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Fairfax Financial Holdings Limited: Financial Results for the Year Ended December 31, 2016

 

Marketwired MarketwiredFebruary 16, 2017

TORONTO, ONTARIO--(Marketwired - Feb 16, 2017) -

 

(Note: All dollar amounts in this news release are expressed in U.S. dollars except as otherwise noted. The financial results are prepared using the recognition and measurement requirements of International Financial Reporting Standards except as otherwise noted, and are unaudited.)

 

Fairfax Financial Holdings Limited (FFH.TO)(TSX:FFH.U) announces a fiscal year 2016 net loss of $512.5 million ($24.18 net loss per diluted share after payment of preferred share dividends) compared to fiscal year 2015 net earnings of $567.7 million ($23.15 net earnings per diluted share after payment of preferred share dividends), reflecting net losses on investments, particularly in the fourth quarter, more then offsetting strong operating income. Book value per basic share at December 31, 2016 was $367.40 compared to $403.01 at December 31, 2015 (a decrease of 6.4% adjusted for the $10 per common share dividend paid in the first quarter of 2016).

 

"Our insurance companies continued to have excellent underwriting performance in the fourth quarter and full year of 2016 with consolidated combined ratios of 90.1% and 92.5% respectively. In 2016, all of our insurance companies again had combined ratios less than 100%, with Zenith National at 79.7%, Fairfax Asia at 86.4% and OdysseyRe at 88.7%. Our operating income was strong at $1,039 million. Net losses on investments of $1,204 million were primarily as a result of fundamental changes in the U.S. in the fourth quarter that may bolster economic growth and business development in the future. Consequently, we removed all our defensive equity index hedges and reduced the duration of our bond portfolios to approximately one year. Our investment actions resulted in our having cash and short term investments in excess of $10 billion at year-end," said Prem Watsa, Chairman and Chief Executive Officer of Fairfax. "In the fourth quarter we announced our agreement to purchase Allied World for $4.9 billion, a transformative acquisition for Fairfax. We continue to be soundly financed, with year-end cash and marketable securities in the holding company approaching $1.4 billion."

 

The table below shows the sources of the company's net earnings, set out in a format which the company has consistently used as it believes it assists in understanding Fairfax:

 

Fourth quarter Year ended

December 31,

2016 2015 2016 2015

Gross premiums written 2,244.1 2,202.4 9,534.3 8,655.8

Net premiums written 1,954.6 1,910.5 8,088.4 7,520.5

Underwriting profit 197.4 264.2 575.9 704.5

Interest and dividends - insurance and reinsurance 101.2 96.1 463.3 477.0

Operating income 298.6 360.3 1,039.2 1,181.5

Run-off (excluding net gains (losses) on investments) (121.0 ) (67.6 ) (149.4 ) (74.1 )

Non-insurance operations 57.5 44.6 133.5 127.8

Corporate overhead, interest expense and other (126.3 ) (63.1 ) (374.0 ) (351.5 )

Net losses on investments (1,073.7 ) (200.1 ) (1,203.6 ) (259.2 )

Pre-tax income (loss) (964.9 ) 74.1 (554.3 ) 624.5

Income taxes and non-controlling interests 263.4 29.3 41.8 (56.8 )

Net earnings (loss) attributable to shareholders of Fairfax (701.5 ) 103.4 (512.5 ) 567.7

Highlights for 2016 included the following:

 

The combined ratio of the insurance and reinsurance operations was 92.5% on a consolidated basis, producing an underwriting profit of $575.9 million, compared to a combined ratio and underwriting profit of 89.9% and $704.5 million respectively in 2015, primarily reflecting greater catastrophe losses in 2016.

Net premiums written by the insurance and reinsurance operations increased by 10.7% to $7,905.0 million, primarily reflecting that Brit was consolidated only in June 2015 (net premiums written increased by 3.8% excluding Brit).

The insurance and reinsurance operations produced operating income (excluding net losses on investments) of $1,039.2 million, compared to $1,181.5 million in 2015, reflecting decreased underwriting profit and lower share of profit of associates, partially offset by increased interest income.

Interest and dividend income of $555.2 million increased from $512.2 million in 2015. As at December 31, 2016, subsidiary cash and short term investments accounted for 37.4% of the company's portfolio investments. Interest income as reported is unadjusted for the positive tax effect of the company's significant holdings of tax-advantaged debt securities (holdings of $3,263.9 million at December 31, 2016 and $4,946.2 million at December 31, 2015).

