Jump to content


  • Posts

  • Joined

  • Last visited

Everything posted by shalab

  1. Hope it works out for you and others putting their money into it. The fund is already big at 2.6 billion. India economy is at 2.7 trillion. So it is at ~0.1% of India GDP. If it goes up to 10B to harvest more fees, it will be at 0.4% of India GDP. So for someone to do better than SP500, a lot of things have to go right. India economy is slowing down like everyone else. Furthermore, when FRFHF issues statements, one has to look deeper to see what is marketing talk for the faithful and what is not. When they say Modi is the difference, one has to look at the numbers before and after in companies financial results. I don't see any major difference personally. In fact, India has been ruled by 100-200 families who are interested in protecting their family businesses while hurting the average person. This hasn't changed and is unlikely to change anytime soon. So tread carefully. Let us say this can compound at 8% in dollar terms, higher than the last five years average in very favorable conditions. After paying 20% performance fee and 1.5% management fee, your return will be 4.9%.
  2. It matters for two reasons - foreign trade, the dollar is artificially high - this depresses us exports and boosts imports - yield curve - it is inverted - https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield - negative yield curve slows down the economy or puts it in recession or both
  3. Still having difficulty to admit they made a blunder in raising rates https://finance.yahoo.com/news/fomc-fed-june-meeting-interest-rates-130018529.html
  4. I hope it works out for you in the long term. Fairfax India share price increased at 7.2%/year for five years till the end of 2018 and it has dropped since then. This is before fees and expenses. So SP500 has out performed Fairfax India significantly. Fairfax Africa has returned -10.6% per year.
  5. I stand corrected - I should have said the prices aren't increasing as fast as the Fed is expecting. Prices are definitely going up but below the Fed target rate. Asset prices (houses) have come down in the last year. Shalab, It seems that we disagree about where we're going although it will have to be, in the end, the same destination. "However all data is pointing to the other direction, i.e., prices going down." This yield inversion talk is getting confusing but one of the most significant and fundamental measures I've been following agrees that asset prices may have entered a deflationary phase: the Tooth Fairy payout. https://www.prnewswire.com/news-releases/tooth-fairy-payouts-plunge-for-second-consecutive-year-300798356.html I've been able to match the Tooth Fairy payout until 2012 and then it seems that the payout has been looking for a reversion to the mean. You will also notice that the US regions that have suffered from globalization have shown their resentment through lower payouts.
  6. I noticed it with their annual report but then it was impossible to ignore with the Q1 report. It is not clear why they use leverage so much especially when it is not needed. The obvious explanation may be the correct one - they can collect more fees. I wonder about the people investing in this instrument - reminds one of Biglari Holdings shareholders. https://s1.q4cdn.com/293822657/files/doc_financials/quarterly_reports/2019/FIH-2019-Q1-Interim-Report-(Final).pdf They use 600 MM in loans on 2 B capital. (30% leverage). The number of shares outstanding has also increased year over year by about 2.2%. The whole scheme is seems odd - if one looks at BIAL (the investee) - it is leveraged. Then the instrument investing in it is also leveraged. (FRFHF India). To add to it, the instrument holding it (FRFHF) also leveraged. It is triple leverage :P Also the fee structure is adversarial in nature for the common shareholder. There is double jeopardy. The period from January 1, 2018 to December 31, 2020 (the "second calculation period") is the next consecutive three-year period after December 31, 2017 for which a performance fee, if applicable, will be accrued. The performance fee for the second calculation period will be calculated as 20% of any increase in the book value per share at the end of period Investment and Advisory Fees The investment and advisory fees are calculated and payable quarterly as 0.5% of the value of undeployed capital and 1.5% of the company's common shareholders' equity less the value of undeployed capital. For the first quarter of 2019 the company determined that the majority of its assets were invested in Indian Investments, which are considered deployed capital. The investment and advisory fees recorded in the consolidated statements of earnings in the first quarter of 2019 was $8,289 One is better off holding INDA or related funds - the expense ratios are far lower and affordable. https://etfdb.com/etf/INDA/
