Crip1
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Posts posted by Crip1
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I am considering subscribing to Seeking Alpha and would appreciate the thoughts from other board members on the relative merits of the service (or various subscription levels). There seems to be no limit to "stuff" on the site to be sure, but I can't gauge the usefulness of said "stuff". Thanks much.
-Crip
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1 hour ago, Luca said:
Why is Fairfax so much preferred over Markel here?
Feel like Markel offers similiar attributes with even Buffett buying the stock lately...
I own Markel too and wondered why i should buy Fairfax if i can buy BRK or Markel as a smaller top notch insurer.
I own all three, and each of them are in my top-5 holdings. FFH is selling at a much deeper discount to BV than the other two which makes it a more compelling buy, all things being equal. In reality, though, is that all things are not equal with the following being among the inequalities.
• FFH has historically more big-bets compared to MKL/BRK such as MBS shorts in the aughts and equity hedges a decade later. Markets prefer consistency.
• The communication from FFH, IMHO, is not on par with MKL/FFH. Prem tends to be a cheerleader for his company as opposed to Buffett who willingly acknowledges his mistakes and downplays his accomplishments. Markets like candor and generally don’t like cheerleading.
• FFH’s longevity of disciplined and profitable underwriting is not on par with the other two. Markets like demonstratable performance.It comes down to this…if you believe that FFH’s future business performance (underwriting and capital allocation) is going to be close to the last 5 years as opposed to the preceding 15 or so (excluding the MBS bet) then FFH is the better investment, especially considering that BRK has gotten so enormous that market outperformance is very difficult.
FWIW, I currently have a larger position in FFH than the other two.
-Crip
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3 hours ago, Viking said:
@glider3834 GREAT NEWS! Let the speculation begin as to what they are going to do with the proceeds!
1.) another dutch auction at YE for Fairfax shares2.) re-invest into insurance/re-insurance subs to grow in hard market
3.) buy out minority partners (Allied)
4.) invest in equities
5.) all of the above (so no big dutch auction, just NCIB for share repurchases
6.) none of the above… what else?
1) This is a great time to reduce share count, but I'm not positive this is the best way to do it.
2) My understanding is the subs have sufficient capital to write their business and then some, so I don't think this is even necessary right now.
3) I like this as well, the return on this in terms of eliminating the interest payments is solid, additional earnings are then gravy.
4) Better now than 8 months ago, but I like other options more.
5) The general mood of the market, the past week notwithstanding, is still negative. They should be able to snap up some shares below UD$500.
-Crip
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5 hours ago, Viking said:
"..the sell off in Fairfax India share price is looking overdone."
Many others, myself included, have been saying this for a while. It was overdone when it fell from US14 and change down to $11-$12, and it's not stopped. I don't disagree with anything you've said but there are times when I do start to wonder if the market sees something that I don't.
As far as what to do with the proceeds from selling IIFL Wealth, unless there is a screaming bargain out there, I'd love to see another Dutch Auction.-Crip
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Ummm...up 10% today on seemingly normal volume with no news that I can see. What did I miss?
-Crip
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14 hours ago, TwoCitiesCapital said:
Fingers are crossed. Back in June the 10-year was @ 3.5ish. Now it's 3.65ish. not much change for the 1.50% in hikes that occurred in the interim (with obvious fluctuations both higher/lower during that time).
We might be close to seeing the highs on the long-end at least if the last 3 months is any guide so hopefully they take the cue and start locking this in for the pivot that the market expects in 2023.
I'd be happy with cash put to work with 2-year treasuries...don't see the benefit of pushing durations out appreciably longer at this point.
-Crip
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On 9/3/2022 at 1:30 PM, petec said:
Pleasure. I will recant one part though which is the commoditisation of tech where service doesn't matter. Actually, very few companies can afford the kind of automated ordering MacDonald's has. I am not sure the QR code ordering at table actually works - nobody who goes to a full service prefers it to talking to a human, in my experience.
So yes, tech is yet another way for the big fast food chains to lower costs vs. their competition.
This observation is less to do with the restaurant industry and more to do with virtually all industries. Technology is often sold as a way to cut costs or improve profitability. In reality, it's a matter of survival, really. Everyone eventually adopts new technologies (Word Perfect, Desktop Publishing, Robotics, etc). Those who don't fail, it's as simple as that. Accordingly, I'd not project this to have a major impact on profitability. What is forseeable is that if bringing this into the restaurant environment is not done correctly, it will have a deleterious impact on the company as a whole.
-Crip
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18 hours ago, Viking said:
@Cigarbutt thanks for posting in detail on this important topic. Could your concerns (developing losses on longer tail lines) be a key driver of the current hard market (especially when combined with falling interest income due to low bond yields)? My understanding is the hard market began in 2H 2019 - if true, that means we have just finished year three. And everything i am reading suggests the hard market will continue to run well into 2023. My guess is 4 years of hard market price increases should be able to provide a fair bit of cover for mistakes made in past years. But i will readily admit i do not understand this aspect of P&C insurance very well.
