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glider3834

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  1. yes agree Viking - I guess patience is key
  2. yes looks like they have a headstart https://www.reuters.com/business/autos-transportation/exclusive-wejo-go-public-deal-values-auto-data-startup-800-mln-sources-2021-05-28/ & Otonomo appears to be a serious competitor as well Otonomo was founded in 2015 and provides a connected-car data marketplace, enabling manufacturers, mobility service providers, and app developers to share and integrate car-generated data to make vehicles safe, smart, and convenient. Today, it has 40 million cars connected and is “the biggest center for automotive data in the world. There’s no other place with so much knowledge about transportation, mobility, and automotive - and we live in a world where data is king.” https://www.calcalistech.com/ctech/articles/0,7340,L-3904451,00.html I couldn't find really much google searching comparing these different platforms & Ivy is still pre-release but it looks like they are coming at this market from different approaches - here is Charles Eagan CTO Blackberry Charlie Erlikh Interesting, got it. And then maybe sticking with IoT, but now going to the IVY product. How does IVY compete against [Autonomo] Continental and any other biggest competitors out there? Charles Eagan So, this is an emerging market. So, I think the market is quite large, and we do expect there to be competition, but there's room for competition. BlackBerry plus AWS brings a pretty unique, right from the electrons firing up in the car up to 150 AWS features running in the cloud. That's a very comprehensive and compelling stack that is very hard to compete with. So we have the experience of getting this technology into the embedded part of the vehicle and we know how to make data secure. So, AWS is driving AI tools and they introduced -- the introduction where AI meets the edge of the car is a great potential area that we're bringing together. So Autonomo and others do part of this, but they rely on data being -- they rely on the data being made available by the OEMs. So where IVY's OS and hardware and cloud agnostic doesn't need to be in AWS cloud, so we think it's a very, very competitive offering. And also, I'll point out, in our typical BlackBerry value, we don't aim to own the data. We present a solution to OEMs that allows them to use the data as they choose in a very secure way. Other players are trying to make a data place. So, we're sort of making sure the data moves securely, but we're not looking at insights into that data directly.
  3. good find petec Fairfax were carrying Exco at $238 mil at 31 Dec-20 based on 44% ownership (see below). So that implies equity value of $540 mil for whole business. Then net debt is 140 mil (1.1x EBITDA at 31 Dec-20). So Enterprise value(EV=equity + net debt) would be around 680mil. Exco generated EBITDA of128mil in 2020. So EV/EBITDA of around 5.3. Since mid 2020 natural gas price has basically doubled (see below) & industry appears to be keeping production tight through fiscal restraint & that combined with increasing natural gas demand should support pricing https://www.texasmonthly.com/news-politics/natural-gas-prices-surging-drillers/ Are Exco fully hedged or if partially hedged/not hedged they would be in a great position to increase EBITDA & so could we expect a higher fair value versus carrying?? I guess we will have to wait & see annual results - not much publicly available info in Exco. (from AR2020) Fairfax owns 44% of Exco, a U.S. oil and gas producer. Despite weak energy prices in 2020, Exco generated $128 million in EBITDA and $36 million in free cash flow. Net debt fell to $145 million (1.1 times EBITDA). Led by 28 Chairman John Wilder and CEO Hal Hickey, Exco achieved these results through high field level productivity and company-wide cost control. In December, Exco recorded its 73rd month without a lost time incident. Exco’s Chairman, John Wilder, is a great partner. We are well served by his leadership.
