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2016


bluedevil
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Although I expect FFH's results in Q4 2015 to be flat at best, hopefully the first quarter of 2016 will be rewarding:

 

Profitable underwriting (if trends continue)

Falling bond yields

Falling inflation expectations

Major equity declines (about 14% so far in Russell 2000)

No new major equity blow ups (like Eurobank) -- at least that I know of!

 

Interestingly, the stock price has remained flat despite all of Fairfax's big bets trending significantly in its favor so far in 2016.  I bought some more stock today.

 

 

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How about the following: RFP, SD and XCO

 

Although I expect FFH's results in Q4 2015 to be flat at best, hopefully the first quarter of 2016 will be rewarding:

 

Profitable underwriting (if trends continue)

Falling bond yields

Falling inflation expectations

Major equity declines (about 14% so far in Russell 2000)

No new major equity blow ups (like Eurobank) -- at least that I know of!

 

Interestingly, the stock price has remained flat despite all of Fairfax's big bets trending significantly in its favor so far in 2016.  I bought some more stock today.

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How about the following: RFP, SD and XCO

 

Although I expect FFH's results in Q4 2015 to be flat at best, hopefully the first quarter of 2016 will be rewarding:

 

Profitable underwriting (if trends continue)

Falling bond yields

Falling inflation expectations

Major equity declines (about 14% so far in Russell 2000)

No new major equity blow ups (like Eurobank) -- at least that I know of!

 

Interestingly, the stock price has remained flat despite all of Fairfax's big bets trending significantly in its favor so far in 2016.  I bought some more stock today.

 

Probably negligible impact given that the majority of the damage was done last year, no? I haven't looked up the dollar amount these positions would have been carried at as of 12/31, but my guess after the massive equity writedowns that occurred/will occur in 2015 there won't be much left to write down to offset hedges.

 

The big one will be Blackbbery given that's is off its highs by 30% is a massive chunk of the equity portfolio, but even that will likely pale in comparison to the gains on TRS swaps and deflation hedges. They had nearly $6B in TRS at the end of Q3 - that will likely be a higher notional amount at the end of Q4 given the rally in equity markets so we're looking at close to $600-700M just from equity hedges and also assumes that they didn't increase the amount in light of the Fed rate hikes and the August/September warning signs.

 

Obviously that's offset by equity losses like the $175M lost on Blackberry and RFP since the beginning of the year, but it won't take much in the way of fixed income gains and insurance to get us to being very close to a $1B quarter if everything just stays as it is for the next two months. If things go lower, Fairfax is likely to do better. 

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