FFH Results

[petec]

 

3)  Having $100B in deflation insurance across Europe and the United States is incredible protection to have in this environment...This could literally define their average returns for the next decade if they're right about this.

 

 

Absolutely.

 

FT this morning claims that China produced as much cement in 2011 and 2012 as the US did in the 20th century.  real estate sales are down 8% y/y and new projects are down 22%.  China has had 25 months of consecutive PPI falls.  Deflation is not a stupid thing to protect yourself against, despite the money printing.

[Alekbaylee]

Is that why FFH SP has been going up lately?

Looks like there's suddenly (a lot) more appetite for the stock.

Guess some out there are anticipating some huge gains... ;)

[cwericb]

“Knowing that I have something in my portfolio that will mint money in the event of a severe downturn makes it a lot easier for me to be aggressive in other areas without worrying.”  -

zachmansell

 

Exactly.

 

Not being nearly as sophisticated an investor as many here, I feel that FFH is a good and simple way to help protect myself in the event of deflation and gain on the upside at the same time.

 

So, for me at least.....

 

1) it provides an uncomplicated way to hedge against the downside.

2) it currently produces an annual dividend better than a GIC

3) in the seven years since I bought FFH the DOW has risen by 16% while FFH share price has increased by 122%.

 

What about the future? Who knows, but FFH has made a lot of interesting investments, developed a world wide reputation with increased visibility, improved their insurance performance, and have expanded their presence in the global insurance industry.

 

Works for me. Wish I owned more.

 

eb

[naboo]

I wonder after the past couple of tough years, is there anybody who still has over 40% in FFH like me?

[ourkid8]

Not 40% but I am at 17%...

 

Tks,

S

 

I wonder after the past couple of tough years, is there anybody who still has over 40% in FFH like me?

[petec]

Not 40% but I am at 17%...

 

Tks,

S

 

I wonder after the past couple of tough years, is there anybody who still has over 40% in FFH like me?

 

16%

[Redskin212]

approx. 40%

[naboo]

approx. 40%

 

Now it should be the time to sell some FFH.  1.3 times book.

[karthikpm]

what' s causing FFH to be up 2.5% today? any news /headlines?  or just noise?

[bearprowler6]

BV has increased substantially since the end of the Q1 given the movement in the bond market combined with the sell off in the Russell 2000! Market is likely reacting to both of these along with the increasing threat of deflation in the Eurozone!

[Guest Dazel]

http://finance.yahoo.com/news/gundlach-could-verge-one-biggest-190053082.html

 

Fairfax was one of the very very few who bet big and won this year in the bond market. You have to love these guys....balls of steel!

I just love it....what small group can do when they stick together.

 

Dazel.

[Cageyone]

My first post – and it’s a big thank you to all of you for your experienced insights into FFH!  As background, I am a retiree with a rolling 10 year (hopefully!) time horizon.  I acquired my first 200 FFH shares in 1991 at under $14 – and have added on pullbacks ever since to the point that FFH is currently 49% of my portfolio (Gio, it was 49.7% on the day last June when you started your “Mr. Market….50%” thread!).

 

I’m basically a “buy and hold” kind of investor.  But because my FFH holding is so high (I doubt if any financial planner would recommend this allocation!) – and because the past few years’ BV performance has been so mediocre – I have read with particular interest all of your views (both positive and negative!) on the long-term prospects for FFH to assess whether or not to change my “buy and hold” strategy with respect to FFH.  So keep up the great dialogue as I puzzle through my dilemma!

 

[giofranchi]

My first post – and it’s a big thank you to all of you for your experienced insights into FFH!  As background, I am a retiree with a rolling 10 year (hopefully!) time horizon.  I acquired my first 200 FFH shares in 1991 at under $14 – and have added on pullbacks ever since to the point that FFH is currently 49% of my portfolio (Gio, it was 49.7% on the day last June when you started your “Mr. Market….50%” thread!).

 

I’m basically a “buy and hold” kind of investor.  But because my FFH holding is so high (I doubt if any financial planner would recommend this allocation!) – and because the past few years’ BV performance has been so mediocre – I have read with particular interest all of your views (both positive and negative!) on the long-term prospects for FFH to assess whether or not to change my “buy and hold” strategy with respect to FFH.  So keep up the great dialogue as I puzzle through my dilemma!

 

Well, all I can say is I look for outstanding entrepreneurs, like Mr. Watsa, at the helm of predictable businesses, like FFH (insurance imo is a predictable enough business, meaning that I don’t see it subject to any sort of disruptive change in the foreseeable future).

 

But… I would be glad if I am right about the man and about the business 5 times out of 10!

 

Therefore, I invest my firm’s assets in 5 to 10 companies, and almost never exceed a 30% position. ;)

 

Cheers and thank you very much for your first post!

 

Gio

 

[Cageyone]

More support for Prem’s China thesis?

 

http://www.globeinvestor.com/servlet/ArticleNews/story/GAM/20140503/RBCOVERCHINAATL/

 

[One World Trader]

Why not invest 80 - 100 percent in Fairfax Financial for a 10 year horizon with opportunity cost aside?

[colinwalt]

Draghi Gets Ready to Go Negative as Inflation Sinks

 

http://www.bloomberg.com/news/2014-05-30/draghi-gets-ready-to-go-negative-as-inflation-sinks.html

[no_free_lunch]

Cageyone,

 

That is a pretty incredible story on your FFH position.  35x your initial investment!  Well done!

 

I am very interested what else is in your portfolio.  :)

 

Thanks in advance.

