gfp

So it seems like the Fed will have to announce an end to Quantitative Tightening today, which will then look a lot like "stealth QE" since it requires them to buy treasury securities to offset MBS paydowns just to stay even. Standing repo facility has gotten some action recently. Bank reserves are below their magic line in the sand of $3T and show signs of tight money here and there. Jobs market is in the dumps and will stay in the dumps for what looks like a decade or more. Rate cuts will keep coming. You have to go out 20 years before you find a "4" on the yield curve... Outside of the AI-industrial-complex there are some pretty desperate Americans out there. I sure am glad I'm not a graduating senior at university right now. Unless I had majored in air conditioners or something sexy like that. I hope Blake Hampton is OK out there - he was studying computer science in Oklahoma and working for the TSA. Its a rough world for entry level CS majors and petroleum investors.

I don't think of deferred tax assets like Fairfax Financial has as "prepaid taxes" that they have already paid and are on deposit with the taxing authority. They usually relate to operating losses, tax credits for foreign taxes paid that will reduce future taxes due, etc... Not prepaid cash taxes

In my limited experience I have seen that statutory accounting (for the regulators) treats all bonds as if they were held to maturity - at amortized cost.

You're not missing anything - it's the exact opposite of Berkshire's primary problem, which is too much money constantly coming in with nowhere to invest it. Fairfax has its minority interest capital allocation opportunities pre-negotiated and laid out in front of it. For those asking about people (like me) who are buying here and how we are thinking about risk.. For me it comes down to how big I want Fairfax to be relative to everything else in my portfolio. I want Fairfax to be bigger than it currently is relative to my other two large positions. When it is going down every day, I have my opportunity to buy shares. They show you a mark to market loss until suddenly they don't

My original question to chatGPT was meant to show me that it didn't matter at all to Berkshire's early share price performance whether US P&C pricing was "soft" or "hard" but ChatGPT didn't do it right and perplexity didn't really get the hard and soft markets right either so it doesn't seem like a valuable exercise. But I'll keep buying Fairfax again today even though the hard market is over and it's time to PANIC! See you at $1570 USD / share!

I tried to assign a task to ChatGPT and it broke the damn thing

Those options expire the day after the earnings announcement so I guess that’s why the premiums were so plump

The NBD news certainly increases Fairfax India's chances of "winning." I can imagine a deal structure that is creative and works but who knows how it works out. I assume if Fairfax India wins IDBI they will move quickly to merge CSB into IDBI with IDBI the surviving "brand." You can bet Fairfax parent and the usual suspects of fair and friendly preferred partners will have to help out

That's a pretty good deal alright

well my 10 at a time sure ain't propping up the price!

Nope

30k share block traded this morning in Toronto.

I'm adding now. You never know how much lower it will go or if it even will. I like the current price so I'm not waiting but I guess I will continue to buy if it keeps falling until I run out of stuff to sell to fund the purchases.

I forgot that I actually asked John Varnell this question. They are taxable in Canada and the reason is probably because they are cash-settled and not settled in the issuer's own shares

I have often wondered if this position was taxable or not. Usually, at least in the USA, transactions in an issuers own shares are not taxable. Shares can be bought, held in treasury, re-sold at a "profit" later, without tax. I don't know if derivatives on an issuers own shares receive similar treatment. I think the derivatives gain/loss would be treated separately and ultimately buying shares from a counterparty would not change the tax treatment of the TRS gain/loss. One example in the United States is Biglari's Lion Fund, which owns hundreds of millions of dollars worth of Biglari Holdings stock. Treated primarily as treasury shares by GAAP, since 91.6% of the Lion Fund is owned by the company. These GAAP "treasury" shares could be sold for more than they were purchased for with no tax on "gains." This also allows the shares to be swapped between partnerships for an inside/outside basis maneuver that allows Lion Fund 2 to indefinitely defer cash taxes due on certain realized capital gains until the partnerships are unwound. It is unusual to have a large non-taxable asset to swap so it is not a common situation. The IRS has stated they would like to crack down on those inside/outside basis swaps between partnerships but Biglari's case is unique enough it will probably squeak by, at least under this administration.

Yup

I’m buying a lot of Fairfax today. Good stuff! Keep it coming

Now that he's finally bested his high water marks he does. 25% after 6% annual hurdle with a high water mark. I bought the stock at a time he had to make a ton of money before he would get an incentive. At this point he is probably above the high water mark on most of the buckets of value. Definitely at Holdings and Lion Fund 1, probably not at LF2.

Yeah, I bought some more FRFHF at the close as well. There was a seller offering plenty into the close. My two largest positions, BH.A and FRFHF, traded at the exact same price (per share) at one point today. It will be interesting to see how they do into the future. I wouldn't buy BH.A here but I would (and did) buy more Fairfax.

Sounds like a back of the envelope description of the leverage on the balance sheet, primarily from float, to me

Aren't they just referring to the 3:1 leverage the quantity of investable float provides vs net worth?

Curious what you mean by this

contrary indicator: my Wife's uncle shows up unexpected yesterday for lunch and all he can talk about is how much he is making in his GLD etf. He busts out the telephone several times to show me how close it was to $4000/oz (it hit the even number after he left). He is not an investment professional. Not even retired from his job at 69 years old. The craziest part of the visit: he was wearing a brand new pair of Hey Dude! shoes that he had just purchased on his vacation...

Thanks for the recommendation - I didn't realize he was on tour currently. Might be able to see them in Richmond VA on the 14th. Heading north for a while today.