Shane

I understand what you mean, but disagree that sourcing investment ideas from mandatory SEC filings should be characterized as theft. That's fair - I believe my point still stands that it isn't fair to the investment managers.

Well for marketing purposes the small firms can just send their holdings to prospects, unless you're suggesting they find clients who are perusing their 13F's? It's honestly a big problem in the industry that all of us steal ideas and don't pay for them. If you are a responsible long-term investor in quality compounders with low-turnover why would anyone pay you when they can just copy you? It is my opinion this should pass. Also I don't think companies would use 13Fs to see who owns them, I would assume they get that info from exchanges. Is that the case?

Hoping someone can point me to some interesting articles. I'm wondering if there is a definitive answer for whether passive investing alters stock prices or if it is neutral. Will growing passive allocations push the winners higher and loser lower, or is price discovery really decided only by active managers? Any thoughts would be helpful.

We all know FB went on to deliver tremendous returns following the IPO. I believe PE/VC funds have a finite life on most of their assets and don't really have the choice of when to sell in some circumstances.

I also wonder if this is why we are not seeing more aggressive share buybacks today. Buying the remainder of Allied World is also part of the bigger plan. It would make sense. I'm struggling a bit with his mentioning Teledyne. Singleton bought back shares because they were cheap and he lacked a better use of capital. How can Fairfax know whether their shares will be cheap at any point other than the near term? Buybacks should be done opportunistically. I'm willing to give him the benefit of the doubt that he'll only make repurchases at attractive prices, but laying out a long-term plan to reduce share count doesn't make a lot of sense to me.

I thought it was curious that he didn't buyback more shares, but then realized he mentioned using FCF to buyback shares. Has he indicated he will use the proceeds from First Capital/ICIC to fund repurchases directly that I may have missed? If he intends to use FCF as the primary source of funding for repurchases, many people on this board will be very disappointed.

Thanks Dynamic

Slide 7.... it looks like the data for 2015 non-insurance was repeated for 2017? ......

Seems like a bit of a conflict of interest given WEB's public support of KO's management compensation.

I've spent quite a bit of time looking at retail REITS - the largest reason that these are cheap, I believe, is the market believes the internet renders these properties much less valuable. Probably a lot of truth to that - I certainly hate going shopping and have most things delivered today. However, I'm of the opinion that this spells opportunity. My local regional mall has several high-end restaurants that are as busy as ever. They are adding a high end gym. Who knows how else the space will be used. REITs in general are also impacted by concerns over rising rates and what that will do to cap rates. Interestingly, TIAA Cref had a paper you can search for detailing how this isn't as highly correlated as is perceived. Rising rates will certainly be a headwind, but isn't that the case for all asset classes? Real estate can readily pass on inflation via rent increases and property value, is that so much of a concern for high quality sites with strong demand?

Thanks racemize - this seems like an unbelievable deal. If we remove First Capital - what is left of the Asian Insurance business? How involved was Athappan in running these operations?

I am not sure I totally understand: "Fairfax will guarantee loss and LAE reserves of First Capital as of December 31, 2016" does this mean that fairfax gets 25% of the underwriting profit of the business while being 100% liable for underwriting losses in the future?

Although I am an owner of Alphabet, I believe Facebook has much better targeting capabilities. I welcome the ads on my facebook mini-feed because they are almost always products or articles which interest me. I cannot say that the advertisements on Google or Youtube are welcome, I view them as a nuisance. I'm very excited to see how Youtube progresses, but the search engine is under a lot of competitive pressure IMO. Bing has been steadily gaining share and I view Apple is a long-term threat as well. I'd love to own facebook, however, I have never been able to become comfortable with valuation given the huge stock based comp expense. It deserves a lot of thought.

To give you a bit of equivalence. TD is like WFC (in more ways than one it seems). It started a transformation with a new CEO in 2003. It's been retail focused and customer friendly. Very good risk management. Expanded a lot in the US mainly east coast. RBC is kinda like JPM. It has a large retail business in Canada but they like to be the big boy and do flashy deals. So for the past decade or so they've focused a lot on investment banking and wealth management. They wanna become a big global investment bank. BNS is pretty conservative in it's Canadian operation. It's also pretty international. In that it has a large Latin American and Caribbean operation. I sold my BNS stock a few years back because in my opinion their risk management in Lat-Am has deteriorated. Also has less investment banking than RBC or TD and they own the former ING direct discount bank in Canada. TD Waterhouse should ring a bell for any investor in NA. RBC is like JPM and they are huge. A little overpriced at the moment. I have been selling my shares down a bit. I did as well on RBC as I might have on BAC without the baggage. As to scale the collective big 5: RBC, CIBC, TD, BNS, and BMO fall somewhere between a half to a third the size of JPM, WFC, or BAC. They are bigger than nearly all regional US banks. They are protected by Cdn. legislation, but are also expected to provide for Canadians. They are huge employers, and have some of the best private sector jobs in Canada, with good pensions, reasonable pay, and good job security. Generally they promote young people within. It is sort of a tacit agreement between our government and the banks. You provide for Canadian's, dont be too obnoxious, and we will protect you with legislation. Part of the reason they have been so well run during the period in question is that they had their day of reckoning in the eighties and nineties. We had back to back bad recessions in the early 80s, and the late 80s into the mid 90s.The banks had to belt tighten big time. Then came the US mortgage crisis which served up a warning to them. I cant speak to their risk management right now. Its likely gotten sloppy like JPM, or WFC were sloppy in 2007. But not like Countrywide or Washington Mutual. In a severe downturn globally they will get hit the same as anyone else. A mortgage crisis in Canada is unlikely. House prices in Toronto are nuts but that doesnt necessarily put the big banks in any serious jeopardy. The riskier mortgages are held by other non- bank entities. Chances are, if/when there is a major downturn in CDn. house prices they will each take some writedowns, dust themselves off, tighten up their lending a bit and carry on. None of this implies that I would buy their stock right now though. But them, I am not buying anything. I figure sometime in the next couple of years I will get any one of them at two thirds, or even one half of todays price. Thanks rb & Uccmal - your comments are very helpful. Will be digging in deeper.

