TwoCitiesCapital

I know TRS don't have to be disclosed, so it's hard to know what FFH holds. But does anyone else know what other TRS may be on the books? I kind of thought they were historically using TRS to short stocks and didn't realize they were using them to go long anything but their own. Now I'm curious what other long positions reside outside of disclosure rules as structured like this?

Probably of concern to Muddy Waters who has this central to it's short thesis

I don't disagree with I don't disagree with your logic of using the share repurchases as a floor for their incremental capital, but there's already a thread here discussing if FFH will break $2,000/sh by then. And it's a good probability it just might. So am not sure we can just assume that all repurchases will be done at prices or multiples available today. Either way - debating the return on their return is such a small part of the big picture that I'm not sure it really matters if we get this piece right.

Yea - it's not a few thousand for anyone that would actually benefit from leaving. I don't know the ins and outs of exactly what the exit tax and fees are, but it's my understanding it's not small

You have to pay to do so.

I think it depends on which rates you're using. They don't disclose, but A LOT of people focus on 2Y-10Y (which appears to match up with their chart pretty well). While similar to the 3M - 10Y, it has subtle differences and triggers at different times. The founder of the indicator prefers the 3M rate. The 2Y rate doesn't track the Fed rate perfectly (it actually leads it) which lengthens the time between the inversion firing and the eventual recession. It also is a market rate influenced by return/inflation expectations in the future and not necessarily representative of short-term bank funding which the Fed overnight rate (and the 3M rate) do a better job of approximating. What you're looking for is the choking off of credit when the bank funding rate is lower than the long-term rates they can lend at (or buy treasuries with). The 3M is a better indicator of this. I don't' believe there has been a false signal in the 3M - 10Y, but could be wrong as the Fed data for that doesn't go back to the 60s. There are others who use the % of the yield curve that is inverted instead of any singular pair. I expect that may also improve the predictive power/timing, but have not done the work myself to know.

Yup. It sucks for the shareholders, but is 100% the right call by the executives. This is why I gave up being bearish on Tesla. Could never get comfortable owning the stock, but stopped shorting/puts and etc. because it was clear they were actually buying billions in hard assets worth money with magic internet money financed by their shareholders. Stock could still go down 50-75% and be expensive, but it definitely did A LOT to take $0 off the table and build a floor for the share price. GameStop is doing the exact same thing. It's an unsustainable business model, but now all they need to do is shut down stores and sit on a pile of treasuries waiting for "strategic alternatives" to come along and the C-suite can continue to pay themselves enormous salaries for doing nothing. This has been my argument for MSTR too. Everyone buying it thinking the premium to book is justified because BTC/sh can grow - but they're putting themselves in direct opposition to the CEO who has every incentive to issue more shares at premiums to buy more BTC and grow NAV or BTC per share. Perhaps they can keep it up long enough where each additional share issue brings up the NAV/sh until it gets above their entry price, but ultimately there are going to be a large number of people underwater from the premium disappearing OR, at the very least, dramatically underperforming Bitcoin over the same period of time.

I don't think anyone interprets "lumpy" as going nowhere for 10-years. It's more of "there won't be consistency to annual returns" - not "you'll have negative real returns over the course of a decade" I owned Fairfax back in 2010. I held for 8-years and sold out at some point in 2018 after admitting I had been wrong about the return prospects of the company. I sold because my returns were nominally positive, but very disappointing, relative to other options over that period. It was also hard to see how Fairfax would make enough to justify $500+ share with interest rates at zero, the equity portfolio being dominated by Blackberry, and insurance not doing anything special. Had I held in 2018, I would have ultimately ended up fine - but would have had suffered another 3-4 years of very disappointing returns before some strokes of luck AND the long-term efforts of the Fairfax team building value that was largely hidden in 2018 paid off. It could have very easily ended up differently and we might still be struggling for $500-600/sh

There's the "physical" leaving and then there's actually leaving The US allows you to go - so long as you continue to pay US taxes on your foreign earnings and etc. If you want to get out from the US taxes and associated enforcements, it's not easy nor cheap.

