glider3834

Looks like Fairfax had realised loss of $52 mil on Torstar (from 2021 AR) so there would have been a tax benefit - potentially one motivation - in addition to cash offer for their shares but agree that definitely would have been better if they could have somehow partnered with NordStar rather than selling to them. I doubt Fairfax could have predicted that VerticalScope would generate an IPO return of 3x the sale price for Torstar - the IPO market was dead in May-20 & we were in the middle of covid - whereas now IPO market is extremely strong. Torstar aside, I am definitely sitting on the bullish side of the fence when it comes to Fairfax over the next 12 mths - hard insurance market continuing to drive UWP - Riverstone Barbados sale on closing further strengthening their capital position - unrealised gains on equity portfolio returns continuing in Q2 2021 (eg RFP, BB, STLC) - interest income potential tailwind from higher interest rates if not in 2021 then potentially early/late 2022 - further potential IPO/monetisations of investees over 2021 - increasing their ownership of Digit from 49% to 74% & Digit position appears to be carried conservatively compared to recent Jan funding round. - non-insurance sub operating businesses should continue to post improved performance - Fairfax India stake is undervalued (well below BV) & Fairfax INdia recently announced tender offer/buyback will further increase FFH ownership - Fairfax's warrants in both BB & ATCO carried off their books - could be potentially monetised

totally agree with you that there needs to be an investment case for adding any holding like GOOG and they would have done a deep dive on this one - it became a top 10 holding in their 13F over last 12 mths - my impression from Prem's annual letters was they recognise these large tech platform businesses are great businesses but they are too expensive at the moment. I am not smart enough to call the top with Stelco or RFP but as a shareholder obviously I would like to see Fairfax really max out on these investments - will leave to smarter heads than myself to make the call on this one but timing will be critical!

they are not shorting anymore - so going forward this is a non-issue Sale of Riverstone Barbados (still pending approval) will further strengthen their capital position & they are focused on this. Agree that Fairfax needs exit strategies for some of these more cyclical businesses that are enjoying potentially cyclical peak pricing like Resolute Forest Products or Stelco or which are enjoying WSB reddit popularity like Blackberry, this will be important to how well Fairfax performs this year. Over time I would like to see more secular growth Alphabet Inc (GOOG) type investments in their equity portfolio (large tech platforms high returns on capital & highly cash generative) at the right price of course!

Am I correct in saying that around 5.7 million shares of RFP were included in the investment portfolio with the Riverstone Barbados sale? - 30.5 million RFP shares reported on FFH's 13F as at 31 Dec-20. - 24.8 million RFP shares reported in FFH 's 2020 Annual report, as Riverstone Barbados is equity accounted for so its investment portfolio (including RFP I gather) is no longer consolidated It appears Fairfax have entered into an agreement to purchase certain Riverstone Barbados investments from CVC at a fixed price of $1.2 billion before the end of 2022 and this is based on the 31 Dec;19 prices for these investments (RFP price at 31 Dec-19 was $4.10 versus $16.87 on28 May-21) . Prem said Fairfax has the 'opportunity' to purchase these investments, so it sounds more like a call option arrangement but not sure. It would be great to get more clarity on this - what investments are included in this $1.2 billion amount (would that include these RFP shares)? is it a 'call option' or are they required to purchase?

I actually bought a galazy s4 recently , its got a nice big screen & I can read reports on the bus on the way to work! ;)

also I am looking for a partner to start an investment partnership in Sydney - check out Employment Advertisement section! ;)

I have always maintained a concentrated portfolio with AIG making up nearly 20% of my current portfolio and I currently am holding less than 15 stocks across 3 portfolios I manage 3 portfolios including personal account. I have always used a concentrated value approach. Two big winners this year included two I wrote about on gurufocus Delhaize Group DEG ADR (I recommended DEG ADR on gurufocus last year at around $36) – sold my position out at $67.50 (average cost $33) ING Group ING ADR (I recommended ING Group ADR on gurufocus last year at $5.96) – haven’t sold my position , current price $11.35 (average cost between mid$6 to $8 across 3 portfolios) Other big winners for me in the last 12 months have included AIG,C,BAC,MBIA Worst investment – (RWM) Short Russell 2000 ETF – hedging losses substantially affected my overall returns & JC Penney (JCP)(I recommended on gurufocus at around $20 MEA CULPA!)

great idea, there are some smart investors on this board & I will be interested to see how the preferences look once we have had a good number of votes cast. Cash & AIG were my two favs. ;)

It impossible to make market predictions but on the question - are there fewer opportunities to buy now than in the last 3 years? The answer has to definitely be yes. And that should make all of us cautious.