[Cageyone]

Hi no_free_lunch!

 

The next 20% of my portfolio is in what I view as infrastructure stocks (BAM & TRP).  I'm holding about 10% in cash and the other 20% is a mixture with a bias towards resource names (the largest being MX, CFP and TCK.B).  This 20% mixture also has some small positions in some of Prem's so far less than stellar picks i.e. RFP, SD & BB (average cost mid 20s!)  I also followed Prem into Canwest, which my "buy & hold" approach took me to zero! 

 

Part of my dilemma is that about 75% of my portfolio is tax-deferred and being north of 71 I will soon have to start selling down some positions in order to keep the tax man happy!

 

So I remain open to suggestions!

 

Cheers!

[One World Trader]

Hi Cageyone. How did you become interested in FFH in 1991?

[Cageyone]

Hi One World Trader!

A full-service stockbroker who I have known socially since the early 1970s -- and with whom I have done all of my investing -- had met Prem and was very impressed with him both as an investor and as an individual.  So I followed his suggestion re FFH "and the rest is history"! 

Cheers!

[Crip1]

approx. 40%

 

Now it should be the time to sell some FFH.  1.3 times book.

 

 

 

Correct me if I’m wrong, but with the $15 increase, Fairfax is selling at 37% above BV, a valuation not seen since before the turn of the century. Granted that Fairfax’ bond portfolio is seeing some significant gains since 31 March but, still, this is pretty “frothy” for Fairfax, which brings about a dilemma. Being that the Fairfax shares are in a retirement account and there will be no tax impact on selling these shares, I’m tempted to sell 25-50% of my FFH (Fairfax is my top holding, comprising close to 25% of my total) in order to replenish some dry powder for future opportunities, which may, in fact, be Fairfax should the price drop enough.

 

 

So, is anyone else looking at this run-up as a selling opportunity?

 

 

-Crip

[giofranchi]

So, is anyone else looking at this run-up as a selling opportunity?

 

 

-Crip

 

Crip,

I really wish I knew how to jump in and out of stocks… But I don’t think I can… I sell a great business (...to correctly recognize a great business is already hard enough!) only if it is wildly overvalued… at 1.3 – 1.4 x BV FFH imo is still undervalued… ;)

 

Cheers,

 

Gio

 

[petec]

So, is anyone else looking at this run-up as a selling opportunity?

 

 

-Crip

 

Crip,

I really wish I knew how to jump in and out of stocks… But I don’t think I can… I sell a great business (...to correctly recognize a great business is already hard enough!) only if it is wildly overvalued… at 1.3 – 1.4 x BV FFH imo is still undervalued… ;)

 

Cheers,

 

Gio

 

Me too.  With Fairfax, you've got increasingly good insurance businesses and a good investment team.  That ought to be valued at >1x bv.  How much > is hard to say but if they can do 13% average RoE, and I don't see why that would be hard LT, you're still paying only 10x.  Plus, you have some exceptional optionality if Prem's macro thesis plays out.  This combination of attributes is pretty rare if you ask me, and it is certainly a very different company than it was through most of the 2000's when it traded on a lower multiple.  I'm a happy holder at these levels and considering continuing to add.

[Partner24]

approx. 40%

 

Now it should be the time to sell some FFH.  1.3 times book.

 

 

 

Correct me if I’m wrong, but with the $15 increase, Fairfax is selling at 37% above BV, a valuation not seen since before the turn of the century. Granted that Fairfax’ bond portfolio is seeing some significant gains since 31 March but, still, this is pretty “frothy” for Fairfax, which brings about a dilemma. Being that the Fairfax shares are in a retirement account and there will be no tax impact on selling these shares, I’m tempted to sell 25-50% of my FFH (Fairfax is my top holding, comprising close to 25% of my total) in order to replenish some dry powder for future opportunities, which may, in fact, be Fairfax should the price drop enough.

 

 

So, is anyone else looking at this run-up as a selling opportunity?

 

 

-Crip

 

Hi Crip, that's a good question. I'm not tempted that much, but your question make sense. I would not sell in the hope of buying it at a cheaper price. Nobody can predict if FFH will see at 300's, 400's, 500's or significantly higher over the next few years. If you find a business that fit your criteria and is more appealing to you than FFH, your decision would intrinsicaly make sense, but no crystall ball can tell you if FFH will be cheaper down the road.

 

Cheers!

 

 

[cwericb]

Crip, I have also been tempted to dump FFH in the past simply because there have been times when we have seen some pretty large swings in the price.  But you just never really know which way the share price it is going to go and if I sold out and the price went up instead of down I would find it hard to make the decision to get back in at a higher price. So I decided some time ago that FFH was a long term position for me.

I have three - FFH.TO, RY.TO & BOX.TO and all have been good to me.

 

From their past record and their ever increasing long term diversified investments I have confidence in the company’s growth and upside potential. But as Prem has said, returns may be “lumpy”.

 

Additionally I also get some protection against a market downturn through their hedges. So It offers a decent potential for growth, some protection on the downside and on top pays about a 2% dividend which is as good as I can get in any guaranteed investment.

 

You’ve been invested in FFH for a long time so you know all of this. Many times I have asked myself the same question as you until I decided to just put FFH on the back burner. When there is a substantial dip, rather than getting disappointed or questioning my strategy, I pick up a few more shares.

 

I suspect that you are like me. I look at 500+ and wonder if I should cash in my chips, but then I remember that I have already made the decision a some time ago to just ride it out and see where this takes me. So far the ride has been good.