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Fairfax India new issue


thrifty

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Hi guys,

a longtime holder of FFH looking to invest directly in FIH-U.

any reason for the wide gap between FFXDF and FIH-U? +30%

thanks

 

FFXDF is the over-the-counter ticker in US markets; FIH.U is the ticker on the Toronto exchange (TSE). In both cases, they are in US dollars, but the FFXDF trades very infrequently and you can get some wonky prices. In principle, they should have the same value. But you are probably better off to buy the shares on the Toronto exchange if that is possible with your broker, and if not, perhaps put in a limit order for FFXDF with a price that closely matches the value you see for FIH.U.

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Hi guys,

a longtime holder of FFH looking to invest directly in FIH-U.

any reason for the wide gap between FFXDF and FIH-U? +30%

thanks

 

FFXDF is the over-the-counter ticker in US markets; FIH.U is the ticker on the Toronto exchange (TSE). In both cases, they are in US dollars, but the FFXDF trades very infrequently and you can get some wonky prices. In principle, they should have the same value. But you are probably better off to buy the shares on the Toronto exchange if that is possible with your broker, and if not, perhaps put in a limit order for FFXDF with a price that closely matches the value you see for FIH.U.

 

thanks, dartmonkey

now it makes sense. I was under the impression that FIH.U trades in CADs.

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  • 3 weeks later...

the potential for bangalore airport is massive..that alone should be worth the current market cap 5 years down the line

 

Do you have any supporting maths for this claim? ;)

 

Yes, Bangalore Airport publishes an annual report with all the numbers.. I have read a couple ..they are way ahead of their targets put out in 2007-08 period. You can also find some of these numbers in Fairfax India annual meeting presentation..you can find it here http://www.fairfaxindia.ca/news/Events/default.aspx

 

slide 31

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the potential for bangalore airport is massive..that alone should be worth the current market cap 5 years down the line

 

Do you have any supporting maths for this claim? ;)

 

Yes, Bangalore Airport publishes an annual report with all the numbers.. I have read a couple ..they are way ahead of their targets put out in 2007-08 period. You can also find some of these numbers in Fairfax India annual meeting presentation..you can find it here http://www.fairfaxindia.ca/news/Events/default.aspx

 

slide 31

I lived in bangalore for a long time and have often travelled through the airport. The 3% growth assumptions by the company is very conservative. air traffic is growing low double digits. also the land around the airport has a large optionality and future value as the city is expanding towards the airport too

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  • 3 weeks later...
  • 2 weeks later...

It is around 1.05x book today.

 

When I look at this thing, I wonder though if it is a good investment.  The performance fees seem huge and I am a bit concerned how they can perform given that hurdle.  For instance they have $2.5B assets or $2B equity against $105M in performance/advisory fees in the first 9 months of the year.  That is over 5% of equity in just 9 months.  These fees are a bit lumpy and so it is tough to gauge what they will be going forward.  However that seems to be a high take relative to the equity stake.

 

I can't help but think of GLRE or TPRE when I look at this.  Two companies backed by excellent managers that yet have failed to deliver.  Fees are not the whole story in those cases but they definitely cut into the returns.

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have they ever mentioned potentially decreasing the management fee as the entity scales?

 

Not that that's standard PE / HF practice or anything, but standard PE practice also involves a defined fund life and paying only on realizations (not permanent capital / unrealized) and HF's allow for redemption at NAV (quarterly to 3 years).

 

As this goes from $2B to more, the argument for the 1.5% management fee weakens.

 

Let's say they get to $6B in AUM in 10 years from equity offerings + returns. Will shareholders be okay with sending a cool $80 million / year large to a 77 year old Prem Watsa and his team.

 

He's already grown share count significantly and there's more to come on the follow plus they've generated a lot of returns. They've got to run a business and should be paid well if they're delivering value...but at a point the argument breaks down.

 

People won't care if they continue to do well, of course, but there will be the inevitable stumbles at some point.

 

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Now I am confused.

 

December 7, they said they are going to issue more debt and equity

http://www.fairfaxindia.ca/news/press-releases/press-release-details/2017/Fairfax-India-Files-Final-Universal-Shelf-Prospectus/default.aspx

 

December 29, they say they are going to repurchase shares.

http://www.fairfaxindia.ca/news/press-releases/press-release-details/2017/Fairfax-India-Enters-Into-Automatic-Share-Purchase-Plan/default.aspx

 

Are they doing this to give themselves the flexibility if the prices gets too high (issue more shares) or it gets too low (buy back shares)? I am almost sure I am not understanding things 100%.

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Now I am confused.

 

December 7, they said they are going to issue more debt and equity

http://www.fairfaxindia.ca/news/press-releases/press-release-details/2017/Fairfax-India-Files-Final-Universal-Shelf-Prospectus/default.aspx

 

December 29, they say they are going to repurchase shares.

http://www.fairfaxindia.ca/news/press-releases/press-release-details/2017/Fairfax-India-Enters-Into-Automatic-Share-Purchase-Plan/default.aspx

 

Are they doing this to give themselves the flexibility if the prices gets too high (issue more shares) or it gets too low (buy back shares)? I am almost sure I am not understanding things 100%.

 

 

The universal shelf prospectus doesn't necessarily mean that there will be a share issuance or a debt flotation.  It's just a filing to enable that possibility just in case they actually want to, or just in case it becomes attractive to do so.  FFH files one for the holdco every year.

 

 

SJ

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Hobbit: how do you figure that? Q3 bvps was 13.54. Current price is 14.78

 

Book value would have grown over 10% in q4 alone for FIH to be selling at below book value.

 

The book value stated by fairfax india is a bit misleading in lieu of the additional 10% BIAL stake bought by Ffxind for 200 million earlier this year.  This additional stake values the entire bangalore airport at 2bn which should put ffxind stake at 1.2 bn instead of 600 million being reported currently .

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