Net investment losses of $1,203.6 million in 2016 (net investment losses of $259.2 million in 2015) consisted of the following:

Fourth quarter of 2016

($ millions)

Realized gains (losses) Unrealized gains

(losses) Net gains

(losses)

Net gains (losses) on:

Long equity exposures (180.7 ) 334.6 153.9

Equity hedges and short equity exposures (2,681.4 ) 2,334.1 (347.3 )

Net equity exposures (2,862.1 ) 2,668.7 (193.4 )

Bonds 150.9 (932.4 ) (781.5 )

CPI-linked derivatives - (62.2 ) (62.2 )

Other 195.9 (232.5 ) (36.6 )

(2,515.3 ) 1,441.6 (1,073.7 )

Year ended December 31, 2016

($ millions)

Realized gains (losses) Unrealized gains

(losses) Net gains

(losses)

Net gains (losses) on:

Long equity exposures (184.2 ) 79.5 (104.7 )

Equity hedges and short equity exposures (2,634.8 ) 1,441.9 (1,192.9 )

Net equity exposures (2,819.0 ) 1,521.4 (1,297.6 )

Bonds 648.7 (326.0 ) 322.7

CPI-linked derivatives - (196.2 ) (196.2 )

Other 98.9 (131.4 ) (32.5 )

(2,071.4 ) 867.8 (1,203.6 )

Included in realized losses in 2016 was a loss of $2,663.9 million realized in the fourth quarter when the company, recognizing fundamental changes in the U.S. which obviated the need for defensive equity hedges, discontinued its economic equity hedging strategy, closing all of its short positions in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes effected through total return swaps.

On October 10, 2016 the company completed the acquisition of an 80% interest in PT Asuransi Multi Artha Guna Tbk. ("AMAG") from PT Bank Pan Indonesia Tbk. ("Panin Bank") for $178.9 million. Fairfax Indonesia will be integrated with AMAG and AMAG will distribute its insurance products through a long-term bancassurance partnership with Panin Bank. AMAG is an established general insurer in Indonesia.

On October 18, 2016 the company agreed to acquire from American International Group ("AIG") insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey, and certain assets and renewal rights with respect to the portfolio of local business written by AIG Europe in Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia. Through an ongoing partnership, Fairfax will support and service AIG's multinational business in the countries where business operations are acquired. Total consideration will be approximately $240 million. Each transaction is subject to customary closing conditions, including relevant regulatory approvals, and each transaction is expected to close during 2017.

On December 7, 2016 the company completed the acquisition of a 100% interest in Bryte Insurance Company Limited (formerly known as Zurich Insurance Company South Africa Limited) ("Bryte Insurance") from Zurich Insurance Company Ltd. for $128.0 million (1.8 billion South African rand). Bryte Insurance is an established property and casualty insurer in South Africa and Botswana.

On December 16, 2016 the company completed an underwritten public offering of Cdn$450 million principal amount of 4.70% senior notes due 2026, realizing proceeds of $334.5 million (Cdn$446.2 million) net of commissions and expenses. On January 30, 2017 the company announced cash tender offers to purchase a targeted aggregate principal amount of up to Cdn$250 million of its outstanding senior notes due 2019, 2020 and 2021.

On December 18, 2016, the company entered into an agreement to acquire all of the issued and outstanding shares of Allied World Assurance Company Holdings, AG ("Allied World"), a market-leading global property, casualty and specialty insurer and reinsurer. Under the terms of the agreement, Allied World shareholders would receive a combination of Fairfax subordinate voting shares and cash equal to $54.00 per Allied World share, for a total equity value of approximately $4.9 billion. On January 27, 2017, the company entered into an agreement pursuant to which Ontario Municipal Employees Retirement System will invest $1 billion in order to indirectly acquire approximately 21% of the issued and outstanding shares of Allied World simultaneously with the acquisition of Allied World by Fairfax. Closing of the transaction is subject to regulatory approvals and certain Allied World shareholder approvals, and is expected to occur in the second quarter of 2017.