  4. I think the counterparty who has entered into this TRS with Fairfax would most likely be hedged (eg by owning the underlying shares) - so they would make their money from the floating rate payment (libor + spread) from Fairfax rather than any short sales TRS position is a calculated risk in terms of timing but looks really cheap at around US$372, if Fairfax's book value hits US$600 per share by year end (factoring in Q2 was $545 plus $46 (Digit transaction Q3/Q4 closing) plus Q3/Q4 results) & adjust BV for excess of fair value over book value of their non-insurance subs, effective TRS entry price will likely sit between 50-60% of Fairfax's adjusted y/e book value - so there is very low downside risk, high potential return IMO
  5. Just thinking about Digit valuation purely in terms of P/S (ignoring P/B or combined ratios) - I am going to use GWP to compare with ICICI Lombard Looking at the Digit valuation recently US$3.5 bil (around 7.8x GWP for 2021) versus peer ICICI Lombard market cap around US$10.2 bil (around 5.2 x GWP for 2021) Digit GWP growth for 2021 around 40% versus 9.4% for ICICI If we look out to 31 March 2025, lets assume Digit can continue to compound GWP at average rate of 30% over next 4 years to reach US$1.26 bil Then lets apply a multiple of GWP to estimate valuation - lets say 6.5x (which is lower than recent valuation at 7.8x 2021 GWP) but which is bit higher than ICICI Lombard current level & also factors in slowdown in GWP growth rate (Note: appears Price to GWP multiples in INdia generally are higher & that ties into higher GDP growth rate, higher investment return yields available etc) 6.5 x US$ 1.26 bil = US $8.19bil Now to get to US$1.26 bil in GWP, Digit will need to raise regulatory capital & could go the IPO route or continue to raise funding from VC - either way Fairfax's stake will get diluted but lets assume they dilute from 70% area down to 60% Fairfax's stake then is worth US$4.9 bil or around US$190 per share by 31 Mar-25. So making quite a few assumptions here but lets say Fairfax could generate another US$100 in BVPS growth over next 4 years from Digit or US$25 per year (or US$650 mil) or around 4% BVPS per year. Potentially then Fairfax could hit 4% out of the magic 15% BVPS growth target, just from their Digit investment over the next 4 years. Is that reasonable?? Or maybe they will IPO earlier & hit that valuation earlier - there have been some eye popping valuations in Insurtech listed stocks globally The big risk with India at the moment is that tech valuations pullback at some point - the flip side is that India is attracting more VC capital due to the situation in China - in a way the Country is getting a multiple re-rating.
  6. yes they wouldn't disclose the price viking with negotiation ongoing - I guess we have to put Blackberry in the portfolio context of Fairfax's other stuff they own - if all Fairfax's holdings looked like Blackberry (with more of the valuation being placed on future cash flows from untested business like Ivy) I would be worried , but having Blackberry in there gives Fairfax this business with disruptive potential (Ivy), future Cyber/iOT growth plus potentially decent payoff with patents - if everything comes together over the next 12-24 mths it could work out well.
  7. I agree SJ - BB is not a buy when you do the numbers on it & probably deserves to be reduced at least to a smaller position for Fairfax but maybe they see greater value for reasons which are not in reported numbers (patent deal, Ivy potential, wins in Cyber,iOT) or maybe Fairfax are locked out from selling (due to patent negotiation)
  8. thats an interesting point petec - JC said in CC they have agreed on the price, so assuming this is also discussed at Board level (& I can't see why it wouldn't be) then in that situation Prem would know what it is - the price would probably be material non-public information IMO & regardless of the 'quiet periods' that Blackberry has - if Prem is aware of the price then I think that would prevent Fairfax trading their position until the negotiation done & deal announced.
  9. All good points petec - I just listened to the call too as well Here is interesting background on Ivy & would recommend reading Frost & Sullivan paper as well https://www.autofutures.tv/2021/07/13/why-blackberry-qnx-is-in-the-ivy-league-of-cross-industry-platforms-grant-courville-vp-of-product-strategy/ I agree that Fairfax should hold BB but I see as a higher risk play with a lot of goodwill built in - it also has this asymmetrical risk/reward aspect to it & Fairfax have a habit of liking these sorts of bets (like the GFC CDS short bet that worked & the deflation bet that didn't). Its not a strategic hold they have admitted that on conference calls, Prem tried to sell it in Q1 but couldn't for legal reasons, they obviously have a price target in mind & its not $10-$11. Going back to Ivy & excuse my ramble. If Ivy becomes the dominant digital ecosystem for automotive/smart cities with majority of car manufacturers and car users (eventually as new intelligent connected vehicles are sold) utilising this data platform - - and every time an app is downloaded - like Car iQ (digital wallet) or a battery efficiency management app or service sold (car insurance) or payment made (from car through a bank) using Ivy platform then Blackberry takes a cut each