Fairfax India new issue

[Crip1]

15 hours ago, villainx said:

 

So no Politcal Posts?  =P

 

 

Um,, no, not my favorite thing to do. Your post did give me a chuckle, though.

 

-Crip

[SafetyinNumbers]

47 minutes ago, TwoCitiesCapital said:

There are websites you can look through for CEFs at discounts AND premiums. Most fixed income CEFS trade at a premium when rates are dropping ...and a discount when they're rising due to the additional leverage giving them above average yields. 

Fixed income makes sense because presumably they are passing through the income. My point was that anything that looks like FIH trades at a discount like FIH. The discount to IV is even bigger because of how conservative they are with marks. Even the public positions trade at a discount in part because of how much FIH owns. 

[dartmonkey]

1 hour ago, TwoCitiesCapital said:

The fact that there are so many people so unhappy with everything, and FIH can do nothing right in their eyes, is precisely why I added 50% to my position recently. We have to be pretty close to peak pessimism IMO. 

I am jealous of you, I would do the same thing if I didn’t have such an outsized position already. Buying more on share price weakness has been something that has been possible for a long, long time…

 

But this conversation makes it seem likely that we are at something like peak pessimism. Maybe I will go a little more outsize, one last (?) time. You can’t often buy a bunch of assets growing at >10%/year at boxing day sale prices. 

[djokovic1]

5 hours ago, SafetyinNumbers said:

I think we just disagree about what market structure entails. These companies screen well and that’s what quants like. 

But there are 0 quant funds in these names. They are just too small in market cap. I own most of them and know most of the large shareholders.

[TwoCitiesCapital]

17 minutes ago, djokovic1 said:

But there are 0 quant funds in these names. They are just too small in market cap. I own most of them and know most of the large shareholders.

 

You know, stocks did go up before quants ever existed, right?

 

Quants are not a necessary ingredient for an upward share price movement or improving fundamentals. 

[Daphne]

Sorry to say…this whole discussion has turned very tedious 

[modiva]

I recently added and now have 22% of my public portfolio in FIH.  I started buying 3 years ago so I am sitting around 12% IRR. 
 

I believe it is cheap, downside is limited (20-30%) but upside is big (200-300%). I’d call this as an asymmetric opportunity. The fundamentals are very strong with BIAL traffic expected to double in the next 5 years. Besides, it’s a good hedge against US markets and inflation. 
 

I am prepared to add if the price drops materially and hold for 3-5 years. 

[SafetyinNumbers]

6 hours ago, djokovic1 said:

But there are 0 quant funds in these names. They are just too small in market cap. I own most of them and know most of the large shareholders.

Most active managers also use quant screens. 

[SafetyinNumbers]

10 hours ago, SafetyinNumbers said:

Most active managers also use quant screens. 

An example from Twitter. Ian is a smart guy and owns LATAM airports but they all screen well. FIH doesn’t.

 

[hardcorevalue]

Yes, I saw this too. He's a smart guy but this was a poor post. 

[SafetyinNumbers]

4 minutes ago, hardcorevalue said:

Yes, I saw this too. He's a smart guy but this was a poor post. 

Agree. I think it’s an example of how easy it is to pass over FIH for bad reasons. 

[gfp]

Is he a smart guy?  I remember him as like a 17 year old who sounds like McLovin

[SafetyinNumbers]

46 minutes ago, gfp said:

Is he a smart guy?  I remember him as like a 17 year old who sounds like McLovin

Could just be my confirmation bias. I usually tend to think people that I share similar views to me are smart.

[djokovic1]

On 12/25/2025 at 2:02 AM, SafetyinNumbers said:

Most active managers also use quant screens. 

 

The companies I listed generally screen very poorly. A quant screen would definitely not be a way to find them.

 

Also I think everyone would be fooling themselves, if the thesis is FIH is very undervalued because it's not on most investors radars because it doesn't screen well. I would give a bit more credit to Mr. Market.

