ourkid8

At the Fairfax shareholder dinner, Mr. Bradstreet said they are all in 1 year treasuries.

Agreed! Fairfax has become a significant position in my portfolio so let the good times roll. At the Fairfax dinner, Brian confirmed he has allocated his fixed income portfolio in 1 year maturities so he has not 'engaged' yet... Hear hear Dazel and props to you for your drumbeat of positivity when sentiment was at the bottom.

https://www.bnn.ca/fairfax-eyeing-some-u-s-stores-after-toys-r-us-canada-purchase-1.1067704 I am a bit confused in how the value of the real estate today is worth ~$300M and yesterday $220-225... lol Nonetheless, buying pods of profitable stores in the US is great news!

Over our history, we have issued 29.5 million shares as we expanded Fairfax from net premiums written of $10 million to $10 billion (current run rate of $11.5 billion). During this period, we have also reduced our shares outstanding by 6.7 million, for a net increase of 22.8 million. As the table below shows, our shares outstanding have grown by 5.6x while net premiums written, investments and common equity have increased by 1,000x or more. Henry Singleton, at Teledyne, reversed this trend, as you know, and over the next ten years we expect to do the same – use our free cash flow to buy back our shares!

Exactly, no one should be expecting significant repurchases. Sorry Dazel. I guess that means they have enough current cash for the minorities they want to buy out, so we're relying on current/future cash flow to the holding company for buybacks?

Sanjeev confirmed it is a clean balance sheet so yes, it was a steal of a deal :) Now the concern is the risks coming out of bankruptcy while the parent is under liquidation... I thought the RE might be a key part of it. Am I right that it is debt free? Because if so they've basically paid 3x ebitda, or 1x after RE, which suggests kinda limited downside even if Amazon does come along and eat their lunch. Not so sure about Bill Gregson though - isn't he kinda busy? ;)

Thanks Sanjeev for hosting a lovely evening last night. As per Prem and team, here is what they saw in Toys R us: -$220-225m in real estate -1 billion in sales -The company can run in standalone not needing its parent entity -$100m of edbitda/year -Online sales have doubled in the last 5 years -They are pleased with the current management Now let's see how this company performs out of bankruptcy as there is a lot of stink around the company going under. We all know it is the US parent but ppl may not shop there until they feel comfortable it will be around.

Based on Fairfax 'unlocking value' our BV should be around $485.51 (That's once IIFL splits into 3 separate entities)...We are sitting around 1.09x book and that's not including any earnings from operations + market gains (aka. Eurobank).

Prem continues to show how undervalued Fairfax is... https://www.fairfax.ca/news/press-releases/press-release-details/2018/First-Quarter-Accounting-Gain/default.aspx Accordingly, Fairfax must also change the manner in which it accounts for its ownership interest in Quess through TCIL from a subsidiary to an investment in an associate company. This change in accounting will result in a non-cash accounting gain at Fairfax of approximately US$600 million in Fairfax’s first quarter ended March 31, 2018.

Now the question is, did we overpay? https://www.bnn.ca/toys-r-us-ends-canadian-stores-auction-with-fairfax-as-the-only-bidder-1.1065324 Toys "R" Us's Canadian operations have found a safety net months after the retailer's demise in the U.S. and overseas. Documents filed in a Richmond, Va. bankruptcy court on Monday revealed the retailer will be cancelling an auction for its 82 Canadian stores and seeking approval on Tuesday to sell them to Toronto-based Fairfax Financial Holdings Ltd., which is involved in property and casualty insurance and reinsurance and investment management.

Why do you have doubts? The next 'best' offer was from Billionaire Isaac Larian, who heads MGA Entertainment, put in a bid of US$215 million. Yes, but they have only commited to buying it at $300m if there is not a better offer. They would get $9m if a better offer is accepted. $9 million dollar bills don't grow on trees, but for Fairfax, this is pocket change, unless they really buy the asset (which I doubt).

Thank you, this is extremely helpful. I looked back at the filings for 2018 and they repurchased a total of 41,611 shares and all of them were cancelled. This board is amazing, you learn something new everyday. If it's negative and the price is -- (blank) I would assume it's cancellation of treasury shares. The other dates you showed with positive numbers of shares were presumably repurchased by Fairfax at the price shown but hadn't yet been cancelled.

This is great, thanks! Am I reading this correctly? March 28 - Fairfax disposed of -41,611 -What does this mean? March 27 - Fairfax acquired 7,318 ($637.83) March 26 - Fairfax acquired 14,293 ($633.83)

With the redemption of their high yielding debt and issuing new debt at 3%, we have ~$16-18M in savings a year so far... Great job team, keep it coming!!!

I understand your logic but let's look at a couple of subs within fairfax. Northbridge (100.2) and C&F (103.4) have a 10 year CR average of over 100. If we merge these two subs into a better run entity while at the same time removing duplicate costs within the structure we should be able to bring down those ratios. I do not think this would signal to the market that no one should sell their business as it will signal to the market fairfax prefers decentralized however you need to perform at the level of what the company expects. I believe this is similar to what Berkshire did by consolidating their insurance subs under Ajit. He was able to remove costs from the structure so that it becomes a better run entity. (Please correct me if I am wrong) That would be a gigantic error. They have a lot of talented people beyond Andy Barnard and the reason they stay is because they can run their own businesses under Fairfax’s decentralised system. Centralise, and not only do you lose them all but you send a signal that no-one who wants to keep building their business should ever sell to them again. Plus, the insurance business are not a homogenous mass that can be run together. They’re a massively diverse group of niches that need focussed management. Fairfax and Andy Barnard’s influence is already felt across the group - for example in the changes they plan to make regarding cat tolerance at AWH. He couldn’t do a lot more, but the downside would be enormous.

