Fixed income positions

[muscleman]

They have 15 bn fixed income portfolio. 100 bp raise in interest rate results in over 1 bn losses.

I know they reduced the equity hedges significantly but how about their fixed income portfolios? I can't find any news related to that.

[gfp]

subsequent to quarter end: "The company has sold approximately 90% of the U.S. long term treasuries in its investment portfolios; as a result, its cash and short term investments will be in excess of $10 billion. "

 

http://www.fairfax.ca/news/press-releases/press-release-details/2016/Fairfax-Financial-Holdings-Limited-Third-Quarter-Financial-Results/default.aspx

[muscleman]

subsequent to quarter end: "The company has sold approximately 90% of the U.S. long term treasuries in its investment portfolios; as a result, its cash and short term investments will be in excess of $10 billion. "

 

http://www.fairfax.ca/news/press-releases/press-release-details/2016/Fairfax-Financial-Holdings-Limited-Third-Quarter-Financial-Results/default.aspx

 

Thank you! I have a few concerns.

1. They didn't say when they sold these US Treasuries. So it could be sold after Trump was elected and interest rate started spiking, which means they already lost quite a bit on the bonds before they sold.

 

2. Cash and short term investments were 4.9 bn at 2016 Q3 end. With this statement, they raised 5 bn cash, and that's equal to 90% of their US treasuries. But their total bond position is 15 bn, so they still have 10 bn bonds that they are holding. According to page 23, 100 bps increase results in 1.2 bn losses, so what's their actual book value per share as of today? I guess it is less than $406 at 2016 Q3 end.

http://s1.q4cdn.com/579586326/files/doc_financials/2016/2016-Q3-Interim-Report-Final.pdf

 

 

I like their insurance underwriting results but I am concerned with their investment results.

 

 

 

[thepupil]

Thank you! I have a few concerns.

1. They didn't say when they sold these US Treasuries. So it could be sold after Trump was elected and interest rate started spiking, which means they already lost quite a bit on the bonds before they sold.

 

press release is dated November 3rd.

 

[gfp]

"I like their insurance underwriting results but I am concerned with their investment results."

 

Join the club.  Probably has something to do with the 20+% decline in Market Cap since the beginning of October.

[muscleman]

Thank you! I have a few concerns.

1. They didn't say when they sold these US Treasuries. So it could be sold after Trump was elected and interest rate started spiking, which means they already lost quite a bit on the bonds before they sold.

 

press release is dated November 3rd.

 

 

 

Err...... I am sorry for posting such dumb questions. Thank you for pointing out. :'(