time - you can start to visualise how massive Ivy could become. First mover advantage is important, if Ivy becomes dominant software data platform in connected vehicles/smart cities they will be hard to displace (like Android or iOS) & all the apps will be built on there - they will build a defensible moat & Blackberry could be a very different & more valuable company. At the moment Ivy is still a blank canvas, use case still needs to be developed and proven - early version being released in October. The use case for Ivy will only be realised through the building process & a lot more apps will need to be built - this is really the advantage of teaming up with AWS developer community. I agree petec that if Fairfax sticks around with Blackberry at least for the next 12 mths we will have a lot more visiblity around the potential for the business - of course if they get a great price tomorrow like the Q1 pop then I am sure they will take it - lets see anyway There is another side to Blackberry - now I am a value investor at heart but bear with me Blackberry is a meme stock and it pains me to say but people want to own it for that reason - its a social media stock - meme ETFs are now also a thing. Now I am not suggesting Fairfax should continue to hold it for that reason but lets put our 'trader' hat here - they have to consider that as a 'meme stock' you have the potential for really skewed stock price returns & this higher volatility could potentially play into Fairfax's hands - it almost did in Q1! For example, Blackberry apparently had the highest sentiment rating on WSB today https://swaggystocks.com/dashboard/wallstreetbets/ticker-sentiment & 40 mil shares traded versus 10 mil avg & share price rose over 10% on a pretty small revenue beat IMO. So there is other 'meme stock' aspect to it, now if Blackberry actually can also deliver tangible results (from Ivy,Cyber) then you potentially could get a very skewed return outcome. Will the meme stock craze end - well I thought it would earlier this year - but it hasn't and maybe its because of bigger trends at play - social media/community growth, retail investor growth, prevalence now of free trading etc
  10. just noticed this updated SEC filing from 17 Sep in connection with Fairfax issuing 2031 Notes https://www.sec.gov/Archives/edgar/data/0000915191/000110465921116747/tm2127687-3_f10.htm#tDOTB Factoring in adjustments below, I estimate BVPS at 30 June increases to US$545.51 per share ($14,142 Common equity as adjusted below/25.924 mils shares at 30 June) - I suspect most of this is coming from Eurolife consolidation which is adjusted into this number along with Riverstone Barbados & Brit sales. What looks good are the debt/capital ratios which all showing significant improvement. Net Debt drops by $924mil with Adjusted 30 June figures. (Sale of Brit 375 plus sale of Riverstone of 700 less purchase of Eurolife 142 equals 933 which looks close to this number)
  11. From a reward/risk point of view I think so & Fairfax's shares are cheap on a relative (compared to insurance peers) and absolute basis (vs historical ratios & based on potential BV growth rates IMO) Now the risks are better known (Jun 2020 no guarantee we would have a vaccine that would actually work or how much economic damage covid would do - now we have a lot more visibility around vaccination rates & improving economic conditions.) Reward/value is there as you have indicated BV has grown faster than share price. Also Fairfax have significantly bolstered their cash/capital position with sale of Riverstone insurance - credit line is paid off. Plus have also been some unexpected 'windfalls' (Digit,Stelco,Atlas) that may not have been as visible in June 2020. Look there are risks in play - lower commodity pricing , delta, recent slowing in economic recovery - but offsetting these risks IMO is a pretty decent margin of safety - its frustrating seeing the Fairfax share price really not moving at all despite recent earnings report or Digit revaluation which is pretty material in my view - but I guess its results & Fairfax needs to keep delivering results
  12. I agree Viking - I just hope they can buyback more shares at these levels - being able to extract divs from the subs would help I noticed in the 2020 annual report the maximum dividend paying capacity of insurance subs below is around 1.55 bil (includes non-controlling interests) but we don't have an update of what this level is at 30 June 2021. We have had a strong 1H2021 so that should bolster this number but is offset by divs of 212 that subs have already made to holdco in 1H21. At same time, Holdco cash position is stronger with Brit & Riverstone sales. Anyway I suspect they can increase the pace of share buybacks but we will have to wait & see. Could they also consider reducing the pace of premium growth to free up capital from insur subs & dividend back to the holdco to buyback shares. Plus also have a large total return swap whose value potentially will be increased by share buybacks & that will further increase BVPS.
  13. Atlas closed $16.28 a share - assuming 122 mil shares (excluding Riverstone Europe 9 mil shares) - looks to be close to a $2 bil position now for Fairfax
  14. https://www.theinsurer.com/fairfax-celebrates-odysseys-landmark-25th-anniversary/16231.article
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