The company held $1,371.6 million of cash, short term investments and marketable securities at the holding company level ($1,329.4 million net of short sale and derivative obligations) at December 31, 2016, compared to $1,276.5 million ($1,275.9 million net of short sale and derivative obligations) at December 31, 2015.

The company's total debt to total capital ratio increased from 21.8% at December 31, 2015 to 28.7% at December 31, 2016 as a result of debt issued during 2016 by the company, Fairfax India and Cara to finance various purchases and of the company's lower shareholders' equity at the end of 2016.

At December 31, 2016 the company owned $110.4 billion notional amount of CPI-linked derivative contracts with an original cost of $670.0 million, a market value of $83.4 million, and a remaining weighted average life of 5.6 years. The majority of the contracts are based on the underlying United States CPI index (53.8%) or the European Union CPI index (39.5%).

($ in millions)

Underlying CPI Index Floor

Rate(1) Average

Life

(in years) Notional

Amount Cost Cost(2)

(in bps) Market

Value Market

Value(2)

(in bps) Unrealized

Loss

United States 0.0 % 5.7 $ 46,725.0 $ 286.9 61.4 $ 35.2 7.5 $ (251.7 )

United States 0.5 % 7.8 12,600.0 39.5 31.3 34.3 27.2 (5.2 )

European Union 0.0 % 5.0 43,640.4 300.3 68.8 12.5 2.9 (287.8 )

United Kingdom 0.0 % 5.9 4,077.6 22.6 55.4 0.5 1.2 (22.1 )

France 0.0 % 6.1 3,322.5 20.7 62.3 0.9 2.7 (19.8 )

5.6 $ 110,365.5 $ 670.0 $ 83.4 $ (586.6 )

(1) Contracts with a floor rate of 0.0% provide a payout at maturity if there is cumulative deflation over the life of the contract. Contracts with a floor rate of 0.5% provide a payout at maturity if cumulative inflation averages less than 0.5% per year over the life of the contract.

(2) Expressed as a percentage of the notional amount.

At December 31, 2016 common shareholders' equity was $8,484.6 million, or $367.40 per basic share, compared to $8,952.5 million, or $403.01 per basic share, at December 31, 2015.

Subsequent to year-end:

 

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US Shiller PE at 27+ and they call it a day on the hedges, brilliant! Even adjusted for current low rates the US market is expensive by any standard. If they expect rates to rise (hence why the lower duration of bond portfolio), why are they now dropping the hedges? Do they assume rates will rise just a little, hardly impacting stock valuations in the US? If so, why did they hedge in the first place when valuations were so much lower. Deflation fears were covered by that other bet so that's no excuse really. It all doesn't make sense to me as they still can't admit the mistakes that were made. Serious case of intellectual dishonesty imo.

 

Probably my favorite example of how a track record can be completely irrelevant. Especially if it is based on above average risk taking, a low starting capital base and pure dumb luck. Imo FFH has had all three at one point in its history. Probably would have been better off today without the macro plays of the last 10+ years, including the winnings of '08-'09...

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Core insurance business seems sound.  Perhaps with the Allied World purchase, they are going back to their 'roots' and to doing what they do best.

 

I would be leary of any further non insurance/banking investments with this track record.

 

A drop in stock price =  accumulation opportunity???

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Their hedges were a big mistake, but if they had outperformed the markets with their stock selection there wouldn't be any problem.  The real problem is their disastrous stock selection of the last years. On the other hand one must say that their bond management is still one of the best.  Having cut their long duration a week before the election was a huge and (up to today) brillant move.

I hope they have learned a lesson and that from now on it will be back to basics again.

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US Shiller PE at 27+ and they call it a day on the hedges, brilliant! Even adjusted for current low rates the US market is expensive by any standard. If they expect rates to rise (hence why the lower duration of bond portfolio), why are they now dropping the hedges? Do they assume rates will rise just a little, hardly impacting stock valuations in the US? If so, why did they hedge in the first place when valuations were so much lower.

 

Because the hedges were never a value-driven bet on where the market would go, but a hedge against another Great Depression, which they feel is less likely with a deregulatory/Randian government.  I feel the messaging was always fairly consistent on this - hence how often they repeated the Ben Graham "if you weren't bearish in 1925..." quote.

 

I agreed with them at the time but clearly it was a massive mistake - especially since as you say the deflation hedges would have covered it just fine.

