SafetyinNumbers Posted January 7 Posted January 7 51 minutes ago, petec said: Apologies for the lazy question, but has anyone seen a coherent, detailed justification for why BIAL will be worth (for example) at least 2x current carrying value within 5 years? My gut instinct is that it will be, but I haven't followed it in enough detail to put a good thesis together. I think it’s worth 2x right now. What are you looking for? Relative valuation vs other airports suggests it’s worth that. A DCF with more normal discount rates would get you there as well.
petec Posted January 7 Posted January 7 2 minutes ago, SafetyinNumbers said: I think it’s worth 2x right now. What are you looking for? Relative valuation vs other airports suggests it’s worth that. A DCF with more normal discount rates would get you there as well. Either. First time I have looked for details on BIAL so there's probably something obvious I have missed.
dartmonkey Posted January 7 Posted January 7 On 1/5/2026 at 9:09 PM, TwoCitiesCapital said: 40-50% rallies in 3 of the large underlying public equities certainly changes the math some! An extra $2-3/share in book value pending how they mark the private investments. ...and best of all - the market won't recognize it because much of that gain won't be in the Q4 numbers as a good bit of it happened after 1/1 so won't be until April that the impact gets publicly reported. So we still have more time to accumulate at ~$17 USD. Also, BV may go up enough to trigger more fees, without necessarily budging FIH share price, so there will be more concern about all the profit going to the mother ship. As before, I will be happier paying the fees than not having to pay them, but it is true that that makes us prisoners of this investment until Mr Market starts feeling more positive about the company. A couple more sales of positions with big gains might do it, or maybe it will take the Anchorage IPO to accomplish that.
gfp Posted January 7 Posted January 7 The share price traded above $20 twice in the last 12 months. People on this thread make it sound like this hasn't traded anywhere near book value in ages. There are worse things to deal with as an investor than multiple opportunities to buy and multiple opportunities to sell.
TwoCitiesCapital Posted January 7 Posted January 7 1 hour ago, dartmonkey said: Also, BV may go up enough to trigger more fees, without necessarily budging FIH share price, so there will be more concern about all the profit going to the mother ship. As before, I will be happier paying the fees than not having to pay them, but it is true that that makes us prisoners of this investment until Mr Market starts feeling more positive about the company. A couple more sales of positions with big gains might do it, or maybe it will take the Anchorage IPO to accomplish that. Same - especially as pointed out were nearing an inflection point where the value of all the private/public investments = the market cap and you get the crown jewel mostly for free. Crazy!
villainx Posted January 9 Posted January 9 1 hour ago, SafetyinNumbers said: FIH was active on the buyback last month. Ben must be lurking in the thread and took @CoGreenwich&Laight's comment to heart.
SafetyinNumbers Posted January 9 Posted January 9 22 minutes ago, CS said: Good sign. Peanuts if buybacks stop soon I don’t think over. 1% of the float is peanuts.
SafetyinNumbers Posted January 10 Posted January 10 37 minutes ago, CS said: I was comparing it to total shares outstanding Share price is just supply and demand. Fairfax and OMERS aren’t sellers.
Txvestor Posted January 10 Posted January 10 (edited) 13 hours ago, SafetyinNumbers said: Share price is just supply and demand. Fairfax and OMERS aren’t sellers. Exactly which is why if they allocated meaningful amounts of capital to this endeavor while it still makes economic sense to do so, then they can both make a great investment for shareholders and close the gap with what most people on this board believe its intrinsic value to be. If they keep talking the talk but don't act in any meaningful way, then it starts to sound like a fake narrative. FFH and Omers together own nearly 60%, I'm sure there are many more long term shareholders that won't sell at anything close to the current prices. Which means it would only take perhaps 20% or so of outstanding shares buyback, probably much less to close the gap. As to the reasons this is important, aside from rewarding patient 10+ yr shareholders, it's also important if they need to raise capital. If there was a massive capital raise by issuing shares at these level, trust in management would be seriously eroded, and the hurdle for whatever investment they use that money to make would be very high. So this isn't just a good to do thing. There are potentially operation reasons to do it. It would be really interesting to see how they structure the IDFC purchase if they do win the bidding. Edited January 10 by Txvestor
SafetyinNumbers Posted January 10 Posted January 10 4 minutes ago, Txvestor said: Exactly which is why if they allocated meaningful amounts of capital to this endeavor while it still makes economic sense to do so, then they can both make a great investment for shareholders and close the gap with what most people on this board believe its intrinsic value to be. If they keep talking the talk but don't act in any meaningful way, then it starts to sound like a fake narrative. FFH and Omers together own nearly 60%, I'm sure there are many more long term shareholders that won't sell at anything close to the current prices. Which means it would only take perhaps 20% or so of outstanding shares buyback, probably much less to close the gap. Maybe. I think E-L Financial thought that too and were surprised the discount didn’t close much after they bought half of the free float back. They also paid over 25% of the starting share price in special dividends, raised the regular dividend 30x and split the stock 100-1. ELF’s portfolio is closer to 80% public stocks and ETFs too so in theory should lead to a smaller discount.
