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FFH delisting from NYSE


Daphne

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williams406 and misterstockwell

 

i would like to know about td ameritrade stock conversion as well, is it seemless or do i need to do something extra. I assume in order to trade this we will need to use a phone (no internet trades) and the commission will no longer be 9.99

 

Mr. Stockwell,

 

I'm in a similar position to yours with client accounts held at TD Ameritrade. I just spoke with the trading desk and was told that holding and trading securities on the TSE is no problem provided U.S. dollar denomination. So we're good on this score. However, there was a question about the mechanics. Would there be a seamless transition of FFH (NYSE) to FFH.U (TSE, U.S. dollar denominated) or would FFH (NYSE) would need to be sold prior to buying FFH.U. Did you heard anything definitive on this aspect of the delisting?

 

Williams406

 

I did not ask about that. I figured that I own shares of Fairfax, which will remain the same no matter where they are listed. I assume there will be no transaction involved, but I better ask!

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My biggest hope is that this is not a precursor to going private.  

 

That was my first concern as well.  In the end I was a bit ambivalent about the ORH buyout but it was well timed for me and wasn't nearly as big as my FFH holding anyway.  I would not want to have to find something else to do with my resources at this point, even if they bought us out for 1.25 BV.

 

Hope not!

Maybe Prem will use the money from this reorganization to boost the dividend. I think he mentioned that possibility somewhere around the last CC, not?

Or is it just me getting greedy? :(

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Don't want to presume too much, but it seems like all the Canada guys (and gals) like the move and all the U.S. people (myself included) do not.  Makes sense.

 

I actually don't own the stock but have some option positions open - not really thrilled with this.  It may be a minor inconvience, but this has been one of my favorite companies the past 2 years and I would rather all but a few companies delist as opposed to this one.  Oh well. 

 

Maybe this will result in less "churning" of the stock - and create more long-term shareholders.  Don't have any proof of this, just a thought.

 

 

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I'm not going to be able to use my FFH as margin equity if I take delivery on the 2011 calls, now that it is going to be a "foreign" listed stock.

 

In order to preserve my margin borrowing capacity I'll need to take delivery of FFH and then move the shares to an account in Canada I assume?  Any tips on best/reasonable Canadian brokerage?

 

Eric as a US resident no Canadian broker will open an account for you, thank the SEC for this. I am sure you can find a US domiciled broker who will extend margin on Cdn listed securities.

 

 

That's so lame.  

 

But there's too much lame going around this week.  For instance, I've been trying to get a home loan the past couple of days, and I've been experiencing lame on a whole new scale that I never thought existed.  I quit my job in early 2008 so the only person who will give me a loan (after much hunting around) wants 40% down and 6.5% on a 30 yr fixed.  But if I had a job, it would be less than 5.5% and only 20% down for that 30yr fixed.  I asked them how much income I would need from that job to qualify for the 20% down loan, and they said "X".  Well, I told them that I already have 40 yrs worth of "X" in hand... 40 birds in hand has got to be worth more than one in the bush right?  I asked them what if the person with the income gets laid off?  Well, they said he could just go get another job.  So I said, well so couldn't I get another job if I had to?  I mean, this is absurd.  Personally, if it were my money, I'd rather lend it to the guy who had 40 yrs income, and who could pay cash for the full price of the home 4 times over right now (rather than just once over 30 yrs).   Is this why the financial system is such a mess, because lenders won't lend money to people of low risk and instead want the person that's one pinkslip away from foreclosure?  Why in the world do they act like this?

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I did the refinancing last month @ 4.3% for 15 yr fixed. They dont care about your brokerage a/c - the only thing is the W2, tax returns and bank statement. Your tax returns & bank statement should suffice.

 

It sounds like you have a job then, if you are talking about W2 forms.

 

I said I am retired.  There is no W2.  Bank account has less than $30k.  The money is in the brokerage a/c.

 

You need to have a job to qualify for a conforming loan -- I don't qualify because I don't have a job, so my only option is a "portfolio lender" who will keep the loan on the books.

 

Fannie/Freddie won't touch a loan issued to me (income is required), so that's why I get the door shut in my face.

 

 

Imagine, you could have $50m in Berkshire stock but... no income!

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ERICOPOLY why not pay cash then get a home equity loan?

 

Tax deduction.  You can only deduct mortgage interest up to $100k of principle amount for loans, if those loans weren't used to finance the initial purchase of the home.

