This2ShallPass

Thanks. For Freddie, would that be FMCKJ (8.375% non cum)? Also, do ppl here buy a basket of preferreds or just the highest dividend one? Not sure if the various preferreds have different conditions.

I have the common, bought more as a lottery ticket. Now thinking of converting to preferred. Which preferred is better, I want to buy both Fannie and Freddie..

Is that Fairfax India making a move? Wow finally Doubt it, the timing is an election driven rally, probably tied to Trumps' pro India messages (we all know he'll flip on a dime, but will take the 8% pop!). This one is mostly done, the optics of a Canadian company winning one of the high profile deals will be too much for Modi govt. I'm also ok with not winning this one, too big for FFI.

Losing 40% of your pf won't change your life? If that's the case, then taking big swings is ok...you might be at a point in life where investment returns are not meaningful enough for your personal wealth.

30+% in one company is a large position. There's some position where it does become risky, no matter how confident you are about the company. The world is constantly changing, you will have curveballs. Things that are completely outside your ability to predict will happen and sometimes even outside the control of the company. You don't want to get knocked out of the game when something like that hits. And, Fairfax is not Berkshire or Costco. They have done nothing but make great decisions these past 5 years, but they do tend to take big swings, positive (GFC) or negative (hedging). Do you think it'll happen in the next 6 months or so? We have been waiting for it for a while.

How do you all feel about position sizing? It keeps getting bigger for me and is now at 33%. Starting to get a bit scary, I have trimmed once and thinking of bringing it to 30% again..but my cash is also starting to pile up.

I bought Exco (following Chou) when it was ~$0.7. Then in a moment of dumbness sold it for a good % gain ~$5.5 (but $ wise less as I had a small position). Should have just let it ride, now we cannot buy Exco, brokers only allow closing. Here's what Francis Chou had to say about Exco in his semi annual report. Might give you another perspective on value. "In early July 2019, the company emerged from bankruptcy and the 1.75 lien term loans were converted to 28.38 equity shares for every US$1,000 in par value, after netting out certain adjustments. The equivalent price was US$9.51 per share of EXCO. Since it is a private company, I am not at liberty to divulge the latest financial statements, but what I can tell you is that my calculation of its PV-10 value was more than US$1.8 billion (roughly US$38 per share) based on the New York Mercantile Exchange (NYMEX) forward pricing as of December 31, 2023, and the net proved reserves were 2.9 trillion cubic feet equivalent. Its number of outstanding shares as of December 31, 2023 was 47,386,708. We estimate its EBITDA for the year ending 2024 will be between US$200 million and US$250 million. As a comparison, in 2018, the PV-10 value was US$750 million. As of June 30, 2024, the share of EXCO was valued at $21.05 by Kroll, an independent third-party valuator."

Nice post. I didn't think about the China +1 angle. Can you elaborate more on the bull case for 10 bagger? What assumptions get you here, is it the $5-6B BIAL valuation?

Wow..you have been one of the longest bulls here. But I hear you, I reduced by 30% as well. The relative underperformance (vs. how well India has done) is staggering. Also, some real headscratchers on strategy. BIAL is a true crown jewel asset and I'm hoping for IPO soon (maybe more wishful thinking). I'll be fully out after the IPO. Be careful what you wish for Minority investors have never done well (some may say screwed over) on Fairfax takeouts..

"Bottom 6 positions all worth only 10% of pf ($270M total, equal to Sanmar). They're all slow growers / bad industries - discount rate ranging from 13 to 28% and growth rates 1.5-5%." From their last quarterly report @SafetyinNumbers. Btw, can you explain what their strategy is when they buy a $50M company one year and going for $5B next year?

Bit of a headscratcher when they're in the bidding for IDBI. Last 3 companies they bought are small and industries that have very small growth rate. Then you have a portfolio dominated by a huge BIAL position and going after another even larger buy w IDBI. Both are multi billion positions and last 3 buys combined for <$150M. What's their strategy? Are they going big or small? Do they want to be in industries that are seeing a boom in India or slow traditional ones?

Terrible quarter - public equities down 25% and private investments down 6% when Sensex was up 2%. Silver lining, discount is closing. Not exactly the way you want it to happen by BV going down 10% Also, their private investment valuations seem pretty conservative, so less risk of a downside surprise there. IIFL finance involved in something fraud related. they're of course downplaying it but getting banned by the regulator is a clear sign. Not sure why Fairfax doubled down by providing line of credit. Bottom 6 positions all worth only 10% of pf ($270M total, equal to Sanmar). They're all slow growers / bad industries - discount rate ranging from 13 to 28% and growth rates 1.5-5%. Investment thesis on these unclear, just distraction for management. I reduced my position by 30% early this year. BIAL setup is great, I'm waiting for Anchorage IPO to move out of Fairfax India fully.

I was wondering the same. If you exclude TRS, loss of ~$50M this quarter?

Thanks @nwoodman for following up on this thread! Good to see this year is looking a lot better. But the above highlights the cyclicality of this business and 2% yearly growth rate. I really hope this one works out considering it's a top 3 investment, but it doesn't give me the feeling of a quality compounder. This is great. But why would any counterparty signup for fixed cost to build these ships when delivery is years away? Makes no sense. Not questioning what Sokol is saying, but that's a head scratcher that any rational business would take that kind of risk when cost inflation is always there..

Thanks for the running commentary @Parsad! Much appreciated. Great to see Prem commenting on buying at a fair price, that's the only practical way to invest all the money coming in next few years.