This2ShallPass

You're saying Fairfax negotiated with OMERS and Markel as counterparties and it's up to OMERS, Markel and other large minority investors to take care of the discount and also represent the minority overall in the negotiation. Am I correct? To me, those other people don't matter as much as very few investors would have bought FIH because of them.

We just have to agree to disagree on this @SafetyinNumbers. If they just kept this as a deal with OMERS and Markel then that would be fine. But they opened it up to the public and knew very well retail investors would buy because it has the Fairfax name.

100%, lesson learned. I'll say this one last time and then hold my peace (this topic riles me up every time). Big huge Fairfax used money from small retail investors, 100% risk was yours and made more money in FEES than you were able to make in PROFITS!! Their promise is you'll eventually make the money at some future time, but couldn't wait for such future time to collect their fees. Think about that. In my humble opinion, that is not how you should conduct yourself in any situation. Neither fair nor friendly.. This is not why I invested either but it's fair to bring it up when the discussion is around fees. I reduced my stake but am still in it because of BIAL, it's a true crown jewel. And honestly there's lot of FOMO for me w FIH or I would have completely exited (stuck w them for the last 8 years and couldn't exit when BIAL is starting to hit it's stride). Just curious, why did you sell?

No, I just meant it's true what you're saying (OMERS and Markel didn't step up). But most retail invested in FIH because of Fairfax and not these other parties, so I feel Fairfax has the responsibility to setup the agreement that was fair in the first place and not rely on others to help close the discount.

I don't mind if we're at a premium. The only reason a closed end fund sells at a premium is because of the reputation of the manager. If I can make 20% more because of Fairfax's reputation then giving them extra in fees is fine. In my opinion, it's completely not ok to charge fees at a price that no one else in the world is willing to pay for. Ignore Fairfax for a minute, would you be ok with any inv manager making more money from you than you can realize in profits? Yes looks like it. But most of us are buying Fairfax India because of how much we trusted Fairfax.

I'm definitely curious on how they managed to get such an unfair agreement in the first place. Say I come to you with a proposition to make you a lot of money and you pay me a hefty fee in return. I then convince you my fees are calculated on a metric that I can control. 3 years pass and I tell you I have made $100,000 for you and my fees are $20k. You pay me the $20k and turn around to sell your shares to get the $80k in profit. To your shock, you find out no one is willing to buy for the price I told you and your profit is only $30k. But, here's the rub, you have already paid me $20k! Your net is $10k. I used your money, 100% of risk is yours and ended up with more money than you did. This is the reality of FIH shareholders like me (it just so happens I have way more Fairfax but that doesn't make it right). I'm happy they chose to get cash, but there's nothing fair and friendly about this structure. It fleeces the minority shareholders and is just another case of Fairfax not treating minority shareholders right.

For worst case scenario, I looked at damages from Katrina which is the largest ever ($195B) and adjusted for inflation. So a Hurricane like that would cause $300B in damages today. Someone here mentioned Fairfax typically has 1% cat loss exposure and Berkshire 4%. That would cost Fairfax $3B. Then say we're really unlucky and got hit with another hurricane half the size, so 2 bad hurricanes in a 2-3 year period. That would be a loss of ~$4.5B. Bad but manageable, they lose little more than 1 year of operating earnings..

Things work out! Doing an IPO in 2022 would have been terrible.

I'll take you up on that offer, appreciate it:) Will message you once I have planned my trip.

I was also surprised at the big difference in performance, CAD is down >25% from start of 2011 (-1.8%/yr). Anyone know what caused this big weakening? In 2011 CAD was par to USD.

Thanks @SafetyinNumbers. I'm currently planning to get in on the 9th afternoon and leave 11th, still haven't booked.

Apologies for creating another thread, couldn't have a poll as a reply in the other one. I would like to attend the AGM. I'll be coming by myself and have never met anyone before, so not sure what to expect. Anyone willing to share their experience with previous AGMs is appreciated.

If you look at the US OTC FRFHF, return from 2011 start to now is only 180% (including divi but not reinvested). That's ~8% CAGR.

Completely agree. By no means I'm suggesting not to hear contrarian opinions, just need to ignore the noise so we can maintain the quality of the discussions we have been having here.