Saying shorting at $60 makes more sense than shorting at $20 is easy in hindsight - until it goes to $200 and $60 seems as equally as idiotic to have shorted at. Either way - this isn't a sustainable business and the equity holders keep lining up to be fleeced for OpEx to keep the zombie going. Both $20/sh and $60/sh seem insane for a company that should otherwise be bankrupt. I wouldn't run the risk of trying to short - but going long here is wild too. I sold $20 puts with 3-4 days left to expiry during the first pump when the stock was @ $45. Still lost money as it dumped 4 days in a row 20-30% each day. Hard to play this game...

Not quite. There are historical observations where its been as little as 2-3 months after the inversion and historical observations where it took 12-18 months after the inversion. And while it has a 100% track record, there are so few observations of recessions that any "average" of those observations isn't likely to NOT be super predictive or the 'actual' mean of the distribution. The inversion is the warning sign that things are slowing down. It's also somewhat causal by choking off new credit creation since banks earn negative significantly reduced margin on new loans. It's when things un-invert that is basically the confirmation. You probably don't catch the top of the equity market by waiting for the reversion of the yield curve - but you typically miss out on the nastiest part of the recession and you don't get out 1-2 years too soon either.

It's the inversion that signals the recession. And it typically un-inverts by rate cuts catching down to the 10-year We have a few cuts to go before that happens unless if they're making big moves.

I'm pretty sure that is what it was when I joined back in the day to. Incredibly accessible and very reasonably priced even if it were an annual fee.

+1 Increased my position by ~6%.

The problem is, you can lock in returns 2x that 3-4% for the next decade today. Even agency mortgages, with a duration of 10-15 years, are currently paying 6-7%. You don't even have to take credit risk!

I, for one, am ok with the persistent discount. The historic execution is there on the BV side. The present execution is there on the buybacks and future opportunities side. I have no doubt that the longer term execution will be there as a result. The discount won't persist forever if BV performance continues, but am glad for the opportunity to increase my ownership via occasional incremental buys and let FIH increase my ownership for me with time as long as it does persist.

I think the point people miss is the "long term" of "long term store of value". USD is a decent "store" of value for a ~12 month period. But long term? It's been miserable despite being one of the best fiat currencies in existence. Same with bonds that pay USD. But Bitcoin? Has served it's purpose for anyone that has a 3+ time horizon which still isn't "long term" IMO - but rather intermediate. Long term holders? Well, it's worked out better than any store of value should, but that's because they're early adopters in what will be the largest payment network in the world.

Or... it'll be entry and mid-level college educated jobs displaced by AI, inordinately impacting Gen Z women, while physical labor/construction/building is unbothered and remains dominated by men. Hard to tell how that one plays out.

It's going to be true of 2 income families as well. The majority of women value this in a man and WANT a man that earns more than them (not all - but more than half for sure). Men on the other hand? Don't seem to care near as much about the stability/earnings capacity of their wife. The men who get married are far more likely to have above median incomes than below median. The same may NOT be true for women where I actually think it's possible women with above median incomes are LESS likely to be married. Therefore two income families will typically be a man, and a women, both earning money. The men will have fat tails on the right side of the probability distribution. Hers will be more of a random distribution, but likely slightly skewed to the low end of the income distribution.

Snow balls get bigger as they roll downhill...

I use Venmo to send money to my account - takes 3 business days to get there. I just got an insurance check for 65k for fire damage on my condo. Cashed the check? Bank has a hold on the funds for 10 days to make sure it doesn't bounce. Bitcoin? I can have confidence is sent/received in less than 10 minutes for lower fees than a wire transfer. That's the benefit. How people don't see these problems in the current financial plumbing or fail to see Bitcoin can be superior to them is beyond me. And that store of value you complain has fallen by 75% before? The USD has also fallen by 75%. As has gold on prior occasions. Bitcoin, despite its drops, has outperformed every single asset class (and damn near every individual investment) over the past 3, 5, and 10 year horizons - so yes - I consider that a solid long term store of value.

And a lot fewer 'needy' than most suppose. A I've grown older, I've grown more suspicious of charity for these reasons. Being 'poor' today still looks great compared to being poor in the early 1900s in the US.

Maybe I'm doing the conversion wrong from INR to USD, but would seem at today's market IPO price that Fairfax was NOT, in fact, inflating the value of Digit by $1.1B on their stake....

Was coming here to say just this