TwoCitiesCapital

I was just generalizing using their warrants/stake. I have no clue what happens to the SPS, what it worth, how it converts to common, etc to have thrown out any other numbers. I don't actually believe 80% is the right number The point still stands that <100% ownership and limited control over cash flows is not as good as 100% ownership and 100% control over cash flows.

I'm not 100% certain that is the point. Whether or not the gains are market to market or equity accounted doesn't change the taxes Fairfax pays. Like us - Fairfax will only pay taxes on Eurobank when sold or when dividends are received IIRC

It's an arrangement that makes the comp cost knowable upfront and neutralizes the effect of the issuance. Instead of granting it, and buying back years later when much higher, it's bought back today and granted. Shareholders collect the difference of buying today vs years from now AND the certainty of the SBC instead of having to guess at it. Whether the shares are bought today, or 3 years from now, matters not to the employee who gets the same number of shares or the same % of their comp in shares. It matters a lot to the shareholders.

And they have yet to explain how he accomplishes that with 80% of something vs 100% of something. Right now - he controls 100% of their cash flows. Why would a control freak/micromanager give that up so he can only own 80% and not have control of any cash flows? It means Trump is using money that isn't his to try to effect outcomes he wants. And once again, why give up that power/control? +1 Everyone who drank the kool-aid a second time have no one to blame but themselves. Fool me once....

The thesis is much simpler - when someone shows you who they are, believe them. Trump showed us 2016 - 2020.

When it's fraud committed by brown people - it fits their political narrative. When it's fraud committed by their president, or his friends, it gets swept under the rug

Market coming around to the idea that Trump doesn't actually want to take his hands out of the piggy bank. FNMA -10% today, -16% YTD, and -40% from it's "imminent IPO" high in September. If only it has been obvious at the time....

Another month of fiscal conservatives in office....another month of record breaking deficit figures. Go figure.

All resources stocks have been ripping. As have the resources. Gold's rally is extending to everything else and silver has gone absolutely ape shit. Kind of hoping for a big correction in everything so I can take some of these profits from my trims and rebuy the names lower. Would be nice to see some of these commodity names come back and establish some support/bases from which to launch again instead of going straight to the moon.

While I'm sure shareholders might prefer a one-time re-rating for a 50% pop in share price... A long-term discount of 35-40% is constantly providing management the opportunity of a 50+% RoE simply by giving away $0.60 to buy $1.00 worth of assets. Even if the discount never closes, that RoE is gonna drive long-term returns on incremental capital in addition to whatever the underlying portfolio does. 20+ years of having a 50+% RoE opportunity ultimately may be better for long term shareholders than a one-time 50% pop

In addition to the comment above, if even Indians want to sell the INR for gold, who is going to hold the INR? If the gold they consumed was local, it wouldn't be much of an impact as it would all be circular. But much of the gold is imported meaning it is the cash that is being sold/exported in exchange for the imported gold which probably doesn't help. The irony is if they stopped importing it, the exchange rate would probably lift...but households would be saving fiat at that time.

Any more absurd than the party of free markets and limited government pushing tarriffs, interest rate caps, and legislating your bedroom?

He believes in free markets too! Markets where Daddy Trump is free to do as he pleases.

And other forms of financing. CC default rates are currently at ~15% for 30-90+ past due balances. This is NOT money that gets lent for 10%. Not even for 15% a profit motive needs to exist as well as a margin of safety. The only freedom Republicans want is the freedom to be Republican. Freedom in who you love? Only if you aren't gay. Freedom of religion? Only if your religion is white Jesus. Freedom from govt tyranny and arms? Only if the government starts gunning down white Republicans - as was the case of the Jan 6 casualties. Freedom of bureaucratic red tape? Only when that red tape isn't being suggested by Trump. Free markets? Yes....until Republicans' friends need bailed out. Or until Trump decides he wants to raid the corporate piggy bank. Or until Trump's decides prior government grants count as equity. There is no freedom in the command/control economy/government Trump is establishing.

Soy boys as in soy farmers, right? I hear Trump is absolutely annihilating their numbers so you should be good here.

He's talking about a scenario without a Federal Reserve. So there is no removal of the excess reserves. I've already pointed out the Fed is buying them.

Interest rates go to zero? As has been the experience of every government who printed money to spend when they couldnt sell bonds? Being the reserve currency delays the end result - it doesn't change it - because being a reserve currency isn't a permanent state of affairs as demonstrated by every reserve currency before us If all Trump had to do to get lower on interest rates was to spend like a drunken sailor, well, he's already doing that and so did Biden as did Trump before him and interest rates rose over those periods of time.