  7. Parsad says USA consumer prices will go up if USA workers take home more money this year. However all data is pointing to the other direction, i.e., prices going down. The USA saving rate has been higher than average compared to the recent past, where savings rate on disposable income is at 7-8% of GDP. This is excluding contributions to 401(k), ESPP, IRA/Roth-IRA, HSA etc. which can soak anywhere between 0 - 35% of income. https://www.reuters.com/article/usa-bonds-tips-umich-idUSL2N23L0MC https://tradingeconomics.com/united-states/producer-prices Barrons ran an article saying rate cuts are needed and more importantly some QE may be needed by year end: https://www.barrons.com/articles/the-rate-cut-the-economy-doesnt-need-but-the-markets-do-51560557553?mod=hp_DAY_1 https://www.barrons.com/articles/the-fed-may-have-shrunk-its-balance-sheet-too-quickly-51560504607?mod=past_editions Meanwhile, the person that has invested with Parsad is betting on a deflation. (FRFHF) CPI-linked derivative contracts The company has entered into derivative contracts referenced to consumer price indexes (“CPI”) in the geographic regions in which it operates that serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. At March 31, 2019 the company held CPI-linked derivative contracts with a fair value of $16.2 (December 31, 2018 - $24.9), notional amount of $113.6 billion (December 31, 2018 - $114.4 billion) and weighted average term until expiry of 3.4 years (December 31, 2018 - 3.6 years). The company’s CPI-linked derivative contracts produced net unrealized losses of $4.3 in the first quarter of 2019 (2018 - $20.2). Net unrealized gains (losses) on CPI-linked derivative contracts typically reflect the market's expectation of decreases (increases) in the values of the CPI indexes underlying those contracts at their respective maturities (the contracts are structured to benefit the company during periods of decreasing CPI index values).
  8. I am fairly certain it is the pension funds of Europe. Berkshire is a better/safer bet than the negative yields. https://www.ipe.com/analysis/analysis/ipe-top-1000-european-pension-assets-grow-by-9/10014864.article Amazing notes transactions, gfp, Thank you for sharing. Berkshire working on both sides of its balance sheet. Do you know who is the decision maker at Berkshire on such transactions? - Mr. Buffett, or is this perhaps the playground for Mr. Hamburg? To me it's incomprehensible that somebody will tie up capital for 20 & 40 years respectively on such conditions. I wonder who is buying this stuff?
  9. yield curve inverted again: https://www.bing.com/videos/search?q=inverted+yield+curve&docid=13840512517203&mid=9937A21325DBF8F47CD09937A21325DBF8F47CD0&view=detail&FORM=VIRE
  10. Ed Yardeni, recently pointed out that Chinese imports actually declined 0.9% in price in the past year after the 10% tariffs were implemented. This was mainly due to the fact that China devalued its currency to offset the tariffs and maintain market share. http://blog.yardeni.com/2018/10/chinas-syndromes.html https://www.nytimes.com/2019/05/21/opinion/china-trump-trade.html Also - US home buyers are getting better rates https://www.cnbc.com/2019/05/23/china-trade-war-leads-to-lower-mortgage-rates-for-americans.html Huawei approach https://www.wsj.com/articles/huaweis-yearslong-rise-is-littered-with-accusations-of-theft-and-dubious-ethics-11558756858?mod=hp_lead_pos5
  11. Minneapolis Fed President Neel Kashkari said Thursday the bigger problem was how the Fed had conducted monetary policy this decade and not its current approach to targeting 2% inflation. "Ms. Brainard's views illustrate how the central bank's center of gravity has shifted over time. While she was initially reluctant to lift rates, she said by last summer the Fed would need to raise them high enough to slow the economy given the expected boost from the tax cuts and federal spending increases. Several officials last year had projected inflation would begin to rise above the 2% target even with continued rate increases. Now, officials are conceding their economic models may not be working as they did in the past. Inflation excluding volatile food and energy prices posted an annual gain of just 1.6% in March and 1.8% in January, according to the Fed's preferred measure. ... Policy makers will never have perfect information on the real economy," he said in remarks in Santa Barbara, Calif. "But raising rates while inflation was low is an example of a shortcoming of how we implemented our framework rather than a shortcoming of the framework itself." https://www.wsj.com/articles/feds-brainard-says-central-bank-should-welcome-modest-rise-in-inflation-11558023372 Fed admits its short comings
  12. Certainly hope so - I was expecting a lot of negative headlines but found only one in bloomberg that said "Buffett Confronts Tech-Driven Change Amid Investor Questions". Disappointed to say the least. Now we need more seeking alpha articles and the "globe and mail" folks disseminating investing advice to sell Berkshire in favor of their favorites.
