Jump to content

Fairfax Stock this week Part II


Tommm50
 Share

Recommended Posts

Am I alone in wondering what the heck is going on with the trading of this stock? It has made billions in the face of an epic financial disaster over the last two years, has grown book value at an eye popping clip, just announced a quarter that beat analysts estimates by over $20 dollars a share! Results, it gets zero mention in the trade press for the spectacular performance and the stock actually goes down on higher than average volume.

 

We've all noted the power of the hedge funds and their influence with the trade press, particularly the Wall St. Journal. The market maker on this stock has done weird things in my opinion. Is it possible the hedge funds being sued by Fairfax are wielding their influence behind the scenes?

 

Paranoia strikes deep...into your soul it will creep... (name that tune).

Link to comment
Share on other sites

As to price movement: when I first bought FFH in 2006 I was continually flabbergasted at large price movements for seemingly

no reason, but after looking at it for over 3 yrs. now I am resigned to these moves.  Still amazes me tho.

GAF

Link to comment
Share on other sites

Partner,

 

Too funny.  I mentioned an industry even more boring than insurance a few weeks ago on this board and had zero replies.  The funny part is that this stock has outperformed Fairfax since I bought it 13 years ago.  Even this board has selective hearing. Oreilles de c..!

 

-O

 

Let me guess just for fun:

 

- Fairfax is an insurance company

- Insurance is boring, unless something really bad happens (AIG, hurricanes, etc.)

 

But anyway, the weighing machine will do it's job over time...just too busy with more popular stocks actually ;-)

Link to comment
Share on other sites

Over the years I have bought this stock for well under a $100.00 CDN and almost $600.00 CDN.

I remember one day (before listing on New York) the stock price rose around $80.00 CDN for no apparent material reason. I think it was Prem who made a comment something to the effect that "if it continued like this they would own the world". I think even he thought the price movement was kind of crazy.

Again, over the years trying to guesstimate the stock price is a waste of time.

I settle just to know the direction of its intrisic value. I don't have any choice.

I think the business model is rather unique because of what HWIC bring to the table.

I think we all know what will happen when all the stars align.

They have toughed it out good economic times and done well in disasterous economic times.

What else is there?

Link to comment
Share on other sites

Partner,

 

Too funny.  I mentioned an industry even more boring than insurance a few weeks ago on this board and had zero replies.  The funny part is that this stock has outperformed Fairfax since I bought it 13 years ago.  Even this board has selective hearing. Oreilles de c..!

 

 

Omagh,

do tell, I dont remember the thread. I havent been in the general section much lately if thats where it was posted.

 

 

Smazz

Link to comment
Share on other sites

"For What Its Worth"  by Buffalo Springfield

 

Love that song but have to credit wikipedia to remember name

 

Absolutely correct, although I mangled the second line it's "into your heart it will creep".

 

I actually had been quoting another line in that song in listening to the partisian politics of the US: "Mostly say 'Hooray for our side.' "

 

Regarding FFH pricing, there is more than a kernal of truth to JEast's response. Over the years, FFH's "price" and "value" have moved in the short and intermediate terms quite independently of each other. Over the long term, the two converge. The price quote means far less to me than the specifics of the Q3 report...

 

-Crip

Link to comment
Share on other sites

Sorry Smazz...still buying and since it's a low volume stock, I can name my price and wait.

 

From the pool of stocks that I've bought or considered buying over the years, let me add a few more stocks that it beat: ca:ffh, jnj, brk.a, pfe, wmt, msft, csco and a few that it didn't: dell, ca:hcg, ca:gbta, amzn.  You'll note that the capital intensity of each of these stocks is very low -- one of my primary considerations.

 

-O

 

Partner,

 

Too funny.  I mentioned an industry even more boring than insurance a few weeks ago on this board and had zero replies.  The funny part is that this stock has outperformed Fairfax since I bought it 13 years ago.  Even this board has selective hearing. Oreilles de c..!

 

 

Omagh,

do tell, I dont remember the thread. I havent been in the general section much lately if thats where it was posted.

 

 

Smazz

Link to comment
Share on other sites

Rather frigging tortorous isn't it?   ???

