Daphne

Viking Re EXCO: What form of security does FFH own e.g. bond, preferred stock, common stock, warrants? Re Leons: When did these commons appear in the portfolio? Thanks D

Boatrocker IPO on hold. Boat Rocker Media Inc.’s planned $175-million initial public offering is on hold, with the entertainment company weighing its options as investors cool on the IPO market following a series of poorly performing market debuts. Toronto-based Boat Rocker, which produces television shows such as Orphan Black and MasterChef Canada, was scheduled to price its shares on Tuesday at between $12 and $14 each, ahead of a listing on the Toronto Stock Exchange. However, investor demand for the offering was tepid, according to investment bankers familiar with the transaction. They said Boat Rocker’s executives and backers are now reviewing their options include cutting the price or size of the offering, or postponing the IPO. The Globe and Mail is not naming the sources because they are not authorized to speak for the company.

Farmers Edge Inc., a Winnipeg-based agricultural technology provider, is boosting the size of its initial public offering to $125-million on the back of heavy investor demand. The company, which is controlled by Fairfax Financial Holdings Ltd., filed to go public in early February and hoped to raise $100-million. After marketing the deal for two weeks, the company has boosted the IPO size by 25 per cent and priced the shares at $17 each, which is at the top end of the deal’s marketing range. Farmers Edge was able to upsize the IPO because investors put in orders for more than 10 times the original deal size, according to someone familiar with the transaction. The Globe is not disclosing the source because they are not authorized to speak publicly about the matter. Farmers Edge was an early Canadian agricultural-technology leader, and uses data science and AI-powered software to help farmers improve yields. Like many of its technology-based peers, the company decided to go public because Canada is in the midst of an IPO craze. Starting mid-way through 2020, a number of IPO issuers have seen their deals met with intense investor enthusiasm. Montreal-based online payments company Nuvei Corp., for one, set out to raise US$600-million in September but bumped its final haul to US$805-million. Many issuers have also seen their shares soar once they started trading. Shares of Dye & Durham Ltd., a consolidator of software providers for legal and business professionals, have more than quadrupled since listing at $7.50 on the Toronto Stock Exchange last July. The current deluge marks a major reversal. From 2009 to 2020, just 12 Canadian tech IPOs raised $50-million or more, and as of early last year Canadian tech companies were often avoiding or delaying going public because private backers were happy to invest at attractive valuations. That’s now flipped, and public markets are just as competitive, if not even more lucrative. However, there is growing concern that public investors could quickly turn on growth stocks, especially if bond yields and interest rates start to rise in the United States. Many of the companies that are going public lose a lot of money, and Farmers Edge lost $68-million in the nine months ended Sept. 30, on top of a $118-million loss in 2019. While the IPO craze is ongoing, some recent deals have seen more modest demand, suggesting the recent euphoria has some limits.. Both DRI Healthcare Trust and ABC Technologies Holdings Inc., an auto parts maker, were able to complete their offerings in the past few weeks, but DRI priced at the lower end of its marketing range and ABC had to slash its offering size by 60 per cent as well as price its shares below its marketing range. Farmers Edge raised private capital in the mid-2010s from Silicon Valley-based Kleiner Perkins Caulfied & Byers and Toronto-based Osmington Inc., which is controlled by David Thomson. (Woodbridge Co. Ltd., the Thomson family holding company, owns The Globe and Mail.)

Sanjeev Do you think it’s possible for FFH to purchase enough put contracts to cover 100 million shares?

I can’t think of a single time when Prem has failed to take advantage of a presented opportunity. He’s proven to be one of the most opportunistic investors in the market. However because of his multidimensional thought processes, how he does it is most likely well beyond our single or at best two dimensional perspectives.

