gfp

Carson Block question!

Q&A now Odyssey re quota share non-renewal question - $340m unearned premium returned to client - residential property quota share (was 2 year deal, didn't see the profits there). Odyssey non-renewed it and returned the unearned premium. Brit pullback on D&O, Cyber and Cat risk question where do you see best opportunities, where do you see other areas where you want to be cautious Pricing on reinsurance, mostly still seeing double digit price increases on the property side. Insurance - mid-single digit price increases. D&O and cyber price growth slowing and actually reducing

Jen Allen is now going through the allegations in the report by grouping them into 4 categories. Started with Digit valuation and now going through valuations of associates like Recipe.

The call is still in the prepared remarks, just wrapping them up now. Jen Allen speaking

It's back now

To be fair, hadn't they sold the new bonds in Q4 but had not yet fully repaid the old bonds they were essentially refinancing? They just announced the March 15 redemption yesterday. The 2024 notes weren't redeemed until January 29th 2024. But Fairfax had already raised $400m of the later-expanded 6% offering in December.

Year end results press release: https://www.fairfaxindia.ca/wp-content/uploads/02_February_15_2024-PRFIH-2023_Q4_Press_Release_Final.pdf surprising: " During the fourth quarter of 2023 and the first quarter of 2024 the company entered into agreements to sell its equity interest in NSE for gross proceeds of approximately $189 million (15.7 billion Indian rupees). The original cost of the company's investment in NSE was $26.8 million. On January 29, 2024 the company completed one of the sales and received gross proceeds of $132.3 million (11.0 billion Indian rupees). The remaining sales are subject to customary closing conditions and are expected to be completed in the first quarter of 2024."

"We have increased our annual interest and dividend income run-rate to approximately $2.0 billion and we anticipate it will remain at this level for approximately the next four years." " At December 31, 2023 there were 23,003,248 common shares effectively outstanding"

https://www.globenewswire.com/news-release/2024/02/15/2830440/0/en/Fairfax-Financial-Holdings-Limited-Financial-Results-for-the-Year-Ended-December-31-2023.html https://www.fairfax.ca/wp-content/uploads/02_February_15_2024-PRFFH-2023_Q4_Press_Release_Final.pdf

That's not a great hedge unless your equity exposure is TSLA stock. Keep it simple, no need to get cute.

It could be a weekend at bernie's situation for all I know, but it has been a positive for his investment performance.

I'm pretty impressed with Guy Spier lately. He basically hasn't made a trade (that is reportable in a 13F at least) since Q2 2021. https://www.dataroma.com/m/m_activity.php?m=aq&typ=a https://www.dataroma.com/m/holdings.php?m=aq

It is Dazel who thinks Warren Buffett is secretly adding to Citi despite Citi showing up in the 13F quarter after quarter.

LOL

Yeah, that's nothing. These law firms do this for every stock decline that makes the news.

Fairfax's year end 13-F was released - https://www.dataroma.com/m/holdings.php?m=FFH

It doesn't matter what the Fed "wants." They have a mandate for "price stability" and maximum employment and they have recently followed other global central banks into spelling out an arbitrary 2% target. They were not the first to put out a target rate of inflation - 2% is a common target. 2% is their buffer to avoid deflation when inflation fluctuates above and below the target. 2% inflation over long periods of time is as sound of money as we can hope for with our elastic money. As you said, a debt-based system needs some positive inflation to avoid risking the collateral death spiral of deflation.

They would have to be methodical about it. If they tried to unwind the balance sheet in an aggressive all-at-once move it would be messy. If they just plugged away and actually brought it down and kept it down it wouldn't necessarily result in higher rates. Long term interest rates are set by the market primarily on long term expectations for inflation and economic growth and demand for safety and liquidity over other assets. Supply isn't an important a factor as many people think. "supply" of new bonds is pre-funded by the deficit spending that preceded it / "caused" it. Government bonds are money and the Fed swapping one government liability (bonds) for another (bank reserves) isn't a big deal for the economy. The bond is actually more useful out in the private sector than the bank reserve is. And in the old days it used to have a higher yield than the bank reserve. I can pledge a government bond as collateral and multiply it, transform it into virtually anything. A bank reserve is trapped and somewhat sterile. Certainly can't invest a bank reserve into stocks.

Sure, wrong-way macro guys are complaining as well. But if I'm on year 4 or 5 of a 5 year commercial loan at 4.5% and it's about to reset at 8+% with banks willing to do 55% loan to value - I'm watching that short term rate and interested in the timing and magnitude. And the banker is too.

You really think it's investors in Big Tech that are complaining? I'm thinking it is commercial property owners and their lenders that are obsessing over the dot plots.

I'm not sure what the difference would be between a bull market and asset price inflation, but I wouldn't read to much into any correlation with the Fed balance sheet and the S&P 500. QE doesn't create "real economy" money that can be invested in stocks. Excess bank reserves don't do much at all since US bank lending is not constrained by bank reserves. I believe QE does basically nothing, but it is possible that the way the US did it, there was a tightening of MBS spreads that goosed the refinance boom a little bit more on the margin that what would have occurred with slightly wider spreads.

Well he can buy Nintendo any time he wants and it won’t show up on a 13-F.

There is no scuttlebutt on what it could be except that it almost certainly falls into the category "Banks, insurance and finance" on Berkshire's filings. We couldn't figure out what it was by looking at the NAIC filings because it was hidden within the Harney Investment Trust.

Good point - that sounds right to me, given I expect higher reported book value growth in q4.

Hard for me to estimate but I would expect a pretty decent mark to market gain on the bond book for the quarter.