Partner24

When FFH announced their munis backed by Berkshire buying and the before taxes equivalent rate they got on them, I tought it was absolutely brillant and was delighted. My father is very busy, so I try to not bother him with his holdings news, but I was so much delighted that I came with a smile on my face at his office room to announce him the news. These munis could be down in value today, it wouldn't change my tought. It was fundamentaly a very winning risk/reward combination. That being said, your charts are very impressives. What a so much short period of time can do is mind blowing. We live in crazy times! Thanks for sharing them! Cheers!

The better quote that I found on diversification and focus so far is one from Buffett. Here it is: "Focus investing creates wealth. Diversification protect wealth". It's actually more complex than that, but it's a pretty good summary. Small business owners have overall far more chance of failure than if you have a diversified portfolio of very solid companies like MSFT, BRK, etc., but when they build from scratch a small business that his succesful over time, the return on their investment can simply be mouth watering. Something you could not dream of with Berkshire and Microsoft at their present size. Regarding focus investing in stocks, I say when you've fund a given investment that has very strong odds of sucesss and a decently small chance of failure, a fat pitch if you prefer, then a good thing to do is to slam big.

What a nice dilemma it would be to decide what do to with FFH if it was trading at 2,5 X book value... ;) I guess I would then sell a part of my FFH shares, but maybe not all of them. I find it very hard to put my money in businesses where I have as much trust and confidence about it's long term prospects and it's people than FFH. There is some, but not very much. If my other holdings were also too much expensive, I guess I would try to find somewhere else to put my money, but I could also just sit on cash and wait for a good price before buying them again. It's no fun to sit on cash, but it's better than make stupid investment decisions. That being said, suffice it to say that this is actually a very theorical discussion. Cheers!

While Markel usually don't get a lot of attention, gurufocus spent some time recently on Markel and posted likn some other notes and recent interviews with Tom Gayner: http://www.gurufocus.com/news.php?id=56841 http://www.gurufocus.com/news.php?id=57240 http://www.gurufocus.com/news.php?id=57284

I don't have any problem with the actual price. As long as the price remain in this approximative range, I'll keep adding with a smile on my face.

Great article. Thank you very much Sanjeev! It amaze me how FFH has gone through more quality companies in it's very recent history.

Mandeep, Leucadia could well be at 8$ today, I wouldn't think that it was a mistake to buy it at a higher price. The fact is, it's not because that a stock you own go up that you were right, and vice versa Our focus has to stay on the intrinsic value of the businesses, not on their short term stock fluctuations, because if we fall in that trap the market will start to teach us instead of serve us. Cheers!

Ahahah ;) It's easier said than done. Some simple things are not easy to do. That's not the only trait that the next CEO will need, but to me it's a very important one.

I don't know wich one will be the best to fit the job. I think the single most important trait that the next CEO will need to have is to not stand in the way of the managers of BRK subsidiaries. Call them, say hello, "What were you doing before I've been nominated as the new CEO? Ok, please keep doing it". Cheers!

I wonder to what extent their trouble will benefit to FFH (especially their Northbridge subsidiary).

I think you could put the Charlie Munger's picture right next to this Ivory soap quote: "Making the simple complicated is easy. Making the complicated simple is brillant" Cheers!

"I wonder what the next 25 years will bring? Same old, same old?" Ahahah book value per share increase of more than 100 folds AND a higher price/book ratio? My not-yet-born-grandchildren aren't dreaming of that. ;) If we're able to grow our book value per share by 15% compounded over 25 years, that would mean a slightly more than 30 folds increase. Given the same amount of shares and the same price/book ratio multiple, that would mean a more than 150 billions CAN $ company! That's already a HUGE challenge. Cheers!

I wonder why we should need to second guess what Fairfax is buying and selling (and when they should buy or sell some of their specific holdings). They have a track record that a lot of investors must envy....a lot! I have nothing against criticizing some investments when they might show permanent capital loss or criticizing their overall portfolio, but to second guess if they sell a holding, but furthermore expect some stuff from it publicaly is a little bit too far in my opinion. We should try our best to give them a bat, sit on our chair and watch their batting average.

Yes, as stated before, the Nasdaq holdings show what is listed in US only, so we don't have all the picture here.

You're right watsa is a randian hero. If you exclude ORH from the equation, based on Nasdaq data, you get an approximately 3,3 billions stock portfolio, or approximately 70% of FFH market cap.

List of FFH US holdings adjusted for their actual value (based on end of March holdings): http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0000915191&HolderName=FAIRFAX+FINANCIAL+HOLDINGS+LTD%2F+CAN So, our US stocks portfolio is probably worth more than FFH market cap.

You can get them in most of the companies website under the Investors section. You can also get them free with Edgar at: http://www.sec.gov/idea/searchidea/companysearch_idea.html It's more environmental friendly and save companie's money by viewing them online.

They are depressing if you have to sell some shares, but they are great if you buy some shares (like me) ;D Depend on wich side of the transaction table you are. Cheers!

You're all very welcome! By the way, I've done a rough math on what could LUK actual book value might look like. In this regard: 1- I've adjusted the JEF, ACF, Inmet Mining and Fortescue Mining actual market value. 2- I've adjusted the Fortescue note by increasing it's book value per 300 millions (Fortescue carry the liability to Leucadia at approximately 1,5 billions and LUK carry it on it's balance sheet at 200 millions). 3- I've added half of the defered tax asset that was removed from the balance sheet last year (because it is fair to assume that they will ultimately use that asset, but for conservativeness purpose, I just put back 50% of it). I understand that I can't arrive at a precise number because of number 2 and 3 items and fair value of all the other Leucadia assets (private businesses, real estate, investment with outside managers) vary and do not reflect last quarter book value. So, based on what is written above, LUK actual price to adjusted book value is approximately 1,1. If you want to include the full liability valuation of the Fortescue note given by Fortescue AND want to add the full tax asset removed last year, then you have an approximately 0,8 ratio. Please do not hesitate one second if you see some mistakes in my math and want to adjust it. Cheers!