  13. Regarding the 15% target, I know many people believe it as shown in the only "notes" shared from the meeting. May be it is time for Prem to become non-executive chairman and have his kids and Pual Rivett talk in the annual meeting, shareholder letters. Regarding Thomas Cook, you are right about the forex, travel businesses. However, ordering through the internet is still not common in India (from what I understand) and brand names still have a lot of cachet. In Thomas Cook case, one has to look at P/B - not cashflows as it is difficult to calculate/estimate. I bought it when it was roughly 20% lower.
  14. As someone posted earlier, FRFHF returned 7% since 1998 nowhere near the 15% that is being promised every year. Yet, many people follow the person like a messiah (not unlike BH) justifying every action and statement even though it is not rational. I like to follow their India investments as I own thomas cook. Also - I like to hunt for investment opportunities in India. However, FRFHF itself is a heavily leveraged company, even at the holding company level. They have 40B in investments and 11B in shareholder equity. The fact that they have been able to not generate returns in double digits despite such leverage should tell something. My answer would be helping them purchase shares in the market, which Faurfax does a lot of (see annual letters). As I say I have no issue with awards, but I’d like to know more about the conditions and likely rate. No issuances do not dilute Prem’s votes.
  15. I agree with Charlie that the buyback rules will be relaxed over time. It is obvious in Berkshire's case as well - where P/B kept moving up from 1.1, 1.2 and in an interview he said the buyback threshold may be close to 1.3. Then they bought back at 207 when P/B was more than 1.3. Essentially this helps inform the shareholders before they turn on the spigot. Tender offer is highly unlikely for two reasons: - berkshire itself doesnt go into auctions when buying companies - he has said he doesn't want to take advantage of partners - mentioned it several times in the meeting yesterday I am happy with 0.3% per quarter buy back rate or about 1% of outstanding shares per year. This can go up to 2-3% per year eventually. If berkshire deploys 100B to buybacks, it won't be Berkshire anymore that can take advantage of market downturns or buy other companies. As Buffett mentioned, a lot of people have invested a lot of cash in Berkshire as a fortress of value and he doesn't want to break that promise. I agree with that. After sleeping on observing the whole Berkshire AGM thing yesterday, I think this is a precise description of the issue at hand. Depending on how the markets evolve going forward, my overall perception is, that Berkshire will likely be a company sitting on a cash pile north of USD 100 B for a prolonged period going forward while growing at a certain clip its businesses - also depending on how in particular the US economy & the global economy in general evolves going forward. Unfortunately, the specific tender question did not come up.
  16. https://economictimes.indiatimes.com/tech/hardware/prems-love-affair-blackberry-to-bank/articleshow/69171811.cms
  17. Looks like the fed is again not doing its job - "Central bank policy makers are looking for reasons to ignore the lack of upward pressure in consumer prices" https://www.bloomberg.com/opinion/articles/2019-05-02/the-federal-reserve-s-inflation-message-is-muddled
  18. Thanks for the note - I was going off the press release: Diluted number of shares at the end of Q4 2018 - 28.397 million Diluted number of shares at the end of Q1 2019 - 28.093054 million Decrease => 303946 shares No no...$769.2 is available to all shareholders of Fairfax. Preferred shareholders received $11.2 million, so available to common is $758/26.98= 28 million. Or page 19 of the interim report in Note 12.