Not with trillions of deficits they didn't. The Fed literally prints bank reserves to buy treasuries when things go haywire which artificially keeps a lid on interest rates. I really don't believe this is the case when every investor in the world hangs on their every word and they're used to bail out the economy again, and again, and again.

Both matter. The Treasury largely wouldn't be able to do what it does without the Fed and the banks being uneconomic buyers of its bonds. Have an even less independent Fed just furthers the shenanigans of issuance of paper to extract real value today and inflate away tomorrow.

https://www.federalreserve.gov/newsevents/speech/powell20260111a.htm Trump threatening criminal action against Jerome Powell b/c rates aren't where he wants them

They tripped all over themselves and made a laundry list of excuses why Ashley Babbitt, a rioting insurrectionist who was forcing herself through a barricade and had been instructed multiple times to stop, was shot as a result. Jan 6 insurrectionists are patriots and victims. A U.S. citizen who had waived ICE through multiple times and then attempted to leave when the ICE agents were unreasonably aggressive and trying to physically detain her without probable cause? Domestic terrorist. You can't make this up. The don't tread on me crowd continues to beg to be tread on harder....

+1 Not only isn't it unreliable to try to predict with this level of granularity - but it would still make sense to sell. If you're sitting on a 4x and have a capital gain rate of 20-30% - you would still come out ahead by year 7-9 in the higher returning investment assuming consistent returns in each tax year. But even that doesn't account for the optionality of the path of returns. The one your selling is highly appreciated. The one you're looking at to buy may be presenting a temporary opportunity that is making it more attractive. I would argue that if you're correct about the forward looking returns, the odds are not the default 50/50 that both go up/down. The highly appreciated position may be slightly more likely to stagnate/consolidate/correct while the new opportunity may be slightly more likely to bounce. A single +10/-10 at the start makes brings the breakeven from year 7-9 to years 1 or 2. Establishing a new basis also provides optionality on taking loss carryforwards in an unfavorable environment. The loss carryforwards also then can reduce the payback period by reducing taxes paid in future years which furthers the optionality of a quicker breakeven. Because one as an arithmetic function, and the other is an exponential one, the compound growth will ALWAYS catch up with a long-enough time horizon. Even assuming a ~50% capital gain on a 4x gains, you still come out ahead by year ~18-20 in the 12% vs 9% scenario. Larger rates make the hurdle higher. As do larger gains. But compound math is hard to overcome. If you're correct about something having a higher forward looking return and an intermediate time horizon to wait for it, I'd argue you're almost always going to be better of switching. Particularly if you've already been doing that and aren't holding onto a ton of 10-15 baggers that got through time as opposed to superior performance. The only problems crop up when you're wrong about the forward returns and now have the tax loss and a lower return. The more you switch, the lower the cost to switch and the nearer the breakevens....but also the more likely it becomes that some of the trades are mistakes. There's going to be balance between them, but that balance isn't "hold lower performing stuff to avoid paying taxes".

+1 I've said it a thousand times - discounts/premiums are the result of sentiment/narrative. Not management ability. Management ability/capital allocation can contribute to the sentiment/narrative - but it cannot control it. Nor is it anywhere near the scale of potential retail flows nor does it provide the "got to have it" approach to buying at the ask to push marginal price higher. It is very possible that even if Fairfax buys back a substantial amount of free float over the 2-3 years, and IPOs BIAL at nosebleed valuations, that the discount persists at 20-30% for the exact reason you point out and I wouldn't view that as the fault of management. I WOULD fault management if they weren't continuing to repurchase shares at those levels and along the way. At some point, the sentiment will change and people will be excited about Indian infrastructure plays. Fairfax will get bid again - perhaps to a premium - and we'll get a smooth 50-100% tailwind on top of all of the compounding while we waited. Those who have been judicious with their adds will already have had great returns and the last valuation bump will turn that into phenomenal returns.

Trump announces $200B bond purchase in bid to lower mortgage rates - POLITICO https://share.google/dXjsICN894Od1eyua Trump pushing Pulte to buy $200B of mortgages using Fannie/Freddie as the piggy bank. Does this strike any of you as the actions of a man who is willing to relinquish control,return these to public hands, and enrich others not named Trump?

CSU FIH.TO MOH TGT ALS.TO Covers tech, Emerging markets infrastructure, healthcare, consumer discretionary, and materials. Fairly diversified exposure across the 5 in terms of country, sector, size, and currency. Also, many of the names are diversified themselves like Altius owning many different mineral exposures, Fairfax India owning a handful of different public/private Indian infrastructure and financials, and CSU as an amalgamation of purchased tech companies.