————-This topic has been discussed on past WRBerkley conference calls. The question is usually something like “given hard market has been running a couple of years already, why are we not seeing larger numbers for prior year positive development?” WRB answer: “we are being conservative”. My interpretation: “it is coming, just not yet”
I am not professing to be an expert on this matter, but the inflationary environment has to be a big unknown. This would drive, presumably, more conservative reserving.
-Crip
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1 hour ago, Viking said:
1.) Fairfax India dutch auction once IIFL Wealth deal closes. This will continue the trend of Fairfax increasing its ownership stake in Fairfax India.
With FFI having traded around US$11/share for the past several months, and not having been above US$13 since November of 2021, one can see a Dutch Auction at, say, US$14-$15. Shareholders get a quick 27-36% pop at a cost of $150M to take out 10% of the shares outstanding.
-Crip
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This is not intended to start an argument, rather, it's intended to better understand. A few folks have indicated that the offer for ATCO was low and, accordingly, unfair to minority shareholders. The question then is "What should have Fairfax done had they wanted to purchase ATCO? Offer $15? $16? $20? Obviously, Fairfax owes it to their shareholders to acquire businesses at the most attractive price possible so if indeed the offer is a low-ball, that's what they really should be doing for their shareholder base, IMHO. Thoughts related to this are welcome.
-Crip
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9 minutes ago, matthew2129 said:
Would have liked to see them nibble on long term bonds and extend the duration of the portfolio during the q2 spike in rates, but oh well, guess you can't teach an old dog new tricks
I respectfully disagree...love the 2-Year bond purchase from a risk-reward perspective.
-Crip
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15 minutes ago, Parsad said:
Well, I was a bit optimistic! Great 20%+ growth in insurance, they put about $10B into 1-2 year short-term bonds, and interest income and insurance profits have grown dramatically. Huge losses in equities and some bond losses...greater than I expected. Book value dropped to $588! Doesn't look like they bought any shares back in the quarter.
If Fairfax's portfolio got hit that bad and they were positioned better than anyone else, this is going to be one shitty quarter for many insurers. Probably a buying opportunity in the insurance sector if prices fall as the insurance business is doing well and these are temporary portfolio losses for many insurers. Cheers!
I didn't even attempt to put a number on the MTM losses on the equity portfolio, but we all knew it would be bad and it certainly was. Worth noting that half of Q2's loss S&P loss and 2/3rds of BB's Q2 loss have come back in the first month of Q3.
This may have been my favorite part: Given the low duration of the bond portfolio if the investments are held to maturity a significant portion of the net unrealized losses recorded in the first six months of 2022 of $965 million will be reversed in the next 12 to 18 months. Interest and dividend income increased from a run rate of approximately $530 million annually at the end of 2021 to a current normalized rate of approximately $950 million annually. -
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41 minutes ago, Xerxes said:
that wouldn’t be Fair & Friendly, now would it ?The difference is that this was an investment, not an acquisition. It is a fair question to ask if it makes sense to sell a holding at $35/share, why did it not make sense to sell a year ago at $50+/Share.
FFH is my #2 holding but I have to admit one of the things I don’t like about it is, when questions like this are asked, the answers are more song-and-dance as opposed to “Yeah, we screwed up”. I respect the latter far more than the former.
-Crip
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17 hours ago, Parsad said:
With the rupee where it is, I would hope that FFH and FIH are injecting more capital into India and looking at more businesses to acquire. Cheers!
https://finance.yahoo.com/news/india-rupee-drops-another-record-035250125.html
Full disclosure that international currencies is not in my circle of competence.
It’s understood how the INR’s devaluation has impacted FFHI, but how would the investor know whether that devaluation is temporary or more permanent?
-Crip
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58 minutes ago, lessthaniv said:
Bought into ATCO yesterday. Attractive against the backdrop of FCF that it could spin in a few years.
1 hour ago, Daphne said:I am eyeing Atco at these levels recognizing it may take a year or so for it to take off.
And you're getting nearly a 5% yield to wait.
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21 hours ago, Daphne said:
Can’t stop smiling today. Sold my 8$ BB when it hit $31 and bought in RFP at 11$. Life is good.
Wonderful.
Me, I'm sitting on ATCO with an average cost of $13.27 (trading at $10.42) and FFI with an average cost of $12.12 (trading at $11.00). I have a full position in both but I may try to average down some on the ATCO. I still believe both investments are good, but just wish I'd have been able to get in at better levels.
-Crip
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5 hours ago, Spekulatius said:
I think investors regard FIH as a high cost / poorly performing and externally controlled CEF. Those ought to trade at a large discount to NAV.
Don't shoot the messenger. I think FIH might be a trade at times, but as a long term investment, I think it's a lost cause.
As far as being a lost cause, you very well may be right. One has to acknowledge that.
The question for holders (and I am a holder) is whether the market is right about the long-term prospects or if the holder is right. The increase in BV for FFHI over the past 7 years has not been great but it’s been reasonably acceptable, which compels me to think that market has it wrong. But, one has to acknowledge that the market may be right.