 

I'm inclined to agree with them now too, unless Trump goes all protectionist, in which case their timing may prove horrific.

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Their hedges were a big mistake, but if they had outperformed the markets with their stock selection there wouldn't be any problem.  The real problem is their disastrous stock selection of the last years.

 

Agreed 100%!

Last year again they lost money with their equity investments. It’s hard to believe…

I still like the business model of course, and I still like management (they have done a great job on the operating side of the business in recent years).

But insurance without good investment capabilities is clearly unsatisfactory: they should prove they can be good stock pickers again.

 

Cheers,

 

Gio

 

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There investing results during a huge bull market have continued to be as pathetic as imaginable. The company would be in so much better shape if they just put money into an index fund for the last decade.

 

Yes, they would.  I'm not sure I would have done better though, because I'd probably have had a lot more cash (I used Fairfax as my "hedge" to help me sleep at night despite being close to fully invested).  They were very clear that they were hedged and anyone who is disappointed in the performance of the hedges simply shouldn't have been invested in FFH.  As Gio and others have said, the place to focus is on the poor stockpicking which is where they didn't do what they said they'd do.

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I think some perspective is warranted.  Insurance is primarily about underwriting & fixed income management.  In both of these Fairfax has excelled.  The equity/distress is more of cyclical business with long periods of underperformance offset by periods of outperformance.  FFH has hit an unusual long period of underperfromance like many active managers.

 

As to the market being near a top, that depends upon interest rates.  If rates stay the same or go down (FFH's view) stocks are cheap.  If they go up to 5% they are overvalued.  Comparing the current earnings yield to historical levels needs to be adjusted for interest rates.  Aswath Damodaran does this on his site/blog & the results are that stocks are still cheap when compared to bonds.

 

Packer

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There investing results during a huge bull market have continued to be as pathetic as imaginable. The company would be in so much better shape if they just put money into an index fund for the last decade.

They were very clear that they were hedged and anyone who is disappointed in the performance of the hedges simply shouldn't have been invested in FFH.

 

 

Yeah, but in affect, they're basically saying "if you're looking for a company with a competent investment team, look elsewhere'.

 

 

They don't have to invest their float in equities. It's up to them to determine the best way to allocate this capital. And they've done a terrible job at that capital allocation for about 9 straight years.

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Yeah, but in affect, they're basically saying "if you're looking for a company with a competent investment team, look elsewhere'.

 

 

If a bad patch makes you incompetent, then yes.  And admittedly it's been a long bad patch (after a stellar patch).  But I don't pay them 1% plus a performance fee to beat the major indices.  I pay them a salary (and not a particularly big one) to protect their company and compound book value at a moderate rate.  I don't have serious complaints about the hedges.  I do worry about the stockpicking.  What really intrigues me is whether they will learn from their investing mistakes (as they clearly learned from their insurance acquisition mistakes).

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Here are the facts:

 

- Weather forecasts. They tried to predict rain. The sun shined a lot. How about building a ship that will do fairly well at both and bad times instead of predicting weather like that? Instead of trying to be wrong...wrong..wrong....right, what about ...ok if wrong or right...ok if wrong or right...ok if wrong or right...just like Berkshire and Markel?

 

- Cigar butts equities. Did very well when they had small to mid size money to invest. Did mediocre with a big portfolio.

 

 

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Here are the facts:

 

- Weather forecasts. They tried to predict rain. The sun shined a lot. How about building a ship that will do fairly well at both and bad times instead of predicting weather like that? Instead of trying to be wrong...wrong..wrong....right, what about ...ok if wrong or right...ok if wrong or right...ok if wrong or right...just like Berkshire and Markel?

 

- Cigar butts equities. Did very well when they had small to mid size money to invest. Did mediocre with a big portfolio.

 

+1!

 

Cheers,

 

Gio

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Included in realized losses in 2016 was a loss of $2,663.9 million realized in the fourth quarter when the company, recognizing fundamental changes in the U.S. which obviated the need for defensive equity hedges, discontinued its economic equity hedging strategy, closing all of its short positions in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes effected through total return swaps.

 

Donald Trump wins, Tails risks, 1 in 100 year storms, all vanish!!

 

Debt deleveraging?

 

All done.

 

"worried about the speculation in financial markets and the potential for a 50-100 year financial storm"?

 

No more.