This is what I know Digital Lloyd’s syndicate Ki reported that it has raised US$500 million from funds managed by Blackstone Tactical Opportunities and Fairfax Financial Holdings, parent of specialty insurer Brit that is behind Ki. Ki said the capital commitment will fund its expansion as it launches in the fourth quarter of 2020. The follow-only digital entity hopes to write its first risk in January 2021. Brit first announced its new venture Ki in May 2020. Ki was incubated by BritX, Brit’s innovation team, working in collaboration with Google Cloud. Ki promises to reduce the amount of time needed by brokers to place their follow capacity. Ki’s algorithm, developed with support from University College London, will evaluate Lloyd’s policies and automatically quote for business through its digital platform, built by Google Cloud and accessed directly by brokers Ki will underwrite using an algorithm-driven approach and offer instant follow capacity through its proprietary digital platform. Ki is the first fully digital-only syndicate to be approved by Lloyd’s of London, in keeping with its Future at Lloyd’s initiative. Ki is targeting a range of specialty business following selected leaders in the Lloyd’s market, including Brit. Qasim Abbas, senior managing director at Blackstone, said Ki’s digital model will “enable it to build to significant scale, while its algorithmically-driven approach represents an important evolution in the portfolio management of specialty risks.” Matthew Wilson, CEO of Brit and chairman of Ki, said the investments in Ki will allow the business to reach its full potential with significant committed capital ad that Blackstone is “entering the Lloyd’s market at a pivotal moment, with increased acceptance of digital models and a flight to quality.” Mark Allan, CEO of Ki and Group CFO of Brit, said support from Blackstone is a “significant statement of confidence in Ki and the vision we have set out.”

There are daily buyback limits that would preclude that volume. Limits are a percentage of total daily volume but I don’t offhand remember the percentage.

Short term owners who came in for the divi. Pretty good return on a one or two month investment

Forget LMND and reproducing DIGIT, FFH already has underway the next digital platform through a Brit and Blackstone arrangement announced in Sept 2020 that saw FFH pony up $250m seed money for a 60/40 position. Adding to the growing list of potential multi baggers is FFh investment in Altius minerals currently trading at $15. FFH holds +600m warrants it can exercise at $15 worth $2.50 each. And, FFH has another three years of potential growth before it’s obliged to exercise them.

What about Boatrocker? Media and entertainment sector is on fire and this company has been growing by leaps and bounds.

Welcome back DAZEL, I've missed your enthusiasm. ;)

Has anyone noticed the volume over the last few days? Particularly first trade of the day?

Given that making money in the insurance business tends to be a longer term proposition coupled with the covid hit of 2020 ...hybrid capital, generally a shorter term proposition, is likely hiding in the bushes for the foreseeable future.

Christmas comes early...Santa Prem is on a roll.

Check out the blackberry Amazon deal!!!

The Globe and Mail has confirmed a report last week by IP industry journal IAM that BB-T +2.06%increase recently began shopping the majority of its 38,000 patents to interested parties. Tech+IP Capital, LLC, a U.S. investment banking firm, is handling the sale for BlackBerry. A source familiar with the situation told The Globe the company isn’t certain what price it will get, but it’s believed the portfolio could be worth more than US$450-million - a significant size for a deal in the global patent trade, but a fraction of the US$4.5-billion a consortium led by Apple Inc. Apple Inc. paid in 2011 for a trove of 6,000 Nortel Networks patents. The Globe is not identifying the source as they are not authorized to speak publicly on the matter.

Not going public but monetizing assets Canada’s biggest patent holder, BlackBerry Ltd., is looking to unload most of its intellectual property in a deal that could mark another turning point for the fallen former smartphone giant.

The “pattern” I’m seeing here is that this board is filling up with conspiracy theorists. Dr. John Grohol, a psychologist and the founder of Psych Central, says that conspiracy theorists come up with ideas out of thin air to match whatever 'fact' they think is true, and often use paranoia-based beliefs to convince others.

Hang on....no need to ratchet up the conspiracy theories. I’ve worked on a number of deals, at the most senior levels in the insurance sector, in the retail sector, in media etc. One in the insurance sector was a multi country deal concluded in ten days start to finish. So, if we’re going to speculate here, try this plausible scenario (plausible because I’ve seen it happen). Buyer starts talking to Prem and co about their desire to buy out Torstar and take it private. Prem says, who’s going to run it? They say we have a few people in mind. Prem says, what about Paul, he knows the business, is brilliant at what he does and is looking for a position that keeps him closer to home. Could be a terrific fit. The rest is history. McLuhan said it best....if I hadn’t believed it I wouldn’t have seen it.

India: a huge and skilled workforce ready and able to to take on so much more manufacturing as the Covid fallout lands squarely on China. Geopolitics may very well drive the future here.