Why would they swap assets with Canadian Pension Plan? I assume that's who you are referring to. Do you mean with OMERS who has a 40% equity position in Eurolife? Fairfax got Eurolife for an amazing price and the business continues to kick-ass. (Please see the thread below) What I would like to see is a consolidation of their numerous insurance companies under the Fairfax umbrella and Andy should be able to significantly take costs out of the system. That would create significant value however I do not see Prem agreeing to do so due to their fair and friendly culture he continues to talk about. http://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/fairfax-to-acquire-80-interest-in-eurolife/

https://www.fairfaxindia.ca/news/press-releases/press-release-details/2018/Fairfax-India-to-Acquire-Additional-6-Interest-in-Bangalore-International-Airport-Limited/default.aspx Fairfax acquired an additional 6% stake in BIAL and now they own a 54% interest.

Great news however I would like them to use the balance to refinance/repay other outstanding high yielding debt instead of being used for general corporate purposes. Fairfax intends to use C$298.4 million of the net proceeds from the offering to redeem in full the C$267.3 million outstanding principal amount of Fairfax’s 7.25% senior notes due June 22, 2020 plus accrued and unpaid interest thereon and the applicable premium (the “2020 Notes”), and to use the balance to refinance or repay other outstanding debt or other corporate obligations of Fairfax and its subsidiaries and for general corporate purposes. https://www.fairfax.ca/news/press-releases/press-release-details/2018/Fairfax-Completes-600-Million-Senior-Notes-Offering/default.aspx

Crip1/Dazel, does this change your views on Fairfax as both of you were expecting large share repurchases. I personally think this is a net positive consolidating their positions in Brit (Andy Bernard needs to perform his magic to bring down the CR) and Eurolife (P&C Combined ratio less than 70% so they are kicking ass) to make them Fairfax subsidiaries. +1 You can hope all you like but I fear the big buyback ain't comin'. The cash is earmarked for buying the stubs of Brit (FFH have the option to buy OMERS' 29.9% from 2018 and the ticket will be over $500m) and Eurolife.

As a FFH shareholders, I would love if they "tidy up" their Indian holdings so that we can have the same upside AND receive a 1.5/20. :-) It's a beautiful win/win scenario!!! (Hint hint, did you forget you just paid Fairfax US$114.4 million) that would require fairfax india to list in india for the minority shareholders of these companies? not sure about the exact rules, but as an investor in the indian markets, i dont know of any foreign company being dual listed in india. the reverse exists where a few indian companies are listed in the US via ADRs I think he's saying that FFH would give the shares to FFH india in exchange for FFH india shares. Since they are both in Canada, I don't think there would be an issues? oh ok, got it. just change of control for thomas cook. Yeah I was merely wondering if they would "tidy up" the Indian holdings into FIH - partly to avoid the impression of a conflict of interest and partly to make my notes neater ;)

Unfortunately they are not, the pace of buybacks in 2018 has been extremely slow. Now that I think about it, I have a strong suspicion they must be under negotiations with OMERS to start buying back their stake in Eurolife or potentially Brit. It's the only logical explanation for the extremely slow share repurchases. Subsequent to December 31, 2017 and up to March 9, 2018 the company repurchased for cancellation 20,000 subordinate voting shares under the terms of its normal course issuer bid at a cost of $9.9. https://s1.q4cdn.com/579586326/files/doc_financials/2017/annual/WEBSITE_Fairfax-FINANCIAL-FULL-Annual-Report-v3.pdf

Yes, they picked up a small position on Q4 2016 /Q1 2017 for ~$30 /share so they can exit the position with a nice gain.

https://www.bloomberg.com/news/articles/2018-03-26/berkshire-hathaway-says-knauf-made-offer-for-usg-at-42-a-share Fairfax can sell their position in USG for a nice little gain...

https://finance.yahoo.com/news/fairfax-announces-pricing-offering-senior-200820172.html Fairfax is issuing 600 million euro debt with a coupon of 2.75% per year and due 2028. This is extremely cheap euro denominated debt and looks to be used to refinance higher yielding debt. "Fairfax intends to use the net proceeds from this offering to refinance or repay outstanding debt or other corporate obligations of Fairfax and its subsidiaries and for general corporate purposes. This may include the redemption or repurchase of certain of Fairfax’s previously issued senior unsecured notes. "

Fairfax has deployed a bit over $1B in debt/warrant deals so far in the last year. I was wondering are they using float or cash at the Holdco for these deals? If it is using float and we average a CRs of 100, there is no further built in leverage, correct? Or is the leverage derived from the differential between government rates and CR written? Sorry for these noob questions, I am trying to better understand the company and cash deployment opportunities.