If one does believe that the market is right, then there’s the exit strategy. If it was not sellable at US$12.50 then it really should not be sellable at US$10.97. This is akin to someone accepting an offer of $450K on their house that when they rejected an offer of over $500K a few months ago.
Personally, I have a lot in this position so if/when it moves higher I will look to lighten my position and redeploy where things look better. And when I do, as one with the Sadim* touch for selling stocks, I’ll be sure to let this board know as my selling has more often than not been a good entry point.
-Crip
* Midas spelled backwards
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3 hours ago, rohitc99 said:
This may not be a popular view in the west, the question to ask - why should india support ukraine/europe ?
Ukraine has voted against india in most international forums. Europe/US have not been any better in the last 70+ years. Now that they need support from India for whatever reason, they talk of moral reasons etc.
India is acting in its own interests as have US and Europe in the past. Russia has supported India when US was supporting Pakistan. So there is reason India should not leverage the situation to its own benefit
The caveat to the commentary below is that geopolitical politics is not in my circle of competence, so take it for what it’s worth.
I’m not stating that India should support Ukraine, but I think it’s important to not explicitly or implicitly condone invading a sovereign state if for no other reason that it’s trend-setting (and don’t underestimate that). Much of the citizenry in North America is bellyaching about energy pricing, some of which can be attributed to the invasion of Ukraine, and that definitely has a negative impact on all of us in terms of inflation. That, however, is not nearly as concerning as:- The loss of life and liberties for thousands, if not tens of thousands, of innocent people. Everyone should be outraged over this.
- The impact on hundreds of millions of people who depend on food and fertilizer from Ukraine and from Russia. The crisis that may be caused by this is, honestly, unconscionable.
The west can only do so much in terms of dissuading Russia from their actions. Sanctions may be putting pressure on the Kremlin, but the entities who are best able to dissuade Russia are China and India since both are chief trading partners for Russia. It’s more to do with humanitarian concerns and world economics than “supporting” Ukraine/Europe/The West.
-Crip
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10 hours ago, Viking said:
I have been trying to better understand India’s posture on the war in Ukraine. The speaker in the video below succinctly explains one of the key factors driving India’s response: security. Go to the 35:40 mark of video (discussion of India starts at 32:30 mark). China is India’s primary external threat. India’s security/military is built around managing the Chinese threat. And pretty much all of India’s military equipment is supplied by Russia - including munitions and spare parts. (Vietnam is in the exact same situation). And it would be massively expensive for India to pivot away from Russia (the speaker said it would not be like a consumer pivoting from Apple to Android when deciding to switch smartphone platforms
which got a good laugh from the audience).
—————Viking’s additional comments: There are also significant economic benefits to India of supporting Russia: cheap oil, cheap fertilizer and first in line for grain shipments. All important for a country looking to raise much of its population out of poverty. And also wanting to avoid an all too possible political crisis (driven by high energy prices and lack of food).
—————
My father, God rest his soul, gave more than a few pearls of wisdom over the years, one of which being "Wars are fought for economic reasons, yet wars screw up everyone's economy".
-Crip
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So, what do you do Mr, Watsa, assuming things once this deal closes as they are now, buyback Fairfax at C$650/US$500 or buy more ATCO at US$11.50 (and enjoy a 4.5% divvy yield)?
-Crip
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3 hours ago, MMM20 said:
Thanks for the update. With the ongoing hard market, good-enough investment performance, and still conservative fixed income side, the stock seems cheaper now than at $360 1.5 years ago - I just wonder when we'll see them play more offense. Will they add a whole lot more capital to the mortgage side given that rates have essentially doubled? Also just hope they don't cut the flowers to water the weeds with respect to the potential digit ipo and other things.
Digit IPO: The timing on this is interesting to say the least. If Fairfax owns a big chunk of a company whose value is increasing at a rapid rate and assuming Digit does not need capital that Fairfax would be able to inject, why would Fairfax want to dilute their ownership? Reinvesting monies in a more favorable investment (including a stock buyback)? The IPO would, due to some speculative frenzy, bring in more than Digit is actually worth? Fairfax needs the proceeds to supplement urgent needs of the parent company. Right now, I not seeing any of those scenarios playing out.
The greedy side of me would love to see it since, assuming that it would IPO for anything close to what’s been speculated upon, that we’d see a nice bump in the stock price, but I am not sure that’s the best thing for FFH shareholders.
-Crip
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Invert, always invert.
I’m trying to kill this company as an investment and am having a tough time doing so. So far, here’s what can kill it:
• Substantively higher inflation in India compared to the US causing currency devaluation.
• Political change. Modi will not be in charge forever and a less business-friendly regime can either limit the progress towards a more capitalistic society or reverse it. Capitalism was on the rise in Russia a couple of decades ago and, well, we know how that worked out.
• Execution risk. So far the batting average looks solid, but the market has a way of humbling everyone.
Those are my biggies. Any others?-Crip
Fairfax India new issue
in Fairfax Financial
Posted
Based on FFI's share price today. I'd personally appreciate a heads up on your next move.
-Crip