gokou3
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Posts posted by gokou3
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CHTR's 2017 EBITDA was $15.3B and let's say they will do $16B this year (4.6% yoy, vs 5.8% increase for 2017 vs 2016). That's a $700M increase which, with 4.5x leverage, results in another $3B of new debt.
Then, EBITDA - capex - interest - tax ~ $16 - 9 - 3 - 0 = $4B cash generated from operations for buybacks or total $7B. With CHTR at ~$85B market value, that's 8.2%.
My capex number is relatively high due to the MVNO investment which also may pull the EBITDA number down slightly.
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Surprised at the lack of interest in CHTR at a price significantly lower than the price at which Rutledge and Malone just bought back 12% of the company... Or maybe people who are buying it just aren't mentioning it here.
I bought LBRDA one page ago. :)
Hope CHTR can buy back another 8-10% of the shares in 2018.
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There's about a 6% holding discount for LBRDA shares, but you may be right that it may be too small to justify holding LBRDA instead of CHTR directly.
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LBRDA (when CHTR is trading at 10x EV/2017 EBITDA)
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Fairfax India is a Canadian domiciled company for Canadian taxpayers purposes. No different than Royal Bank from an investor - taxpayer perspective. In the future, if FIH starts paying dividends, they will be considered eligible Canadian dividends. FIH can be held within a TFSA or RRSP. No withholding tax on FIH dividends (should they start to pay dividends). No foreign reporting (ie T1135) required either.
I hope this helps.
Thanks, you have answered all the questions that I haven't put in words. :)
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For Canadian shareholders of Fairfax India, I wonder if there is any special tax for this Indian-focused investment vehicle. Is there any difference between holding FIH in a non-RSP vs RSP vs TFSA account? Any withholding taxes? Thanks,
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Need to break down the 7% returns.
Fairfax has averaged 23% / 50% / 27% for Cash/Bond/Stock Allocation between 1986 to 2014 (when I last calculated them).
Assuming a 25% 50% 25% cash bond stock allocation.
If you assume 2% returns for the cash portion, 5% returns for bond portion, to get to 7% investment returns on total portfolio, the stock portfolio has to return 16%.
Even assuming 6% for bond portfolio would require the stocks to deliver 14% annually.
Vinod
Vinod,
Thanks for correcting my calculations. Seems to me it's a tall order to get to 7% return in this kind of market (high stock AND bond valuations).
My earlier post on this should be ignored. I was reading and posting too fast. 7% for the equity portion of the portfolio and 7% for a blended portolio is much different. A 14-16% return for the equity portion isn't plausible.
I need to look more closely at this later today. The numbers below are a little hasty.
It looks to me as though the book value is about $12.5B US. A little under $10B CAD. (most I see are per share; so perhaps I have this total book value incorrect).
If there are $40B in investments, at a 95% combined ratio, why would they need a 7% return to grow book at 15% (about 1.8B USD)?
Anyway, I've gotten myself confused here and need to take a fresh look.
I guess I need help here. Here is the quote from the letter.
"With $40 billion in investments, a current run rate of $11.5 billion in net premiums written and $12.5 billion in
common shareholders’ equity, we need an investment return of approximately 7% in order to achieve an annual
15% increase in book value per share, assuming a consolidated combined ratio of 95% at our insurance operations."
7% return on $40B is $2.8B. $2.8B would much greater than a 15% increase in the book value. It seems to me as though they are subtracting from the $40B in investments to get the 7% number, but I don't understand the steps. Some of the 40B is certainly necessary for claims, but they should keep the investment returns. That being said, they don't have a free hand on the entire 40B given the necessity to be able to pay out claims. Is that what they are taking out, or is there something else?
Thanks in advance for any assistance.
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If he intends to use FCF as the primary source of funding for repurchases, many people on this board will be very disappointed.
He's referenced Singleton and Teledyne before and in the letter. Teledyne issued to acquire for years and then turned the ship and bought back for years. The buyback is a long term thing. They can't put too much to work too fast - the stock isn't liquid enough, unless they do an SIB, but then they'd have to pay a premium - and they've never said they wanted to. Expect the share count to be much lower in 10 years but not necessarily in 10 months.