 

If you really wanted to test that theory, you should ask all the people you know who own Fairfax but don't own FIH, why they don't own FIH. And why is FIH usually 1/10th the position size of a Fairfax position even though FIH is so significantly undervalued. Maybe that will give you the real reason.

[modiva]

44 minutes ago, djokovic1 said:

 

The companies I listed generally screen very poorly. A quant screen would definitely not be a way to find them.

 

Also I think everyone would be fooling themselves, if the thesis is FIH is very undervalued because it's not on most investors radars because it doesn't screen well. I would give a bit more credit to Mr. Market.

 

If you really wanted to test that theory, you should ask all the people you know who own Fairfax but don't own FIH, why they don't own FIH. And why is FIH usually 1/10th the position size of a Fairfax position even though FIH is so significantly undervalued. Maybe that will give you the real reason.

There are any number of reasons why a stock is cheap.  Fairfax Financial was trading ridiculously cheap for 5+ years. Microsoft was trading ridiculously cheap for 10+ years.  Many 5-10 baggers were trading ridiculously cheap when brilliant investors picked them up.  The thesis can be wrong or right, but can only be ascertained in hindsight. Therefore, it’s important to build your own thesis not blindly follow someone else’s. 

[SafetyinNumbers]

1 hour ago, djokovic1 said:

 

The companies I listed generally screen very poorly. A quant screen would definitely not be a way to find them.

 

Also I think everyone would be fooling themselves, if the thesis is FIH is very undervalued because it's not on most investors radars because it doesn't screen well. I would give a bit more credit to Mr. Market.

 

If you really wanted to test that theory, you should ask all the people you know who own Fairfax but don't own FIH, why they don't own FIH. And why is FIH usually 1/10th the position size of a Fairfax position even though FIH is so significantly undervalued. Maybe that will give you the real reason.

I know a few investors that own FIH and no FFH and more vice versa. The reason why my FFH positions is 11x FIH is because I understand the mechanism by which it rerates which is in part due to being in benchmarks. It also has excess capital for buybacks if it’s not rerating and because the floor ROE is high. Marginal FIH holders treat it much more as a trading stock because there are no buyers if the discount shrinks whereas the FFH multiple is open ended. Maybe I’m too influenced by ELF. An important distinction between the ones you listed and FIH is that ELF is also listed on the TSX. I’m much more familiar with Canadian market structure than foreign markets given my professional experience investing and trading Canada.
 

If an investor had high confidence in the Anchorage IPO timing, high confidence that the discount wouldn’t grow significantly and a small enough position to trade out on a big move, it probably makes sense to be long more FIH vs FFH for the catalyst. 
 

 

[TwoCitiesCapital]

My FFH position is ~4-5x my FIH position 

 

1) Largely in my confidence of the under valuation in 2021/2022 and having a much longer history and better understanding of FFH and the catalysts it needed that I was observing happen (higher interest rates, hard insurance market, and equity portfolio performance). 

 

2) because it has re-rated. Having something go up 5-6x in as many years does a lot for relative position size

 

3) because the trend is my friend in FFH, I've been adding to it more regularly than I add to FIH. 

 

My cost-basis in FIH today is only about 1/2 of my cost basis in FFH - the primary difference in market values is because of the relative performance over the last 4-5 years that I've been accumulating both. 

Edited December 26, 2025 by TwoCitiesCapital

[73 Reds]

19 minutes ago, TwoCitiesCapital said:

My FFH position is ~4-5x my FIH position 

 

1) Largely in my confidence of the under valuation in 2021/2022 and having a much longer history and better understanding of FFH and the catalysts it needed that I was observing happen (higher interest rates, hard insurance market, and equity portfolio performance). 

 

2) because it has re-rated. Having something go up 5-6x in as many years does a lot for relative position size

 

3) because the trend is my friend in FFH, I've been adding to it more regularly than I add to FIH. 

 

My cost-basis in FIH today is only about 1/2 of my cost basis in FFH - the primary difference in market values is because of the relative performance over the last 4-5 years that I've been accumulating both. 