Thanks for the link! Why aren't our regulators capable of addressing many of the issues that we confront in the market today? Most of them plan to go back to living off money made in the system they are supposed to regulate. You can argue that financial regulation is so important that no one in such a position should ever be allowed to do as you partially did—serve and then leave to make money in the regulated field. Such considerations led to lifetime appointments for federal judges. And we got better judges with that system. So government service should be a little like a monastery from which you can never escape? What you can opt to do is retire, which is pretty much what our judges do. We recently had a discussion about that issue (in a thread about Patrick Byrne comment on a top SEC lawyer who leaved for private practice). That's exactly what I've underlined. The line between SEC pratice and private practice is too thin and it create some sort of incentive to not be too harsh with your opponents.

Here is a link to some Leucadia AGM notes. These are good ones. Thanks to Dah Lui Hau (David) for sending me these notes on the pdf format. Cheers! http://www.scribd.com/doc/15241531/2009-Leucadia-Annual-Meeting-Notes

Some quotes, then my comments: FFH is kind of like a no fee hedge fund isn't it. It's even better than a hedge fund. We get our money from policy holders, we keep the profit for ourselves and we have some permanent capital, wich structuraly help us to have a longer term horizon (that's a competitive advantage). Regarding, Canwest, I haven't done a valuation on it, but from my point of view it's very strategic just from a media perspective. I hate the word "strategic". When a holding company start to make "strategic" investments, that's a bad sign. Every investment should care about the return on it first. That being said, I don't think they have done the Canwest deals mostly on a strategic point of view. My 2003-2009 experience with Fairfax confirm me that the media mostly act like a voting machine, just like the stock market. The only thing it could do on a "strategic" point of view would be to help us build our good reputation as a "Fair and friendly" investor and that might help us get more phone calls. But it would be overall not significant. Our track record will speak louder than some articles from time to time. So, millions and millions $ of investment to hope to get some permanent ads from Canwest subsidiaries would be questionable as an "ad" investment, in my point of view. But, like I said before, I don't think that was the primary objective for Fairfax. Berkshire get far more free "ads" than Fairfax, mostly because of it's track record and the charism and brain of it's CEO. Now, make no mistake, I'm not judging Canwest purely on future goodwill for FFH because they have also made an investment in Gannett...so they must see some value. I'm 100% with you here. "Also, BAM and Onex want in on this deal (Canwest) as well, so we're not the only village idiot". Nearly all value investors fall into value trap from time to time. Sometimes, they fall alone and sometimes they fall together. I'm not saying that Canwest is necessarely a value trap. Time will tell if it was either that or a hidden treasure. With the declines in yoy premiums, I believe Prem and Co. are right sizing Crum for sub-90 CR. I don't know, but I like it. When prices aren't appropriates, a decline in premiums is a very good sign of underwriting discipline. I wish they broke out retention within the insurance operations, because if in fact they are right sizing Crum, this will take some time to show up, but when it does, some will try to delete their negative posts on FFH insurance operations. Well, I will not judge FFH overall underwriting performance based on one or two cycles only. What matter is the long term. So far, we do not have been a bad underwriter, neither a great one. We will be a great one if the cost of our float will be, on long term average, free. We will be a good one if we get it at a lower cost than the government and we will be a bad one if we get it at a higher cost than the government. I don't have time to conduct thoughtful analysis like sizing muni's, corporate bonds, active investment portfolio, etc. and holding 90% FFH allows me to do everything that I want/can't in one single investment, it's efficient for me. Me too. It's might sound ironic for an investor to delegate the particular investment decisions to someone else, but to me it makes perfect sense, and that's what I actually do too. Cheers!

I just hope its not another Canwest or Abitibi. But it look like another cigar but investment. Leon and BMTC (gbt.a) are much more well run and are strong competitor. Good observation. That being said, the situations are differents in some aspects. Abitibi and Canwest don't have time on their side (especially Abitibi). But I don't see why 10, 20, 30 years from now why people will not buy new furnitures. You always need a place to sit, sleep, diner, etc. and I would be surprised that people will buy their furnitures by Internet in China without seing them in person first and get it delivered in their homes so they'll don't need their local retailer anymore as a valuable intermediary. And it's more heavy stuff to ship overseas than a collectible coin. Now, that's not because an industry might not face some kind of permanent headwind that every business in it are good investments (see the recent history of Jean Coutu investments in the U.S.). I also think that Leon and BMTC Group are better operated retailers. They weren't swimming naked. The Brick was (their "the unbeatable" slogan in french radio and tv commercials, with some insight, was some kind of a joke). That being said, the actual recession is not permanent and if they can get out of trouble, it might be a very decent investment over time. Time will tell. Cheers!

Berkshire Hathaway chairman letters.....hey, it's free! 8) The Warren Buffett portfolio by Hagstrom One up on Wall Street by Peter Lynch Investir à la bourse et s'enrichir by Bernard Mooney (...) "Buy very few and die with them" investing by Partner24 (a 1 line book) ;)

Oh well, if would take a look at my stock portfolio since one year, you might find it one of the most boring on earth (very, very low turnover, very very few holdings). Regarding the actual state of the market, especially in financials, is it a suckers rally or will it last? I don't know. I can't predict these kinds of things and I can't say if the financials are overall cheap, since several are outside my circle of competence.