I vaguely remember there is a restriction by the TSX by how many % of O/S a company can buy back in a year under NCIB, as well as a restriction based on trading volume (i.e. not exceeding X% of daily volume). Is anyone familiar with such rules on TSX?
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Need to break down the 7% returns.
Fairfax has averaged 23% / 50% / 27% for Cash/Bond/Stock Allocation between 1986 to 2014 (when I last calculated them).
Assuming a 25% 50% 25% cash bond stock allocation.
If you assume 2% returns for the cash portion, 5% returns for bond portion, to get to 7% investment returns on total portfolio, the stock portfolio has to return 16%.
Even assuming 6% for bond portfolio would require the stocks to deliver 14% annually.
Vinod
Vinod,
Thanks for correcting my calculations. Seems to me it's a tall order to get to 7% return in this kind of market (high stock AND bond valuations).
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I too liked the expansion of the investment team and the additional responsibilities of the younger members.
PW restated the investment goals and 15% increase in BV target.
'With $40 billion in investments, a current run rate of $11.5B in net premiums written and $12.5B in common shareholders equity, we need an investment return of approximately 7% in order to achieve an annual increase in 15% in BV per share, assuming a consolidated combined ratios of 95%"........."We have drilled deeper and by analysing each of our 21 insurance companies we have estimated the investment return needed for each company in order to achieve our 15% target. We have delegated investment responsibility for each of our insurance companies to one member of our investment team".
Could someone check my math:
95% combined ratio on $11.5B = $575M underwriting profit
7% return on $40B investments = $2800M return
Underwriting + investment return = $3.375B pretax or say $2.36B after-tax assuming 30% tax rate
After-tax ROE = 2.36/12.5 = 18.9% >> 15%?
I think it's difficult to have 95% combined ratio (including catastrophes) over long-term. In fact, page 17 says their combined ratio since inception is 100%. They may have gotten better over the years though. On the other hand, 7% return on a mostly-bond portfolio may not be so easy either in the medium term given rising but still low interest rates.
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Thanks. Sorry for being slow, but just want to ascertain - let's say i am holding BEP.UN (traded on the TSX) and I want to sell it and cash out in USD. I would put a trade to sell BEP on the US market and settle in USD, correct? Supposedly BMO would know that BEP.UN/TSX and BEP/NYSE are equivalent?
Yes, if BEP.UN/TSX and BEP/NYSE have the same CUSIP.
Once you sell BEP on NYSE, you will see a long BEP.UN position in your CAD account and a short BEP position in your USD account. BMO system will cancel them out once the trade settles.
Just thought I would add a disclaimer. I've never used BEP.UN / BEP for a gambit at BMO. In theory, the pair should work if the CUSIPs are the same. In practice, there is a chance you may hit some odd issue in their trading system. Maybe call them to confirm if you already own BEP.UN.
I always gambit stocks that have the same ticker on both exchanges: TD/TD, RY/RY, etc.
Thanks, this makes sense.
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I've used it too and saved $1000s. I suggest that you google it -- there is a blog that has details for each of the brokers.
I think this is the one you were referring to:
https://www.pwlcapital.com/en/Advisor/Toronto/Toronto-Team/White-Papers
The blog used DLR as an example. For BMO in particular, I would have to call in to execute the second half of the trade. I wonder if I could avoid calling if I use a dual-listed security, e.g. Enbridge (ENB)? Buy on TSX and sell on NYSE.. not sure how I can specify the exchange for this trade though - perhaps by specifying the settlement currency?
Yes, you can avoid the call if you use a dual-listed security at BMO. You can do both trades online.
Going from CAD to USD, pick two options when you sell:
Market: US
Settlement currency: US dollars
Thanks. Sorry for being slow, but just want to ascertain - let's say i am holding BEP.UN (traded on the TSX) and I want to sell it and cash out in USD. I would put a trade to sell BEP on the US market and settle in USD, correct? Supposedly BMO would know that BEP.UN/TSX and BEP/NYSE are equivalent?
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I've used it too and saved $1000s. I suggest that you google it -- there is a blog that has details for each of the brokers.
