Crip1

It would also be interesting to see whether the correlation and subsequent disconnect impacted other "peer" companies such as Markel. Cinc Financial, etc to determine whether this was a macro thing or specific to FFH. -Crip

You beat me to it.

Did anyone else have the conviction, and the dry powder, to add sub US$12 yesterday? I added 25% to my position. -Crip

Before I say anything it's gotten to epidemic proportions the level with which people hide behind a computer keyboard and harshly criticize just about anyone. I refrain from doing that just because I find it so distasteful. That said, I saw this on Seeking Alpha and was pretty surprised somebody took the time to write about a subject on which they have extraordinarily limited insight. Beyond that, the author could have I really did make his point about a third of the way through article. The rest of it was simply rehashing what he'd already said. It's not right to impune this individual's character or mock their intelligence or knowledge. But this person ventured a little too far outside their circle of confidence. - Crip

We can only speculate and, honestly, I am not as concerned about that as I am about the fact that the investor who knows FFI inside and out, arguably better than anyone, determined that $12/share was an attractive price. It could be argued that the same investor felt that FFI was more undervalued than FFH. -Crip

While bemusedly shaking my head, I bumped up my position by 50% just now. I simply can't believe that the market price will stay this disconnected from the BV forever. Furthermore, BIAL really has to be a tailwind here...the combination is too good to pass up such that I am considering adding more. -Crip

Seeking Alpha may not have proofread the headline terribly well: FRFHF: Fairfax Financial GAAP EPS of $122.25 beats by $1.78, revenue of $26.47M misses by $25.22B I mean, nice earnings number but it's kind of a miss to fall $25.22B short on revenue. -Crip

Inverting the question. The items above represent mainly good news but I think the market is focused more on bad news for Fairfax (Additional reserving, impairment charges, unexpected insurance losses, etc). To the extent bad news can be eliminated or minimized the closer to intrinsic value the market will value Fairfax without the current discount. -Crip

I was thinking along similar lines that there is a risk-reward analysis at play. Is it worth some additional yield in the short term with to open one’s self up to capital loss in the intermediate-long term? If the difference is 300 basis points per year, maybe. But if the difference is 50 bps per year the reward is substantively less attractive. -Crip

Personally, I’ve given up trying to predict how the market will look at the earnings. Markel had a great quarter, beating all estimates handily yet is down 2-3% from where it ended pre-earnings-announcement. I really don’t disagree with anything you said about Fairfax as it is still my largest holding despite my tendering some of my shares to the Dutch Auction, but it’s hard to handicap the level with which this is asymmetrical when the market is so irrational. -Crip

The advantage of FFH's low duration is not going to show much in this earnings cycle. The 10-year treasury, for example, did not move terribly much in Q4 of 2021 compared to 2022 YTD. There will be an element of “Only when the tide goes out do you discover who's been swimming naked" when the Q1 2022 earnings are released. My curiosity with the Q4 2021 earnings release will be to see to what level, if any, FFH moved into longer duration bonds. -Crip

Guessing that part of the decline today is due to Wednesday being the ex-Divvy date. So far the strategy of tendering shares hoping to buy back 10-20% lower like folks did with FFI was not looking too good, but a few more days like to day and that's going to start looking better. -Crip

No opinion on what’s driving the recent runup, and I honestly don’t care. The factors of short term movements are more a matter of speculation and/or Mr. Market’s mood swings. Longer term, market price and book value are converging (though not in a straight line) such that, eventually, the price is going to get to or beyond BV. The questions are…what will BV be when this happens and when will it happen? It may be six months down the road and US$645, or three years down the road at $825. The fewer errors that are made (ill-advised company purchase, big investment decision gone bad, etc.) the sooner it will happen and the higher the BV once it gets there. So, the past month or so have been nice, but it’s noise. Just want to see FFH keep executing and avoid unforced errors. -Crip

I think the catalyst would be performance. If FIH can return 10% on the $20 Book Value, that would be in excess of $4 over two years. $4 on the $12 current price is roughly a 15% annualized return on purchase price. Returning anything more than 10% would amplify the 15%. That’s gonna get the attention of the market. -Crip

Well, the $64,000 question is whether or not any folks who tendered, and I tendered roughly 25% of my position, are going to be able to buy back in the US$450 range. The other question for those who tendered and will have more cash available is whether it be better to plow that cash into Fairfax India? -Crip

Yes, from Schwab. -Crip

I can't speak for everyone, but from my perspective the desire to not own RFP is summarized by the Buffett quote of "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price". The info you shared suggests that management is doing an admirable job with the company, but the fact that it's a commodity business is the reason why I would love to see FFH reduce/eliminate their stake. -Crip

I seem to remember that. -Crip

This may be reinsurance-specific as Markel's Reinsurance combined in Q3 was 112% and is 108% for the 9 months. Fairfax' results compare favorably at 109.5% and 101.3% respectively. Though certainly possible, I am disinclined to think Odyssey Re has lost their expertice. -Crip

This is coming from someone who "Drank the hedging Kool-Aid" several years ago. You are 100% right, SJ. Even if the market moved sideways it was a flawed idea. My bad for not seeing it at the time and you are right, it was pure speculation. -Crip

I just finished looking at Markel's earnings which were released today. Their insurance including specialty showed underwriting profitability and roughly 20% growth year over year compared to their reinsurance which showed a 112% combined ratio for Q3 2021. Seems like a lesson in "stick to your knitting" -Crip

Much Ado About Nothing (IMHO) But considering that FFH is up about 2.5% today where the market averages are up roughly half that much compels me to think that the market looks at any distancing from BBY is a positive for Fairfax. -Crip

Yup, more or less.

"“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” As long as they keep continuing to execute, shares will trade closer to or at a premium of an ascending Book Value. Always happier to see the business doing better than the share price as opposed to the opposite. -Crip

Duly noted. Thanks for the knowledge. -Crip P. S. I'd still love to jettison RFP now, and would have loved to do so more in Q1