 

 

 

Are you all kidding me?  This is one group of the most dedicated value investors I know of.  And yet there are messages bemoaning the mood swings or lack of mood swings of mister market?  Suck it up guys and gals!  The intrinsic value of FFH just went up, while the price quote didn't.  That means we have yet another arbitrage opportunity.  We should be celebrating that we can still get FFH at below book, and that FFH just 'went on discount at the mall', not bemoaning that Mr Market hasn't recognized the boost in book value.  Come on!  You are all one of my sources of inspiration and encouragement, don't be getting into Mr Market's moodiness! :-)

 

Link to comment
Share on other sites

I agree with probably most of the posters on this board - FFH somewhat (maybe slightly) undervalued at this point in the game.

 

Not to pump a stock I own, but it seems CNA trades a much bigger discount to book value ($22 share price, $35 BV).  There are many insurance stocks trading for less than book - this discount seems too significant.

 

I recently sold my FFH, wrote some put contracts (long dated) at the $250 area, and bought some CNA today.  I talked to a couple other investors buying into CNA.  In addition to CNA - I also own AHL.

 

 

Link to comment
Share on other sites

"The price quote means far less to me than the specifics of the Q3 report..."

 

So, you're looking at what's happening on the basebal field instead of the scoreboard that his managed by a drunk and depressive fellow ;-) I'm on your side Steve!

 

Cheers!

 

 

Philippe, you said it much more colorfully than me!

 

-Crip

Link to comment
Share on other sites

I agree with probably most of the posters on this board - FFH somewhat (maybe slightly) undervalued at this point in the game.

 

Not to pump a stock I own, but it seems CNA trades a much bigger discount to book value ($22 share price, $35 BV).  There are many insurance stocks trading for less than book - this discount seems too significant.

 

I recently sold my FFH, wrote some put contracts (long dated) at the $250 area, and bought some CNA today.  I talked to a couple other investors buying into CNA.  In addition to CNA - I also own AHL.

 

 

 

Hey I was thinking the same thing and created a thread to discuss CNA and L. Its in the General Section.

 

They seem to be a Fairfax without the investment gains and have brought in a new CEO from Chubb which I am hoping fixes that. I would expect either consistent underwriting profit or fairly decent investment performance and CNA has neither.

 

----

 

On FFH, I own FFH leaps which are up significantly and will cash in at some point. I have seen a 20% drop in their valuable but, have gotten used to FFH. I am guessing in December it will rally for no reason then fall on the next Q. ORH behaved the same way for some reason. You just have to pick your spots I guess.

Link to comment
Share on other sites

  • 2 weeks later...

Partner/Smazz,

 

How's this for boring? Auto parts distribution...snore.  But, it's a moat on a set of captive retailers and captive jobbers that require a constant supply of parts.  The average age of car in North America continues to climb and people continue to service those older cars.  In this recession, it's a hard market for auto parts distributors and margins have been increasing accordingly.  It's not the industry or the industry economics that matter, it's a talented group of people who have the talent, desire, and opportunities to improve costs and service.  The company has grown its talent pool and continues to have a founder as chairman, an ex-CEO and an ex-CFO on the board, and a current CEO who rose through the ranks and made his mark as CIO.  They grow with fair and friendly acquisitions -- sounds familiar -- with a strategic focus on growth by acquisition in a fragmented marketplace.  CEOs have a RoCE bonus in their employment agreement.  In 13 years, the worst year was a 10% RoCE, but typically above 15% and you could buy it for close to book value several times.

 

One thumbnail calculation that I like to do is to take the average RoCE for the last 5 or 10 years and multiply it by 1/book value.  Since most stocks trade for a premium over book, what's the premium that I'm paying for every dollar of equity being purchased per share?  If RoCE is the return that I'm getting per dollar of equity, it's roughly an annual coupon similar to a bond.  Then by multiplying by 1/BV, it roughly tells me the coupon after factoring in the premium to book and tells me the coupon spread over a 10-year treasury.  If I can buy a growing coupon with a starting point above 10%, I'm interested.  What makes me continually excited about this company is the steady and continuous growth fed by its moat.  It was my first ever stock purchase 13 years ago and it's been a wonderful learning experience to have this stallion in the stable.  You'll know that I've been adding over the last 12 months after doing the calculation based on some of the 52-week lows.  The double play of rising earnings and rising P/E's lies ahead.

 

http://www.uniselect.com/eng/PDFs/roadshow%20septembre%2021%202009.pdf

 

Cheers,

 

-O

 

Even this board has selective hearing. Oreilles de c..!

 

Hi Omagh, and wich stock was that?

 

Thanks.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...