Partner24

Is it me, or do I smell panic? It smell pee. AIG is a huge disaster, GE is threatened to be downgraded even it it cuts it's dividend, Dow Jones hits a 12 year low, media reporting only the negative things about Warren Buffett's letter to shareholders, I hear people saying that capitalism will be dead, you name it... I'm not calling a bottom. I would like to be able to do that, but the only way to me to make money with a crystal ball would be to buy it cheap and then sell it higher on Ebay. That being said, I guess there is still people that are still optimistic, but suffice to say that they don't get a lot of media attention... But I wonder what will history tell us in 10 years about this period. The glass seem more half empty than half full actually, but we'll see. Cheers!

Well, these journals are made to generate impressions. Basically, tThe more impressions they have, the more ads dollars they generate. So, they do some punch headlines to generate attention and interest. So, they achieve their basic objective well, but that's all. As Berkshire shareholders, you can throw them in the garbages.

Dear Crip, You bring an interesting point and, to me, your comments are fair. There is different aspects to check before making a judgement about the managers performance. - In taking a look at how they have been able to improve the balance sheet over the last few years, I'm quite happy about the results. We're not a AAA company, but Fairfax has done significant steps in the right direct direction and I'm very satisfied. - Investment returns: they are great. We were protected from a 50 to 100 years financial storm and we were not swimming naked. I don't know any public company that had these wise move made and this is simply terrific. - Runoff. Great improvement! Less claims outstanding, less underwriting losses, etc. This really seem to be well contained now. A great relief! - Underwriting. Yes, this is the sour point to me, but this is not a catastrophe. Ideally, it would be great to have no cost float over the mid and long terms (or ice on cake, an underwriting profit), but it is not terrible neither. I understand that I shouldn't include the currencies variations, but I will fully include underwriting losses from hurricanes and other catastrophes. So, to me, Fairfax performance over the last few years can be quoted as A. The small percentage cost of float is the only reason why I don't see myself honestly give an A+...but frankly A+ is not far. As an individual shareholder, am I satisfied with an A? Absolutely! There is so much D and E out there, especially in 2008. Do I see myself "firing" Fairfax by selling my shares because of insatisfaction? No. Cheers!

After over 60 votes, the mean vote goes to 14% CAGR return over the next 10 years. Cheers!

An article about FFH year end results and conference call from the Globe and Mail: http://business.theglobeandmail.com/servlet/story/RTGAM.20090220.wfairfax0220/BNStory/Business/home

GE, BRK and WFC are all down significantly. I guess that those who would like to buy them are salivating now.

He tries to play with taxpayers money. How can I qualify this behavior? I'll let each one of you do it yourself.

It was an overall stellar year. Hey, we made not only a profit this year, but a huge one! :D Remember, that is 2008!!!!! Regarding underwriting, to me, Fairfax is an ok underwriter. Not a bad one, not a good one. Over the long run, I'm not expecting to have zero cost of float like Markel, Berkshire or W.R. Berkley. I'm expecting 1, 2 or 3 percentage points of cost of float on average. I've dreamed about zero cost with Fairfax in the past, but my expectations were too high and sometimes, I've been disapointed with underwriting. Now I'm expecting these kind of things and that's ok, because we have great investors to invest that float. And hey, if the situation change over time, I'll be pleasantly surprised! 8)

It is anonymous, so don't be affraid to be wrong ;)

Indeed, our portfolio will be more volatile. But I prefer a lumpy 15% than a steady 12% and Hamblin Watsa people are terrific at what they do.

More details about their portfolio changes: http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0000915191&HolderName=FAIRFAX+FINANCIAL+HOLDINGS+LTD%2F+CAN

Do you remember when they said that they had closed their hedge on equities and said that they were finding opportunities accross the world? Well, we're beginning to see that in action! I think that when we'll take a look back at November 20th 2008 in a decade, we'll conclude that it was the start of the seeding in a great soil for FFH that will have made shareholders harvest a decent growth in book value per share for the following years. It's too soon to say, but I'm confident. And furthermore, we now have some great businesses in our portfolio. At the 2007 AGM, I remember that Prem said something about the "great" businesses. He said something like he was open to invest in them, but was waiting for a good price. Well, thanks to his patience and discipline!

I also see some significant additionnal investments in JNJ and DELL.

Thank you very much for the information. A lof of good/great businesses are added at cheap prices! :)

I have nothing against Bill Miller. I like his view, especially in the tech sector. I made some bad investment decisions in my short investment "career" (especially two). These were my decisions and I was wrong. I think the first thing to do is to realize it, and then to do some reverse engineering and realize what went wrong with yourself and then try to learn from it to get better over time. It is human nature to blame outside stuff when something gets wrong. Bird flu, rain, climate, recession, government, institutional imperative (everybody was doing it, so did I)...you name it. I understand it and we're all human. But there is some limits too. Candor is a very good quality to have, because it help us to gain in wisdom.