I don't agree with the Value investment institute's article's critique on BB's investment in AIG (I own shares in AIG for full disclosure) AIG's leverage ratio is 5:1 and not 10:1 as stated in the article - refer to Q3 2012 consolidated balance sheet. Insurance company liabilities are estimates but I disagree there are always an "unknown quantity" - I would recommend anyone studying an insurance company estimate spends time on their loss tables to see movements in reserves & redundancies to gauge the quality of the liability provisions. It is impossible to make a prediction that is 100% correct of what the insurer's actual liabilities will be year to year but when an insurance company is conservatively run and managed you can generally make a close enough forecast. Investing is after all taking a calculated risk based on the known facts at the time. AIG trades for $31 & its book value including OCI is around $68. So it is very cheap on this measure. Book value is a very appropriate measure to value in insurance companies because their assets generally consist of corporate & government bonds, equities and cash - assets which are generally liquid and can be fairly valued. Ditto on the liability side, everyone needs to do their homework - I think Bruce Berkowitz has done his. Berkowitz is right in saying AIG's books have been scoured over by numerous regulators, auditors and ratings agencies since the CDS blow up during the GFC. AIG is a very undervalued stock at the moment.

http://www.theglobeandmail.com/report-on-business/rob-magazine/top-1000/big-insurance-worries-about-the-future/article4267962/ Good article & highlights the "fall out" from central bankers as they pursue zero interest rate interest policies in most developed nations globally.

cool, i'm checking in 20th April & will give you a call pre dinner

thanks oec, I booked Intercontinental toronto yorkville on hotwire - its bit further away but I can do a cab & it was 126 per night which is a reasonable deal- hotel looks nice & is 4 stars - thanks for the tip on the Airport express too

thanks for the recommendations!

Can anyone recommend a good hotel in Toronto that is clean convenient and reasonably priced and wireless connection as well thanks!

ABC funds wrote - "In today’s market, we are looking for greater liquidity, something E-L Financial lacks. Because we are seeing more attractively valued opportunities with greater liquidity elsewhere, we divested our position." for smaller private investors rather than funds , liquidity- while a factor- is less of an issue - ultimately if a company is undervalued as ELF - the shares will eventually tend towards its fair value

hi all, Thanks for all the great posts on ELF . I think its a good value at current prices. Here is my take on the earnings power of ELF . They have $1 bil in equities at the corporate level and 1 billion thru their insurance subs - making around $2 bil Assuming they can average over time 7% capital appreciation annually that would equal around $140 mil If you change that 10%, 20% etc you can get all kinds of great potential scenarios but I'm being conservative. Empire Life has earnings power of around 63 mil . Lets assume Dominion can break even & Corporate does 32 mil net (including equity investees). I've worked these figures from the last few years of financials. So that would put the net operating income at around 90-100 mil If we see a genuine hard market as ELF are predicting then the results for Dominion could improve substantially back to where they were some years back (ie from break even to 50 to 100 mil plus). Alternatively substantial apopreciation in their equity investments OR the consolidation of their "United" investment(which trades at a big discount to book value) could also provide a big potential boost. Going back to comprehensive earnings power - assuming 7% capital appreciation on equity investments - I would guess around $200-$250mil . At current market cap of 1.7 bil (using their diluited shares of 3.8 mil factoring in preference shares) thats a good price- now if Dominions results substantially imrpove or we get a 30% appreciation in their equity investments then book value and comprehensive income could be substantially higher. So there is a good downside with a potentially a realkicker on the upside. The shares are trading at around 2/3 of book value so they are definitely being priced with downside protection I am flying from Sydney to Toronto for the Fairfax dinner & meet up - really looking forward too - so if anyone else is going & wants to have a coffee & talk about ELF & other ideas let me know my email is tarn.crowe@cci-recruit.com cheers

I am really pleased with Fairfax's move selling all its treasuries into Muni bonds 87% insured by Berkshire Hathaway. The yields are enormous - i also demonstrates Fairfax's growing concern that yields have to go up on treasuries - they are way too low- the US govt cannot continue to borrow infinitum into teh trillions and continue to pay 2.6-2.8% interest - the yield of over 5.5% on Munis is a much stronger risk reward proposition particularly when backed by Berkshire whose balance sheet is unquestionably strong. The purchase of over 2bil in equities is also an excellent move All in all I am pleased with Fairfax's investment strategy to a more offensive stance.

if there is a theme they are going after the industry leaders in each area with their equity investments - I knew they would step up but not this much this quickly - I am prepared to bet that the world is not going to end & Fairfax will end up making a lot of money buying at rock bottom prices!