  19. Since they wont give you the diluted number of shares and book value per diluted share, here is the updated calculation after Q1: Diluted number of shares at the end of 2018 - 28.397 million Diluted number of shares at the end of Q1 2019 - 28.5107 million (obtained by shareholder earnings/diluted earnings per share - 769.2/26.98 - page 6 of the report). Using the diluted shares, I get a book value of 414 at the end of 2018. Adjusting for dividends paid out - I get a book value growth of 5.39% Increase in diluted shares => 113K shares. Book value per diluted share => 425.76 The holding company's debt also increased: The company's total debt to total capital ratio increased from 27.2% at December 31, 2018 to 29.2% at March 31, 2019, primarily reflecting increased borrowings by the holding company and non-insurance operations. Spot on. A few more observations: 1) Isn't it just a bit weird that FFH had realized gains on both their equities and their derivatives in the same quarter? Don't get me wrong, I'll take it! But, these were supposed to have been set up as a hedge, but they didn't act as a hedge in Q1. The derivatives are starting to become small potatoes, but I found that was a bit weird anyway. 2) As you noted the CR is up, and favourable development is down. The accident year CRs have been wacked for a number of years and there has been consistent, large favourable development. In Q1 it was still favourable, but the magnitude was down. What's the story? Is it just a few shitty policies at Allied and a bit of bad luck in the other subs, or are we seeing the result of pricing pressure of a year or two ago across the line? While completely irrational, I don't like seeing adverse development in the "new" sub (but somehow I would feel okay if were in an established sub?). 3) The interest rate sensitivity table would suggest that duration has increased a smidgen. Is this a conscious effort and is this a sign of things to come, or is it just a bit of noise? It would seem like a funny time to go a shade longer on fixed income, but in all fairness it would have worked out over the last quarter or two. 4) With the exception of Zenith, net written looks good. It's not that mythical 10% YoY growth, but 5% still shows some real organic growth. It'll be interesting to get some commentary about the pricing environment during the conference call. Nice boring quarter. Let's hope that some of the large block equity postions continue to gain traction. SJ
  20. +1 Also hope the price/book fanatics will publish articles (morningstar, seekingalpha and other mediums) saying no one should buy BRK.A/BRK.B unless the P/B is 1.2. It will allow me (and my extended family) to deploy our capital better ;D I sincerely hope that many shareholders (about $100B worth) think this way and sell their shares back to Berkshire and buy the index. All should be happy with that arrangement.
  21. 2019 Q1: Current dollar GDP increased 3.8 percent, or $197.6 billion, in the first quarter to a level of $21.06 trillion. Personal saving was $1.11 trillion in the first quarter, compared with $1.07 trillion in the fourth quarter. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 7.0 percent in the first quarter, compared with 6.8 percent in the fourth quarter.
  22. Parsad said this in the other thread. I think that discussion belongs here. FFH is definitely a viable business and is in a different league compared to BH or PGNT (ethics). Prem has achieved a lot and he doesn't need to compare himself to anyone. He and his family is set for generations as they virtually control FFH. However, FFH as an investment is a different story for folks trying to increase their own wealth by investing their hard earned dollars. I don't think there is a need to say they aim for 15% return or that they will emulate Singleton. One of the legacies of Singleton is that his family is one of the largest land owners in America. May be that is what Prem is alluding to when he says he will emulate Singleton - his family will be one of the richest in Canada for generations. These claims are misleading and unnecessary. If anything, it tarnishes his legacy. He has been the chancellor of university of waterloo, has given money to charity (Dakshana foundation) etc. He can do more of these and his legacy will be safe. There are many honest, capable managers in corporate america - one can invest in one or many of these companies or the entire group through an index. Over a lifetime, one can get very good results through the index, especially with dividend reinvestment. Thanks for posting.
  • Create New...