Fairfax India new issue

[Viking]

6 hours ago, ranimo said:

@Viking - that, but if Prem does ever fall into a pattern of repeated errors, it will probably be different than the previous errors - he's a very smart guy (which is my basic thesis for holding FFH in the first place).

So I'm not trying to predict anything, just to state that this is a risk. And my understanding is that this risk is common to Fairfax India as well. So to repeat my question - given that you stated that you'd like to reduce exposure to FFH, how do you think about managing your overall exposure to Fairfax entities?

 

@ranimo When I look at Fairfax, when it comes to capital allocation, I value their track record from 2018 to present MUCH MORE than their track record 2017 and earlier. And the facts are clear - Fairfax's capital allocation since 2018 has been best in class (when compared to P/C insurance peers) and it's not even close. That is 6.5 years and running.

 

Now I do closely monitor what Fairfax is doing. If they do something significant that I don't like - something that materially impacts the fundamentals of the business - then I will do what any rational investor would do: I would likely reduce my exposure. That is the same for every investment I hold.

 

My recent investment in Fairfax India is not complicated: it was because I thought it represented good value. Yes, I also own Fairfax. Am I concerned about my total weighting (Fairfax India and Fairfax)? No.

Edited June 14 by Viking

[valueventures]

2 hours ago, Viking said:

 

@ranimo When I look at Fairfax, when it comes to capital allocation, I value their track record from 2018 to present MUCH MORE than their track record 2017 and earlier. And the facts are clear - Fairfax's capital allocation since 2018 has been best in class (when compared to P/C insurance peers) and it's not even close. That is 6.5 years and running.

 

Now I do closely monitor what Fairfax is doing. If they do something significant that I don't like - something that materially impacts the fundamentals of the business - then I will do what any rational investor would do: I would likely reduce my exposure. That is the same for every investment I hold.

 

My recent investment in Fairfax India is not complicated: it was because I thought it represented good value. Yes, I also own Fairfax. Am I concerned about my total weighting (Fairfax India and Fairfax)? No.

Viking - just out of curiosity, what is your approximate total weighting to Fairfax and Fairfax India as a % of your total portfolio / total actively managed portfolio? Thanks!

[ranimo]

On 6/14/2024 at 9:20 PM, Viking said:

 

@ranimo When I look at Fairfax, when it comes to capital allocation, I value their track record from 2018 to present MUCH MORE than their track record 2017 and earlier. And the facts are clear - Fairfax's capital allocation since 2018 has been best in class (when compared to P/C insurance peers) and it's not even close. That is 6.5 years and running.

 

Now I do closely monitor what Fairfax is doing. If they do something significant that I don't like - something that materially impacts the fundamentals of the business - then I will do what any rational investor would do: I would likely reduce my exposure. That is the same for every investment I hold.

 

My recent investment in Fairfax India is not complicated: it was because I thought it represented good value. Yes, I also own Fairfax. Am I concerned about my total weighting (Fairfax India and Fairfax)? No.

Thanks for the answer!

[PJM]

I know I'm taking bit of a short cut to ask here but does anyone have an excel file with the latest holdings and respective valuation for Fairfax India? Also is the fee structure of 1.5/20 based on the book value and is it paid in equity or cash? Does it have any hurdle rate or high water mark?

[dartmonkey]

Check out this recent analysis: 

 

 

But for thoroughness, it's hard to beat Viking's spreadsheets, but I can't find it quickly. If memory serves, he had one posted here a few months ago. Maybe someone else can post a link.

 

As for the fee structure, it is 1.5/20 on the book value as you say, but the 20% only kicks in after a 5% hurdle. It is paid in cash or in shares, every 3 years, and after 9 1/2 years of existence, has been paid 3 times already, the first 2 times in shares, and recently in cash. The hurdle is a fixed 5%, not annualized (i.e. it is $10, $10.50, $11.00, etc., not $10, $10.50, $11.025, ...), so it is already only about a 3.4% hurdle because of the doubling of FIH's book value in the last 9 years, and in 10 more years it will have drifted down to 2.6%.

[Viking]

12 hours ago, PJM said:

I know I'm taking bit of a short cut to ask here but does anyone have an excel file with the latest holdings and respective valuation for Fairfax India? Also is the fee structure of 1.5/20 based on the book value and is it paid in equity or cash? Does it have any hurdle rate or high water mark?

 

@PJM The attached Excel file has what I have for Fairfax India (FIH tab). It has not been updated for 2 years (2022?)? But it might be better than starting from scratch. The Fairfax India tab shows you Fairfax's increase in ownership over the years. The BIAL tab shows you Fairfax India's increase in ownership over the years.

 

This file also contains my share information for most of Fairfax's equity holdings.

Fairfax Charts - Subs.xlsx

Edited Thursday at 04:22 PM by Viking

[ICUMD]

Anyone note the afterhours trading with a $15.15 close in FIH.U? Huge spike in volumes also. Didn't think this traded after hours.  Buybacks?

 

[gfp]

8 minutes ago, ICUMD said:

Anyone note the afterhours trading with a $15.15 close in FIH.U? Huge spike in volumes also. Didn't think this traded after hours.  Buybacks?

 

 

I see the trades but no clue what went down.  The only news I found was about Bangalore needing a second airport (and KIA getting a new taxiway).  I doubt that is the reason for the trading.  Hopefully we will learn something interesting soon

[SafetyinNumbers]

1 hour ago, gfp said:

 

I see the trades but no clue what went down.  The only news I found was about Bangalore needing a second airport (and KIA getting a new taxiway).  I doubt that is the reason for the trading.  Hopefully we will learn something interesting soon

It looks like there was a Market On Close (MOC) imbalance at the close. I used to check these religiously when I was on the prop desk at UBS as it was brand new and there was a lot of edge available. Maybe I should again .

 

The TSX publishes the imbalance at 3:40pm and brokers can enter orders in the MOC facility to offset the imbalance until the close. If the stock is going to move on the imbalance more than a certain percentage from the VWAP of the last 20 minutes of trading or the last price they publish a Price Movement Extension (PME). This allows brokers another opportunity to offset the imbalance.

 

This afternoon had a buy imbalance on the MOC and it grew when they published the PME. Meaning investors saw there was an imbalance to buy and more added to it then provided an offset. The stock went up to 15.15 because that was the clearing price. The buy imbalance acts like a tender at the close. For a buy imbalance, the shares offered at the lowest price in the MOC facility and in the open market get priority but all trades clear at the price needed to satisfy the buying.

 

i hope that’s explanation is helpful. I don’t remember all of the specifics but fairly certain on the mechanics.

 

It has me wondering why someone decided to trade it this way and if they have more to buy. 
 

 

 

 

[ICUMD]

@SafetyinNumbers thank you for sharing this info.

 

I suppose if someone wanted to develop a large position quickly in a thinly traded company, this would be the way to do it.  

 

Nice to see it head higher, though time will tell it's holding power.  Price is set by the small hands that trade.  

 

Perhaps a harbinger of good news to come.