+1  For me FFH is a far more comfortable hold.  It seems that for now the success of FIH hinges largely on a single event and owning all my shares in a tax-deferred account, not even sure I would continue to own it once the catalyst occurs, whereas FFH should stay and grow in both value and volume in the proverbial coffee can.  

[UK]

Not that it means much, but personally for me the main reason of possible sizing of FFH vs FIH (or even maybe one of the reasons why it is cheap overall or deserves some discount) is the the same as would be between US/Canada and India. It is a great emerging country, but still it is not the western world and even there shit could occasionally happen to big regulated/infrastructure business. Even if these political risks are hard to quantify, then as with most such countries, you also have a currency issue, which is not negligible.

 

Edited December 26, 2025 by UK

[73 Reds]

10 minutes ago, UK said:

Not that it means much, but personally for me the main reason of possible sizing of FFH vs FIH (or even maybe one of the reasons why it is cheap overal or deserves some discount) is the the same as would be between US/Canada and India. It is a great emerging country, but still it is not the western world and even there shit could occationaly happen to big regulated/infrastructe business. Even if these political risks are hard to quantify, then as with most such countries, you also have a currency issue, which is not neglible.

 

 

Yup.  Plus all the reasons cited by @CoGreenwhich&laight in prior posts.  But there's more; FIH is thinly traded and it is hard to buy too much at any one time.  And personally I don't like owning more than the CEO who owns next to nothing.  When FFH share price drops by 10% it is a golden opportunity as long as the earnings multiple and P/BV remain below its peers.  There are so many ways FFH makes money.  It is much harder to add to FIH though when it gets cheap enough, I have. 

Edited December 26, 2025 by 73 Reds
word

[RichardGibbons]

3 hours ago, djokovic1 said:

If you really wanted to test that theory, you should ask all the people you know who own Fairfax but don't own FIH, why they don't own FIH.

 

I don't own Fairfax India because I don't want to pay the management fees that Fairfax India returns to Fairfax, and because I think it's more likely than not that Fairfax will eventually do something that benefits Fairfax greatly at the expense of Fairfax India shareholders.

[Munger_Disciple]

22 minutes ago, RichardGibbons said:

 

I don't own Fairfax India because I don't want to pay the management fees that Fairfax India returns to Fairfax, and because I think it's more likely than not that Fairfax will eventually do something that benefits Fairfax greatly at the expense of Fairfax India shareholders.

 

+1

I own FFH but not FIH. I like to align myself with the management & GP entity. The other problem is that the mothership competes with FIH for India investments. 

And the fees (which IMO are too high) never sleep!

Edited December 26, 2025 by Munger_Disciple

[Malmqky]

I just started a position in FIH. 

 

I don't see how any of the bear arguments (Besides Prem doing something to benefit FFH and "hurt" FIH) would impact the thesis here. Some fees, illiquidity, etc. don't break anything.

[RichardGibbons]

2 hours ago, Malmqky said:

Some fees, illiquidity, etc. don't break anything.

 

I'm confused by this. The ROE is guaranteed to be lower than it "should be" every single year, forever.  If it would normally compound at 10%, it's instead going to compound at 8%. Investors who look at it will see the numbers and think, "After 20 years, if FIH is making 10% on its investments, then I've lost almost a third of my return as a result of fees going to Fairfax."

 

Why do you think that doesn't matter?

Edited December 26, 2025 by RichardGibbons
Fixed math error.

[Masterofnone]

They are such different investments. FIH is an emerging market play with potential high returns if many things happen to work out. Being a a Fairfax fan might make one more comfortable with the structure and management than if it was just some random emerging market hedge fund. If the Indian economy goes on a tear and the investing is sound, returns could be worth the risk. Is it better than putting money into the Nifty 100? To me it comes down to BIAL. And if the shares significantly re-rate due to an eventual IPO I'll likely sell a portion of my modest position.

But I bought 3 1/2 years ago with a cost basis below $12 and mostly hold shares in non-taxable accounts. 

The fact is, it has not been a great investment for most people and most of us who do hold are banking on the airport asset. 

Edited December 26, 2025 by Masterofnone