glider3834

thats close to my guesstimate - I got $42M or so - there may also be tax $ impact - I guess we will find out all numbers when Q4 results are out

viking I think this will be an equity adjustment transaction for Fairfax based on any difference bw fair value & carrying value of the % interest sold to NCI(assuming I am reading IFRS guidance below correctly) & so with no earnings statement impact https://www.grantthornton.global/globalassets/1.-member-firms/global/insights/article-pdfs/2017/ifrs-10-guide-under-control.pdf I believe Fairfax expect a mark up gain on their existing GIG interest when they close as they are acquiring control, but here Thomas Cook was already a controlled sub before & after this transaction.

yes looks like it Fairfax intends to use substantially all of the net proceeds of this offering to repay outstanding indebtedness with upcoming maturities and use any remainder for repayment of other outstanding indebtedness of Fairfax or its subsidiaries and for general corporate purposes.

https://travel.economictimes.indiatimes.com/news/travel-agents/fairbridge-capital-reduces-stake-in-thomas-cook-india-as-company-sells-8-5-stake-via-ofs/105731200

https://www.fairfax.ca/press-releases/fairfax-announces-pricing-of-senior-notes-offering-2023-12-01/

unfortunately I am paywalled too now

another article https://www.ft.com/content/227514cd-426f-4b1a-a9cd-5652f8c6abc0

RIP Charlie Munger “The first rule of a happy life is low expectations. That’s one you can easily arrange. And if you have unrealistic expectations, you’re going to be miserable all your life."

I think FFH probably gains more from being public than private (eg liquidity for staff restricted share awards or funding optionality eg Allied acquisition or investment optionality eg TRS on FFH shares) & I think if Prem wanted to take it private then it would have likely happened already - Fairfax is now in its 38th year or so. With stock buybacks, there is shareholder alignment IMHO.

some history on Markel's acquisitions here & interestingly they also were in advanced talks to acquire Allied World before it was acquired by Fairfax https://www.slipcase.com/view/inside-in-full-markel-trying-to-be-berkshire-without-buffett/12

Just on this subject of competitive advantages I would say their dealmaking in their core insurance business has resulted in a lot of shareholder value since they started. - they will trade in & out of insurance businesses & have generated billions in capital gains from ICICI Lombard, First Capital, Eurolife FFH, C&F Pet, Ambridge, Digit etc.

we have no idea who the parties are to this trade but is it hypothetically possible Fairfax could reduce part of their TRS position & in turn purchase the underlying shares directly from counter-party - could they do this under a block trade exemption to NCIB with security regulator clearance? I am just thinking if the 2% repurchase tax kicks in on 1 Jan then this would be an opportune time to do it.

This is what i found Under subsection 88(1.1) of the Income Tax Act, non-capital losses of a subsidiary corporation may be carried forward and deducted in computing the parent corporation's taxable income, but only in a taxation year of the parent that following the winding-up of the subsidiary. Subsection 88(1) of the Income Tax Act applies where a “taxable Canadian corporation” has been wound-up into a parent taxable Canadian corporation that owns at least 90% of the shares of each class, immediately before the winding-up https://taxpage.com/articles-and-tips/winding-up-a-corporation-per-subsections-881-882-842-of-income-tax-act/

yes but look its been a terrible investment for Fairfax so its really its just extracting something of value - turning a lemon into lemonade in a sense - they will need to call time on the turnaround at some point if there is no traction there & I hope thats sooner rather than later

viking I am no tax expert but Farmers Edge had circa C$500M in non-capital tax losses at end of 2022 & that number would be higher now & if FFH can acquire all the shares (they currently have 61%) for around C$4M by my rough math, then if turnaround fails & they then choose to wind up this sub, then Fairfax the parent corp I think could use those tax losses applying whatever appropriate tax rate. Farmers Edge hasn't recognised any tax asset due to its ongoing cash burn. I think as well as a private co. they would have lower running costs than a public co. Its end of tax year as well so given minority investors are likely sitting on tax losses there is probably intuitive sense to the timing. They have a new CEO who is trying stuff but its not showing up in any revenue numbers , its possible Fairfax will want to give him more time but the recent financing of C$6.37M feels like it has almost been calculated to the dollar- thats my impression anyway.

I think there may also be a contingency, tax planning objective here, in the event the turnaround is not successful

I would expect them to pay the fines & move along, but these delays to IPO are frustrating, but on the flipside IPO conditions now in India look better than late 2022 https://www.business-standard.com/finance/personal-finance/india-emerges-as-global-leader-in-the-number-of-ipos-in-2023-123110600198_1.html and it does allow Digit to include their latest financials for Jun-23 quarter in their IPO application showing Digit's improving profitability

https://www.prnewswire.com/news-releases/blackberry-announces-partial-extension-of-convertible-debentures-301986571.html I guess will allow Fairfax to free up around $200M to invest in higher return debt instruments

this article is relevant to discussion on valuation https://www.insidepandc.com/article/2cdgrj2sqw8zb25mjo2yo/specialty-lines/ipc

I wrote a bit a long winded reply but main point I would say is that we have to give Fairfax credit for their fixed income mgmt - luck plays a role but you have to put yourself in a position to take advantage - they saw more value in the optionality of holding cash over stretching for the limited yield on offer.

one potential driver of future earnings will be future additional impact on EPS if/when they acquire additional shares from minority interests in Odyssey, Brit, Allied - as premium growth slows & they can build excess capital in subs, they should be in better position to generate cash to pay divs to holdco &/or buy out minority interests IMHO

thanks viking its interesting how price can drive narrative

this is an interesting article on Pacwest deal for KW & FFH which shows it was a strategic acquisition & looks like portfolio is performing as expected https://commercialobserver.com/2023/11/kennedy-wilson-expanding-debt-platform-reach-pacwest-loan-acquisition/ 'The loan portfolio Kennedy Wilson assumed has remained healthy despite the many market headwinds that unfolded over the past 18 months due largely to rising interest rates. Whitesell said there are zero losses in the portfolio as a result of low leverage and a strong asset management team that actively works with borrowers to rebalance loans as needed. The portfolio is facing some looming maturities, with about half of the loans positioned for an immediate paydown and the rest expected to receive extensions, according to Whitesell.'