I'm unfamiliar with these banks, but the comments on this thread have piqued my interest. Looking at ROE, it seems that over the past 20 or so years Royal Bank of Canada has topped all of the others (TD, BNS, BMO). The second place would go to BNS. Can anyone who follows these banks comment on why that is the case?

Thanks! How did you learn that Yale invested with Hillhouse?

I have heard that Brave Warrior is one, but I don't know of any others. Have been searching online, but they do not seem to disclose. Does anyone have a list?

Well Costco has a much higher chance of a stock split......

I'm also unaware at who the successor will be. Thanks for all the input. The question comes about as I kind of randomly chose letters to read that spanned the full time from 1985 to now and noticed that the portfolio seems to be inconsistent in the style of holdings. As ValueMaven pointed out, they have at least twice gone towards a concentrated portfolio weighted towards quality names (Wells, JNJ, Heinz, Kraft, USB) and then reverted back to distressed names. This is unlike Markel/Buffett who are more consistent in the types of investments they buy. Once WEB moved on to quality names, he stuck with it. Similarly, Gayner seems to consistently build portfolios with high(er) ROC names and jockey stocks. HWIC goes all over the place. Can anyone shed some light on how the investment process is structured? How many people are responsible for final investment decisions? Do analysts pitch ideas to an investment council? Do they track individual analyst performance? Any details would be great.

Outside of the hedge and CPI-linked derivatives, has the investment style changed much over time at Hamblin Watsa? There have been a lot of changes with the top 10 positions over the past 6-7 years, but i am not overly familiar with the early days. Can anyone who has followed the company for a long time comment?

I don't appreciate the dilution from this deal, however, it could be as low as 11-12% if they get the third parties involved... which is probable. I remember Bruce Greenwald criticizing Burlington and several of Seth Klarman's investments, saying the rational wasn't sound and he had done his own work on the names. I think this becomes dangerous. In my opinion, an investment in Fairfax is a bet on Hamblin Watsa as a manager of your capital... I don't second guess the few fund managers I have. Often I will try to figure out why they bought something, but if I don't come to the same conclusion I just wait and watch... Often these investments still work out very well despite the fact that I wouldn't have made the same decision. After 5 years or so I will look back on the performance and make a call on whether I think things will improve... So far I am not convinced they have lost their mojo... but I am worried about investment performance and would be disappointed if results don't improve.

I struggle with nearly any deal which increases the share count, particularly when it is (potentially) done almost entirely with shares that aren't clearly overvalued. It is also frustrating to read that so many decisions appear to be based on macro viewpoints which are notoriously difficult to get right. I usually try to take the viewpoint of a 5+ years holding period while trying to not to second guess investment decisions from 'jockey stocks', but It has been hard to do this with Fairfax. I added to my position prior to this announcement viewing this as a company which had done a great job improving the underwriting and investment returns are likely to improve with the reduction in hedging. Only time will tell.

Apologies if this is too basic, but what gives everyone so much confidence that the pref shareholders will have rights to dividends in the future? Given that they already were essentially killed by the profit sweep, it seems there is a precedent set that their rights are no longer applicable post bail out. My concern is that Mnunchin might give Fannie/Freddie back to the market, but that might not end up being a win for preferred shareholders.

Valueinvesting101 - thanks for this, very helpful! Benjamin1978 - I agree here. Since Berkshire owns all of BNSF, the return on his investment must include the additional investments made in the company via capex. It now seems to me the easiest way to get a feel for the return on Berkshire's investment is to just look at the ROE of BNSF LLC. Not bad at all.

Why am I conclusive? - My point was really that he is accepting a low return on his investment in the short term (including goodwill), but is counting on a long runway of solid incremental returns on capital to dilute that out over time. So earnings doubled, but the return on his investment (again, including goodwill) doesn't seem to be very attractive. That figure will improve as the goodwill is diluted by more incremental capital invested over depreciation in the future. Does this make sense? I need to work on these filings tonight, it is interesting to me that the ratios can vary that widely depending on the filing. A 17% ROE would completely change my analysis, but would totally confuse me given our other calculations!