Curious what you find funny. If you had a quarter of what Prem has...packed in your head, I’d be surprised!

TORONTO, Oct. 31, 2019 (GLOBE NEWSWIRE) -- Fairfax Financial Holdings Limited (TSX:FFH and FFH.U) announces net earnings of $68.6 million ($2.04 net earnings per diluted share after payment of preferred share dividends) in the third quarter of 2019 compared to net earnings of $106.2 million ($3.34 net earnings per diluted share after payment of preferred share dividends) in the third quarter of 2018, primarily reflecting net losses on investments, partially offset by higher operating income. Book value per basic share at September 30, 2019 was $462.98 compared to $432.46 at December 31, 2018 (an increase of 9.5% adjusted for the $10 per common share dividend paid in the first quarter of 2019). "Despite the catastrophe activity in the quarter, our insurance companies continued to have strong underwriting performance with a third quarter consolidated combined ratio of 97.5%, with Zenith National at 87.1% and all but one of our other major companies between 96.2% and 97.9%, and our operating income remained excellent, improving to $280 million. We continue to be soundly financed, with over $1 billion cash and marketable securities at the holding company and no significant holding company debt maturities until 2022," said Prem Watsa, Chairman and Chief Executive Officer. The table below shows the sources of the company's net earnings, set out in a format which the company has consistently used as it believes it assists in understanding Fairfax: Third quarter First nine months 2019 2018 2019 2018 ($ millions) Gross premiums written 4,211.6 3,763.6 13,273.6 11,763.0 Net premiums written 3,318.3 2,960.8 10,614.1 9,376.7 Underwriting profit 81.3 74.2 270.7 299.1 Interest and dividends - insurance and reinsurance 163.1 139.2 501.5 400.8 Share of profit of associates - insurance and reinsurance 35.7 36.5 84.6 24.9 Operating income 280.1 249.9 856.8 724.8 Run-off (excluding net gains (losses) on investments) (14.2 ) (49.2 ) (45.0 ) (102.3 ) Non-insurance operations 8.2 65.7 163.9 244.8 Interest expense* (121.5 ) (84.8 ) (355.0 ) (259.9 ) Corporate overhead and other income / expense 14.0 (2.6 ) 97.1 (113.8 ) Net gains (losses) on investments (96.7 ) 41.2 1,075.8 917.2 Pre-tax income 69.9 220.2 1,793.6 1,410.8 Income taxes and non-controlling interests (1.3 ) (114.0 ) (461.5 ) (557.2 ) Net earnings attributable to shareholders of Fairfax 68.6 106.2 1,332.1 853.6 * Including $19.2 million and $50.8 million in the third quarter and first nine months of 2019, respectively, related to the revised accounting for leases effective January 1, 2019 Highlights for the third quarter of 2019 (with comparisons to the third quarter of 2018 except as otherwise noted) include the following: The consolidated combined ratio of the insurance and reinsurance operations was 97.5%, producing an underwriting profit of $81.3 million, compared to a combined ratio of 97.6% and an underwriting profit of $74.2 million in 2018. Net premiums written by the insurance and reinsurance operations increased by 12.1% to $3,318.1 million (13.7% excluding the net premiums written by operations not present in the third quarters of both 2019 and 2018). The operating income of the insurance and reinsurance operations increased to $280.1 million from $249.9 million, reflecting primarily higher interest and dividends. Interest and dividends of $214.9 million increased from $193.7 million, primarily reflecting higher interest income earned on increased holdings of high quality U.S. corporate bonds, partially offset by lower interest income earned on decreased holdings of U.S. municipal bonds. Share of profit of associates of $149.6 million increased from $63.9 million, principally reflecting increased share of profit of Eurolife and IIFL Finance. Interest expense of $121.5 million is comprised of $65.7 million incurred on borrowings by the holding company and the insurance and reinsurance companies, $36.6 million incurred on borrowings by the non-insurance companies (which are non-recourse to the holding company) and $19.2 million of accretion on lease liabilities subsequent to the adoption of IFRS 16 on January 1, 2019. Short-dated U.S. treasury bonds and high quality corporate bonds represented 25.7% of the company's portfolio investments at September 30, 2019 compared to 34.7% at December 31, 2018. Net investment losses of $96.7 million in 2019 consisted of the following: Third quarter of 2019 ($ millions) Realized gains (losses) Unrealized gains (losses) Net gains (losses) Net gains (losses) on: Long equity exposures 170.7 (159.3 ) 11.4 Short equity exposures — (17.9 ) (17.9 ) Net equity exposures 170.7 (177.2 ) (6.5 ) Bonds 14.3 48.0 62.3 Other (136.7 ) (15.8 ) (152.5 ) 48.3 (145.0 ) (96.7 ) First nine months of 2019 ($ millions) Realized gains (losses) Unrealized gains (losses) Net gains (losses) Net gains (losses) on: Long equity exposures 599.6 362.2 961.8 Short equity exposures (7.9 ) 117.0 109.1 Net equity exposures 591.7 479.2 1,070.9 Bonds (260.2 ) 471.6 211.4 Other (134.6 ) (71.9 ) (206.5 ) 196.9 878.9 1,075.8 Net losses on Other in the third quarter of 2019 in the table above was primarily due to foreign exchange impacts on investments denominated in the euro, which weakened against the U.S. dollar. In two approximately equal transactions in late September and early October 2019 the company sold its remaining 9.9% equity interest in ICICI Lombard for gross proceeds of $729.0 million. On July 15, 2019, the company redeemed its remaining Cdn$395.6 million principal amount of 6.40% unsecured senior notes due May 25, 2021 for cash consideration of $329.1 million (Cdn$429.0 million) including accrued interest, and recognized a loss on repurchase of long term debt of $23.7 million (Cdn$30.7 million). The company held $1,701.8 million of cash, short term investments and marketable securities at the holding company level ($1,699.0 million net of short sale and derivative obligations) at September 30, 2019, compared to $1,557.2 million ($1,550.6 million net of short sale and derivative obligations) at December 31, 2018. The company's total debt to total capital ratio, excluding non-insurance operations, increased to 27.1% at September 30, 2019 from 25.0% at December 31, 2018, primarily reflecting increased borrowings at the holding company, partially offset by increased common shareholders' equity. During the third quarter of 2019 the company purchased 65,815 subordinate voting shares for treasury at an aggregate cost of $29.8 million. From the fourth quarter of 2017 up to September 30, 2019, the company has purchased 621,204 subordinate voting shares for cancellation and 662,789 subordinate voting shares for treasury at an aggregate cost of $635.9 million. At September 30, 2019, common shareholders' equity was $12,417.2 million, or $462.98 per basic share, compared to $11,779.3 million, or $432.46 per basic share, at December 31, 2018. The increase in common shareholders' equity per basic share was primarily due to net earnings. There were 26.9 million and 27.4 million weighted average common shares effectively outstanding during the third quarters of 2019 and 2018 respectively. At September 30, 2019 there were 26,820,057 common shares effectively outstanding. Unaudited consolidated balance sheet, earnings and comprehensive income information, together with segmented premium and combined ratio information, follow and form part of this news release. In presenting the company’s results in this news release, management has included operating income (loss), combined ratio and book value per basic share measures. Operating income (loss) is used in the company's segment reporting. The combined ratio is calculated by the company as the sum of claims losses, loss adjustment expenses, commissions, premium acquisition costs and other underwriting expenses, expressed as a percentage of net premiums earned. Book value per basic share is calculated by the company as common shareholders' equity divided by the number of common shares effectively outstanding. As previously announced, Fairfax will hold a conference call to discuss its third quarter 2019 results at 8:30 a.m. Eastern time on Friday, November 1, 2019. The call, consisting of a presentation by the company followed by a question period, may be accessed at 1 (800) 369-2013 (Canada or U.S.) or 1 (517) 308-9087 (International) with the passcode “Fairfax”. A replay of the call will be available from shortly after the termination of the call until 5:00 p.m. Eastern time on Friday, November 15, 2019. The replay may be accessed at 1 (866) 356-4351 (Canada or U.S.) or 1 (203) 369-0104 (International). Fairfax Financial Holdings Limited is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and the associated investment management.

Can I assume by your comments that there was nothing of much interest that was shared at this year’s AGM?

Excellent analysis and IMO the critics sound more like trolls

Ironic indeed!