 

"However, we have warned you many times in our Annual Reports of the many risks that we see and the great

disconnect between the markets and the economic fundamentals."

 

No more.

 

"Most investors consider the

2008/2009 recession and crash to be a once in a generation event – and it’s over! We differ because we think we

escaped the serious adverse consequences of that recession as a result of huge fiscal stimulus from the U.S., even

greater fiscal stimulus from China and the reduction in interest rates to 0% with massive monetary stimulus in the

U.S., Europe and Japan through QE programs. There is nothing to fall back on now if the U.S. and Europe slip back

into recession."

 

Now we have Trump!

 

"The potential for unintended consequences, and therefore of pain, is huge."

 

There can be no pain with Trump as president.

 

Vinod

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Included in realized losses in 2016 was a loss of $2,663.9 million realized in the fourth quarter when the company, recognizing fundamental changes in the U.S. which obviated the need for defensive equity hedges, discontinued its economic equity hedging strategy, closing all of its short positions in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes effected through total return swaps.

 

Donald Trump wins, Tails risks, 1 in 100 year storms, all vanish!!

 

Debt deleveraging?

 

All done.

 

"worried about the speculation in financial markets and the potential for a 50-100 year financial storm"?

 

No more.

 

"However, we have warned you many times in our Annual Reports of the many risks that we see and the great

disconnect between the markets and the economic fundamentals."

 

No more.

 

"Most investors consider the

2008/2009 recession and crash to be a once in a generation event – and it’s over! We differ because we think we

escaped the serious adverse consequences of that recession as a result of huge fiscal stimulus from the U.S., even

greater fiscal stimulus from China and the reduction in interest rates to 0% with massive monetary stimulus in the

U.S., Europe and Japan through QE programs. There is nothing to fall back on now if the U.S. and Europe slip back

into recession."

 

Now we have Trump!

 

"The potential for unintended consequences, and therefore of pain, is huge."

 

There can be no pain with Trump as president.

 

Vinod

 

Thank you for this. Just makes it all the more ridiculous.

 

I was relatively understanding of the partial move post-election to reduce duration and hedges. I did the exact same thing until we got more clarity on tax reform which had the potential to be a BIG change in my thesis. As time has passed, it appears tax reform won't happen quickly and won't be anywhere near as big as most Republicans would like, so I've added mine back.

 

Fairfax, on the other hand, went ahead and sold all of their bonds and killed their hedging program in the middle of a tightening cycle with valuations at their 3rd most expensive ever while corporate profits are significantly off their 2014 highs...all because of a change in president?

 

 

 

 

 

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Their hedges were a big mistake, but if they had outperformed the markets with their stock selection there wouldn't be any problem.  The real problem is their disastrous stock selection of the last years. On the other hand one must say that their bond management is still one of the best.  Having cut their long duration a week before the election was a huge and (up to today) brillant move.

I hope they have learned a lesson and that from now on it will be back to basics again.

 

Sounded like they are making a big trumpflation macro bet to me.  I'm not familiar with anyone who does macro (or should i say political trump and modi-casting?) well with huge amounts of money, would be especially surprised to find macro savants amongst purported fundamental value investors. 

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Included in realized losses in 2016 was a loss of $2,663.9 million realized in the fourth quarter when the company, recognizing fundamental changes in the U.S. which obviated the need for defensive equity hedges, discontinued its economic equity hedging strategy, closing all of its short positions in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes effected through total return swaps.

 

Donald Trump wins, Tails risks, 1 in 100 year storms, all vanish!!

 

Debt deleveraging?

 

All done.

 

"worried about the speculation in financial markets and the potential for a 50-100 year financial storm"?

 

No more.

 

"However, we have warned you many times in our Annual Reports of the many risks that we see and the great

disconnect between the markets and the economic fundamentals."

 

No more.

 

"Most investors consider the

2008/2009 recession and crash to be a once in a generation event – and it’s over! We differ because we think we

escaped the serious adverse consequences of that recession as a result of huge fiscal stimulus from the U.S., even

greater fiscal stimulus from China and the reduction in interest rates to 0% with massive monetary stimulus in the

U.S., Europe and Japan through QE programs. There is nothing to fall back on now if the U.S. and Europe slip back

into recession."

 

Now we have Trump!

 

"The potential for unintended consequences, and therefore of pain, is huge."

