law that would require a vote by the preferred shareholders. Therefore, it doesn't trigger early redemption rights to my knowledge, and the company has been current on dividend payments, and there has been no announced change to the rights of the preferred shareholders. In addition, certain transactions that would vary the rights of holders of the series A preferred shares cannot be made without the approval in writing of the holders of 66-2/3% of the series A preferred shares then outstanding or the sanction of a resolution passed by a majority of the votes cast at a separate meeting of the holders of the series A preferred shares.

The ORH preferreds are not redeemable prior to October of 2010. In addition, there is no change of control covenant to redeem at par.

That is a very good question, Sanjeev. It doesn't make any sense to me either.

Given that Current book value per share is very close to $60, i think they are attempting to get the company for pretty much 1x book value per share. Must say i am disappointed with the price they are attempting to get ORH for, which should reflect the market rally (and hence the large increase in book value) since June 30th 2009.

They will have to sweeten that significantly to get my vote, as i would be VERY disappointed with that price! As of June 30, 2009 the Book Value per share of Odyssey Re was $51.90. Since that time, the S&P 500 has increased 10%. And looking over the last 13-F, I suspect Odyssey Re's investment portfolio did even better than the S&P. Nonetheless, lets be conservative and use the book value per share as of June 30th, inclusive of the market's return since June 30th through today's date. This would imply a CURRENT book value per share of $57.09! (And this even ignores the leverage used in ORH boosting equity further, and ignores the Odyssey Re repurchases that were done well under book after June 30th). But lets be extra conservative and ignore all that as well) Therefore, 1.16x current book value would conservatively be $66.23!! If they want to claim they are making an offer for 1.16x book value, then they should use CURRENT book value which we all know is significantly higher that that of June 30th, 2009 (the market has rallied significantly since then). We all know book value per share that is to be reported for the 3rd Quarter is much higher. In addition, as Parsad suggested, the premium for Northbridge was 1.30x book value per share. Using the Northbridge premium of 1.30, times the CURRENT book vaule of approx. $57.09 = $74.22 per share for Odyssey Re. They need to sweet that Deal quite a bit to get this concerned shareholder anywhere near in the ballpark of wanting to tender any shares. I would be perfectly happy owning Odyssey Re shares as a standalone company if it means giving the company away at that price.

You know what that means. Time to buy a basket of reinsurers. :P http://finance.yahoo.com/news/Analyst-sees-buying-apf-1822558007.html?x=0&.v=2

I saw a Buffett interview about a month or two ago, where WEB said that the "housing problem will be over in 18 months, or something like that."

Me too. I love to see rational criticisms.

Shiller is referring to residential, but acknowledges the possibility of another housing bubble due to affordability: http://www.nbcchicago.com/news/business/US_Housing_Market_Could_Be_Facing_Another_Bubble__Shiller-53697742.html

What do you really think, Cardboard. :D lol Whether they consolidate or not certain investments is no big deal. It will effect the reported book value, income statement, and this and that, but I'm sure they don't judge their equity investments by the effect it will have on the reported GAAP accounting numbers. At least they shouldn't. I'm sure its the cash they care about. They definitely made mistakes with those investments you mentioned. It seems when the company goes distressed shopping in non-U.S. markets it doesn't work out as well. These are distressed investments, and some such as Brick need more time to determine whether or not they will be successful. I do think Fairfax has to take a loss sometimes, instead of continuously plowing money into sinking ships, when they realized that a company is broken. Not all distressed investments work out. If they did work out, we would be calling them a genius, but it is a difficult type of investing which usually results in either a homerun or a total loss.

If they consolidate Brick, then it will negatively effect the balance sheet, given that the company has a net deficit in equity.

I'm sure investors last year would have liked to have known the puck was going to be 50% lower right now. :P Just joking. These guys are great investors, but there is a price at which anyone should be willing to pay for any business. Even Cumming sold quite a lot of stock in June 2008 for around $49/share (when it seemed overvalued) and a little at the end of last year around $15.50/share for whatever reasons. I didn't attend, but I recall reading notes that... at the 2005 Shareholder's meeting, Cumming said LUK's shares were overvalued during Q&A. He was asked again this last meeting, and responded with a no comment this time around. I think LUK is neither very cheap nor overvalued at current prices. Another way of putting it is by saying that... if those two investors were not at the helm then I would say that it is slightly overvalued with current holdings. ~Long LUK

At current market valuations/environment, I wouldn't tender any Odyssey Re shares for less than $68/share. But that is me. I am perfectly happy with ORH's progress as a stand alone company. I also don't expect any buyout of ORH this year (but who knows), as future near term investment gains won't be of the magnitude of the past year, in which to allocate to such a major investment. The less float/remaining shares in ORH as the buybacks continue over the quarters/years, the more FFH would be willing to offer in premium for ORH. I think they would be more likely to pay a higher premium, closer to 1.3x book value if there were only 10% remaining float vs. 25-28%.

And equipment rental companies: Hertz, United Rentals, RSC Holdings ~Long URI & FAIRX