Eng12345 Posted January 10 Posted January 10 13 minutes ago, Txvestor said: Exactly which is why if they allocated meaningful amounts of capital to this endeavor while it still makes economic sense to do so, then they can both make a great investment for shareholders and close the gap with what most people on this board believe its intrinsic value to be. If they keep talking the talk but don't act in any meaningful way, then it starts to sound like a fake narrative. FFH and Omers together own nearly 60%, I'm sure there are many more long term shareholders that won't sell at anything close to the current prices. Which means it would only take perhaps 20% or so of outstanding shares buyback, probably much less to close the gap. As to the reasons this is important, aside from rewarding patient 10+ yr shareholders, it's also important if they need to raise capital. If there was a massive capital raise by issuing shares at these level, trust in management would be seriously eroded, and the hurdle for whatever investment they use that money to make would be very high. So this isn't just a good to do thing. There are potentially operation reasons to do it. It would be really interesting to see how they structure the IDFC purchase if they do win the bidding. Yeah I generally ascribe to this sort of thinking, but the trick is you need incremental buyers at the incremental price. If no one buys it now, why would they buy it higher? This method of thinking/action changes nothing about that.
TwoCitiesCapital Posted January 10 Posted January 10 (edited) 1 hour ago, Eng12345 said: Yeah I generally ascribe to this sort of thinking, but the trick is you need incremental buyers at the incremental price. If no one buys it now, why would they buy it higher? This method of thinking/action changes nothing about that. +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. Edited January 10 by TwoCitiesCapital
SafetyinNumbers Posted January 10 Posted January 10 10 minutes ago, TwoCitiesCapital said: +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. It’s possible market structure will change but I wouldn’t bet on it. I think premium/discounts drive the narrative but flows drive price. With FIH not being in any benchmark there are no passive flows to get ahead of which keeps most flows out. I think the discount to IV is probably as wide as its ever even though the discount to book is tighter than average. I think it’s a result of investors trying to get in ahead of BV growth based on the IPO. At what discount will the buyers show up post IPO is a reasonable question if they don’t have the IPO catalyst to look forward to.
Haryana Posted January 14 Posted January 14 On 1/5/2026 at 6:14 PM, SafetyinNumbers said: I do find it a bit surprising that the INR doesn’t do better given how much gold Indians own. Emkay attributes this to behavioral traits: households treat gold as a combination of consumption and long-term savings, with 75-80% of gold holdings in jewelry. Holders rarely value their gold holdings, unlike financial assets, so a wealth effect does not come into play, according to Emkay economist Seshadri Sen. Read more at: https://economictimes.indiatimes.com/markets/stocks/news/5-trillion-in-gold-at-record-high-prices-indias-household-gold-could-now-be-bigger-than-gdp/articleshow/126223934.cms
TwoCitiesCapital Posted January 14 Posted January 14 On 1/5/2026 at 8:14 PM, SafetyinNumbers said: I do find it a bit surprising that the INR doesn’t do better given how much gold Indians own. 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.
SafetyinNumbers Posted January 14 Posted January 14 1 hour ago, TwoCitiesCapital said: 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. It’s being borrowed against and invested so I do think it helps the economy via credit creation. I had a theory that gold would help strengthen INR but it was explained to me last year that the government has a policy to weaken INR to help with exports.
djokovic1 Posted January 14 Posted January 14 On 1/10/2026 at 6:05 PM, TwoCitiesCapital said: 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. What is even more important is to control fundamental value creation (which management can), ie by buying back a large amount of shares outstanding when a discount exists. If done consistently, the discount will usually close or reduce and even if not you get meaningful intrinsic value/share compounding in the meantime.
SafetyinNumbers Posted January 14 Posted January 14 3 hours ago, djokovic1 said: What is even more important is to control fundamental value creation (which management can), ie by buying back a large amount of shares outstanding when a discount exists. If done consistently, the discount will usually close or reduce and even if not you get meaningful intrinsic value/share compounding in the meantime. In the current market structure, I think the only way that works is if it’s a take private. Even in that case, I think it happens at a big discount to intrinsic value even if it’s close to book value. I just don’t see where the incremental buyer comes from to keep the discount closed. I lean a lot on E-L Financial for my views on this but it’s a good comp also being listed in Canada where half of the float was bought back.
dartmonkey Posted January 14 Posted January 14 2 hours ago, SafetyinNumbers said: I lean a lot on E-L Financial for my views on this but it’s a good comp also being listed in Canada where half of the float was bought back. Just to make sure I'm understanding you, do you mean that despite the very substantial buybacks, the discount has not closed on ELF?
SafetyinNumbers Posted January 14 Posted January 14 40 minutes ago, dartmonkey said: Just to make sure I'm understanding you, do you mean that despite the very substantial buybacks, the discount has not closed on ELF? Exactly. The discount to BV was 35% in 2015. It ballooned to ~45% by the time they started buybacks in 2020, bought back half of the float, raised the regular dividend 30x, paid big special dividends and split the shares 100-1. The discount is still about 35%.
TwoCitiesCapital Posted January 14 Posted January 14 (edited) 2 minutes ago, SafetyinNumbers said: Exactly. The discount to BV was 35% in 2015. It ballooned to ~45% by the time they started buybacks in 2020, bought back half of the float, raised the regular dividend 30x, paid big special dividends and split the shares 100-1. The discount is still about 35%. 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 Edited January 14 by TwoCitiesCapital
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