What you have unintentionally done LC (and other regulars) is give some fuel to the troll fire. Someone comes in throwing wild ass ideas and accusations, normal people offer a sane explanation and before you know it's an actual debate and the cockamamie bs they threw out is worthy of a discussion. It happens so often, even in our politics, won't name any names I realized this after engaging in some unproductive discussions and waste of my time, these exchanges fire up some ppl. You send 10 responses they will send 11, you do 100, there will be 101 and will keep going. Only differences is ours is thoughtful, takes energy to post and responses typically are inflammatory 1 liners. Best option is to hit the ignore button (easier said than done) and get the quality of our board back (look at the last 2-3 pages). I know they're really helping us see the error in our ways wrt Fairfax, but we'll just have to do without their magnanimity..

I only have the OTC but considering adding more and thinking of buying FFH.TO (having too much OTC does worry me a bit). Is there any adverse tax consequence of buying FRFHF vs. FFH.TO for an US investor? Maybe, something sounds very fishy about this report. Fairfax should go hard at these guys, shorting is healthy for the market if done right but this is intentionally hurting a company. Whatever said, as unfair as it is, it'll dent the confidence of many investors who were already wary of Fairfax..

Thanks. I have been following this through Berkowitz's letters for a few years but only got in about a year back, <1% position. Which preferred would you buy? Both pfd and common can only be in the money if they end the conservatorship and couldn't common go much higher 10-100x? pfd is more gtd return though.. Wasn't that guy Berkowitz's college roommate supposed to help during Trump presidency, never happened..

I have Fannie and Freddie stock. Followed Ackman's advice, buy them and put it in a drawer and don't look for many years. Which is a better play stock or preferred? I know Berkowitz owns the preferred, but there are so many of them I didn't know which one to get. Btw, what's going on w Fannie and Freddie, they're up ~150% in the past year?

He did not work his way up the ranks of Fairfax or do anything of significance that's needed to be in BoD of a large company. His last name is the only reason for his position. If you think there's no one more qualified than him, that's high praise and good to hear. I haven't spent a lot of time looking into this so definitely open to changing my opinion on Ben. Why do you feel he's very competent and thoughtful investor? How are the returns of Marvel capital and when he was portfolio manager before?

You're right, this is a real risk and we're all ignoring it. Maybe Buffett clouds our views on longevity:) But this is a risk that we just have to deal with, not sure you can do anything about it. On succession, Prem's kids don't have the expertise and won't be a good fit to lead such a large and complex company in any meaningful way (even as chairman).

Good question. I'm sure there are some companies that are perennial underperformers and are a good bet to perform even worse in a large cat event. I don't know them, maybe some of the folks who have more expertise in the insurance sector can chime in..

Agreed, that's one we will have to live with investing in insurance. One thing I have done this past year and plan to do next 2 hurricane seasons is buy long puts on a basket of insurance companies. It cost ~2%/yr, only doing this as Fairfax is a big % of my pf and paying the put premium seems prudent..

Viking, my focus for this topic was on #2, things under Fairfax control. Issues at P&C industry level or macro driven need to be weathered or may even be buying opportunities as you mention. Losses from runoff is an example of things to discuss more. If losses are accelerating, why and are there some underlying factors. To be clear, I'm not saying there are any issues. I'm pretty bullish. Just want have a thread that focused only on the potential areas of concern (rather than being part of the other larger discussions where they might not get the same level of attention).

Yesterday, I was taking a long walk reflecting on my investing performance. 2023 was a very good year, as I would assume the case for many here who have a large Fairfax position. The next two years also look to be really good, @Viking has covered it in depth. The upside is compelling and maybe even simple with rates locked in for 3 years. I do believe Prem will follow through on his Teledyne comments, the hard market is slowing and with money flowing in we'll see significant buybacks. Many other tailwinds like Digit IPO waiting in the wings. All the rosiness though made me a little uncomfortable (the market humbles you when you're least expecting it:)). What could go wrong w Fairfax? Starting this topic (hopefully it's not redundant) to focus on the risks and having a clear understanding so we're not surprised. The big unknown for me is underwriting quality. With premiums rising so fast, how do we know they haven't relaxed their standards. CRs worsening is a lagging indicator, the whole world will know when that happens. Are there other metrics that we can track and regularly review over the next couple of years? Maybe the insurance experts can weigh in. Pls add other risks that we should keep an eye on. Wish you all a happy new year and a great investing 2024!