Thank you very much uncommon for all the very interesting information

That's a small bunch of peanuts for FFH.

so perhaps a killing in underwriting AND investments in the days ahead? Well, I think that FFH could get some decent returns with their investment portfolio in the years ahead, but it's more difficult to me to predict what will happen with underwriting, but I'll cross my fingers. The more damage our competitors have and the less outside capital they'll be able to obtain, the better for us. Cheers!

Ive always stuck to the mantra that I wouldnt buy any of it if I didnt feel comfortable owning all of it. Thats prob why my portfolio is so very very concentrated. Well Smazz, IMO, that's far from being a bad mantra to have! When you ask yourself this question, you naturally end up having far less stocks in your list than otherwise, unless your circle of competence is very wide and deep.

Renaissance Re Holdings (a reinsurer) saw it's book value per common share decline by 5,6% in 2008.

Great question. My answer is to keep the winners and the ones in wich you have the most confidence in, as long that they don't trade over a fair price. To me, tThere is no Fairfax no. 2 out there. Neither Prem of the South ;) That being said, I always stay open minded and very interested to hear new investment ideas, but remind myself that our human nature sometimes tell us that the girl next door is better than the one we already have and to quote Pascal, "All men's miseries derive from not being able to sit in a quiet room alone".

Well, prepare your popcorn and stay tuned for more developments ;)

"Would appreciate some clarification. If one had a cash trading account (as opposed to a margin account), would the assets would be more secure?" Well, I'm not an expert on that field, but based on what I've red so far and the discussions that I've had so far with the representatives of my broker tell me that they can't do the same things with the securities that are not used to secure the margin and the securities that are in a cash account. They are more limited with what they can do with a stock that is not used to secure your margin. But in both cases, the stocks are not in your name. They are registered on the broker's name as a trustee. Let's say you have 1 share of ABC inc. In aggregate, the clients of your broker have 100 shares of ABC inc. So, your broker will have 100 shares registered in his name, but as a trustee, 1 share will belong to you. If your broker goes bankrupt, the 100 shares are on it's balance sheet, but as a trustee. If you have the stock in your own name (paper stock certificate), the situation is different. The trustee link with your broker is broken and the stock is not on it's balance sheet. If he goes bankrupt, you can say "Sorry, but these stocks are in my own name and cannot be used to pay your creditors". And when you say that to them, they all say "Yes, but you have a garantee with the CIPF". Further studies of CIPF assets tell me that they have not built a very solid ark, and the numbers that are available are for 2007. They don't provide anything for the end of 2008. http://www.cipf.ca/c_learn_fund.htm . And these assets and contracts are used to garantee more than 1 trillion of assets (based on a discussion I had with a CIPF's representative). But frankly that's just my own humble assessment of the CIPF situation. I might be totally wrong. Again, I'm not an expert in that field. If anybody would want to add or correct something, please don't hesitate to do it. Your comments, facts and corrections are more than welcomed.

StubbleJumper, That's interesting comments. I had this reflexion about that "too big to fail" scenario in Canada. However: - We have a Conservative party in Canada that don't like to do these kind of bailout things; - Who knows what could happen if it's brokerage division was in trouble? Maybe that in the end every client would get a % percentage of their assets below XXXXXXX$ or something like that and the government would only garantee that. And even then, I don't like to rely on good faith of politicians to keep my arch above water. There is also the option to get your stock certificate and keep them on the brokerage vaults. In that case, as far as I know, the stock fully belong to you and the broker cannot put it in their own assets as a trustee. So if he does stupid things with the assets and liabilities of it's clients, creditors cannot claim your stocks if there is a bankruptcy. I don't know if this is fully accurate. I'm still studying about these safer alternatives to the traditional trustee format.

I'll close my margin account soon enough. I always have maintained a quite low margin to equity ratio, but the volatility is not my concern. My concern are the brokers here in Canada, and especially with margin accounts. First, there is their supposed garantee by the CIPF, but in 2007 they were only 500 millions in assets (they don't provide updated numbers for 2008...) to protect over 1 trillion in assets (based on what one of their employee told me in a phone call 2 weeks ago). When I said that this was not very high, he basicaly told me 2 things: - historical bankruptcy data since the 60's suggest that this is enough - they will first liquidate the brokers first and then use the funds available to provide capital if needed When I asked to see the balance sheets of the main brokers available here in Quebec, no one said yes. When I asked to IIROC to provide me with data, he also said no. Furthermore, when I took a look at my broker agreement for a margin account, what I what they can do with my assets that are used to protect the margin, I didn't like what I red. I may sound overconservative, but I don't like that.