 

There can be no pain with Trump as president.

 

Vinod

 

Thank you for this. Just makes it all the more ridiculous.

 

I was relatively understanding of the partial move post-election to reduce duration and hedges. I did the exact same thing until we got more clarity on tax reform which had the potential to be a BIG change in my thesis. As time has passed, it appears tax reform won't happen quickly and won't be anywhere near as big as most Republicans would like, so I've added mine back.

 

Fairfax, on the other hand, went ahead and sold all of their bonds and killed their hedging program in the middle of a tightening cycle with valuations at their 3rd most expensive ever while corporate profits are significantly off their 2014 highs...all because of a change in president?

 

How important is public policy? (JPM 2015 AL)

 

Cheers,

 

Gio

IMG_0478.thumb.JPG.a1797031bebc45785f62ed5da39906ac.JPG

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The net return over the last 2 years is essentially flat after inflation - similar story over the last 5 years.

The only constant has been the dividend, and macro bets that would have paid well - had the event materialized 

 

To the technically minded;

Isn't this really just  a high quality bond + a long straddle on the market?

Interest on a $450-650 bond (share price) less the cost of the straddle = the dividend? 

Dividend - inflation on the bond = roughly zero?   

 

If you have the expertise to do this yourself, the power to you; but if you don't - at least recognize that this is essentially what you are getting. There's nothing wrong in that.

 

FFH is a great training ground, but everyone eventually has to fledge.

 

SD

 

 

 

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I am with basically everyone here, there is too much that has happened that it's hard to ignore.  I don't like doing business with people who won't admit a mistake.  FFH tries to emulate Berkshire but yet misses the key ingredients of humility and consistency in investment approach.  I think if the ffh bet is now long the market while their equity selection under performs then aren't I better off with an index fund?  At least VT is clear on what they own and why. :)

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Included in realized losses in 2016 was a loss of $2,663.9 million realized in the fourth quarter when the company, recognizing fundamental changes in the U.S. which obviated the need for defensive equity hedges, discontinued its economic equity hedging strategy, closing all of its short positions in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes effected through total return swaps.

 

Donald Trump wins, Tails risks, 1 in 100 year storms, all vanish!!

 

Debt deleveraging?

 

All done.

 

"worried about the speculation in financial markets and the potential for a 50-100 year financial storm"?

 

No more.

 

"However, we have warned you many times in our Annual Reports of the many risks that we see and the great

disconnect between the markets and the economic fundamentals."

 

No more.

 

"Most investors consider the

2008/2009 recession and crash to be a once in a generation event – and it’s over! We differ because we think we

escaped the serious adverse consequences of that recession as a result of huge fiscal stimulus from the U.S., even

greater fiscal stimulus from China and the reduction in interest rates to 0% with massive monetary stimulus in the

U.S., Europe and Japan through QE programs. There is nothing to fall back on now if the U.S. and Europe slip back

into recession."

 

Now we have Trump!

 

"The potential for unintended consequences, and therefore of pain, is huge."

 

There can be no pain with Trump as president.

 

Vinod

 

Thank you for this. Just makes it all the more ridiculous.

 

I was relatively understanding of the partial move post-election to reduce duration and hedges. I did the exact same thing until we got more clarity on tax reform which had the potential to be a BIG change in my thesis. As time has passed, it appears tax reform won't happen quickly and won't be anywhere near as big as most Republicans would like, so I've added mine back.

 

Fairfax, on the other hand, went ahead and sold all of their bonds and killed their hedging program in the middle of a tightening cycle with valuations at their 3rd most expensive ever while corporate profits are significantly off their 2014 highs...all because of a change in president?

 

How important is public policy? (JPM 2015 AL)

 

Cheers,

 

Gio

 

Prem W also did something similar when Modi came to power in India. He didn't even wait for a day to make pronouncements. History of politics in India is rife with anti-incumbency; Modi's place is not etched in stone, neither is Trump's. Making investments based on macro itself is bad, making them on election outcomes is worse. FFH needs to protect themselves from 1-in-100 year mega insurance catastrophes, not worry endlessly about macro economics. Have they cried wolf-wolf too often and are now staring at the proverbial wolf?

 

During one of the AGM's I attended (2010?), Prem's stated goal was "15% long term return  from here on" (no more 20% was what he was actually saying). How's that coming?

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