I think this is the one you were referring to:
https://www.pwlcapital.com/en/Advisor/Toronto/Toronto-Team/White-Papers
The blog used DLR as an example. For BMO in particular, I would have to call in to execute the second half of the trade. I wonder if I could avoid calling if I use a dual-listed security, e.g. Enbridge (ENB)? Buy on TSX and sell on NYSE.. not sure how I can specify the exchange for this trade though - perhaps by specifying the settlement currency?
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Results came out on the 15th.
On the 16th, Crip and I both pointed out that there often seems to be a time lag between the time the results come out and share price movement.
Share price has barely moved until today and now pops 4-5%. This happens quite frequently and is almost like having advance knowledge of the results.
I wonder if it is due to the re-opening of the share buyback window after earning release? Trading volume for FFH is low, so even at Q4's buyback pace that represented a few % of daily volume.
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Wondering if anyone knows what are their cost basis for Diagnos and PETROMAROC? If I had to guess, they probably bought high and sold low. Of course, the main worry is that they need the cash due to a liquidity crunch. I think they sold DREAM last year for this reason.
Discl: long DC.B, DC.D
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Here's the source of the XIV prospectus:
If the price of the underlying futures contracts increases by more than 80% in a day, it is extremely likely that the Inverse ETNs will depreciate to an Intraday Indicative Value or Closing Indicative Value equal to or less than 20% of the prior day’s Closing Indicative Value and will be subject to acceleration if we choose to exercise our right to effect an Event Acceleration of the ETNs.So depending on VIIX movement... since it has gone up less than 80% including after-hours today, I think XIV still remains.
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Lol, look at the inverse vol etf's after-hours (XIV, SVXY). Not sure what's going on exactly but it's a massacre. SXVY down 80% now. These funds might bust overnight.
I believe either the XIV or SVXY will go into auto-redemption mode after a 80%+ drop in a day? Does after-market movement count?
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Added to my pipeline stocks ENB and KMI today. I suppose higher interest rates and the trouble in BC has added to the weakness. The big picture is that owning franchise and hard to replace cash flowing assets is probably a good thing.
I bought a bit of ENF.to recently for the higher ACFFO to equity yield and lower 2018 EV/EBITDA vs. ENF. Have you considered ENB vs ENF?
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CBI by far... bought in the $40s and sold near the bottom at $10. So two mistakes made in one stock.
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This stopped working a while back, but has worked again with the nov update.
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Merry Christmas to all! 8)
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And then we have this:
Brookfield Property Partners L.P. Proposes to Acquire GGP Inc. for $23.00 per share in a combination of cash and BPY Units
https://bpy.brookfield.com/en/press-releases/2017/11-13-2017-130048315
Each GGP shareholder can elect to receive consideration per GGP common share of either $23.00 in cash or 0.9656 of a limited partnership unit of BPY (“BPY units”), subject in each case to pro-ration based on a maximum cash consideration of approximately $7.4 billion (50% of the aggregate offer) and a maximum of approximately 309 million BPY units valued at approximately $7.4 billion (50% of the aggregate offer). The proposal represents a premium of 21% to the unaffected closing share price of the Company’s common stock of $19.01 on November 6, 2017.GGP stock trades above the offer price today, indicating that the market expects a higher offer down the road. Brookfield has a history of lowballing its target in its first bid and subsequently put a higher one. Two examples:
Brookfield Property Partners Increases Proposed Offer To Acquire Brookfield Office Properties
https://bpy.brookfield.com/en/press-releases/2013/12-20-2013
...it has increased the offer price in connection with its proposal to acquire any or all of the common shares of Brookfield Office Properties Inc. (NYSE: BPO; TSX: BPO) (“BPO”) that it does not currently own (the “Offer”) by increasing the cash portion of the consideration by $1.00 per common share to $20.34 per common share of BPO.$2.8 Billion Brookfield-Rouse Merger Takes Step Forward
https://commercialobserver.com/2016/06/brookfield-rouse-merger-deal-sealed-at-702-6m/
The company stockholders, excluding the Brookfield affiliates that collectively hold 33.5 percent of the outstanding shares of the company, will receive $18.25 per share in cash.... It was reported in January that Brookfield put in an all-cash bid at $17 a shareHope Simon Property would come in and stir things up a bit. ;)
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Just came cross this...
America’s ‘Retail Apocalypse’ Is Really Just Beginning
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Tourism
What are you buying today?
in General Discussion
Posted
CHTR