 

But you gave me an idea -- maybe I can get a HELOC, and when I draw on it if I use the funds to buy stocks I could then probably deduct it as investment expense (much the same as margin interest).

 

I also wanted a 30 yr fixed loan, but I don't think I can get that with a HELOC (I could be wrong).

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Well, I told them that I already have 40 yrs worth of "X" in hand... 40 birds in hand has got to be worth more than one in the bush right?  I asked them what if the person with the income gets laid off?  Well, they said he could just go get another job.  So I said, well so couldn't I get another job if I had to?  I mean, this is absurd.  Personally, if it were my money, I'd rather lend it to the guy who had 40 yrs income, and who could pay cash for the full price of the home 4 times over right now (rather than just once over 30 yrs).

 

I realize this is getting off topic, but:

 

(1) Sounds like your "problem" is a nice one to have, and

 

(2) Sounds like you should just pay cash and be done with it.

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Eric, are those bankers related to the people who

wouldn't sell you a health insurance policy?  Why don't

you come clean and tell us the truth about your background?:)

Seriously, try a small bank that's in decent shape.

A great uncle had a very small bank that was one of

only three in the US that was sound enough to be permitted to reopen

the very day after Roosevelt's banking holiday ended

in the 1930's.  His secret?  They said he wouldn't make a

loan unless you could prove you didn't need one!  He lived

to be 101 and ran the bank until just before he died.

If he were still alive, he would lend you money.  

 

 

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I'm not going to be able to use my FFH as margin equity if I take delivery on the 2011 calls, now that it is going to be a "foreign" listed stock.

 

In order to preserve my margin borrowing capacity I'll need to take delivery of FFH and then move the shares to an account in Canada I assume?  Any tips on best/reasonable Canadian brokerage?

 

 

Get an account with Interactive Brokers.  They give 30% initial and maintenance margin on Toronto FFH.

 

http://www.interactivebrokers.com/en/p.php?f=margin

 

 

 

That looks like it's a viable alternative, thanks for the help. 

 

 

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Ericopoly.

Try Schwab (or may be others) who do home loans.

The last i heard they will take the portfolio size into consideration for the home loan..

do not know the full details, but maybe worth checking it out..

 

some small banks, who keep the loans on their books (& not sell to freddie/fannie) will be interested in doing your loan..

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ERICOPOLY why not pay cash then get a home equity loan?

 

 

But you gave me an idea -- maybe I can get a HELOC, and when I draw on it if I use the funds to buy stocks I could then probably deduct it as investment expense (much the same as margin interest).

 

Yep,

thats done all the time....well, used to be done alot.

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Hi Eric,

 

Regarding the question of securing a margin account against Canadian equities:  Ajay (our prime broker) isn't in the office right now, but I've left the question with one of his associates.  I should have an answer for you Monday morning.  If they do it, I'm sure some other brokers will also.  Cheers!

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ERICOPOLY why not pay cash then get a home equity loan?

 

Tax deduction.  You can only deduct mortgage interest up to $100k of principle amount for loans, if those loans weren't used to finance the initial purchase of the home.

 

But you gave me an idea -- maybe I can get a HELOC, and when I draw on it if I use the funds to buy stocks I could then probably deduct it as investment expense (much the same as margin interest).

 

I also wanted a 30 yr fixed loan, but I don't think I can get that with a HELOC (I could be wrong).

 

Eric, you can get a HELOC with your 15 year fixed...lenders are a little more restrictive then in years past as it relates to CLTVs, but if you have a good amount of equity in your home, then you will certainly be able to secure a HELOC.

 

-Crip

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It is clear to me based on all the comments that most American investors typically do not buy shares listed on non-U.S. exchanges. It is a very different situation up here in Canada where buying NYSE or NASDAQ listed companies is common occurence. We know the tax implications, we know that they are marginable, we know how to obtain filings/information, etc. The government even removed the 30% limitation on foreign securities held in retirement accounts to encourage global diversification. We are something like 3% of global GDP or a tiny amount, so it is normal for us to reach outside.

 

Also, I would bet that less than 10% of the current American Fairfax shareholders on this board would have ever heard of Fairfax Financial had it not been listed on the NYSE. The fact that they are looking to continue holding the company on the TSX is a testament to the respect that they have acquired over time for Fairfax. Without a NYSE listing, I am convinced that very few new U.S. shareholders will get to know Fairfax.

 

Finally, regarding popularity vs intrinsic value, isn't the earlier that we desperately need at the moment? Fairfax share price vs IV really sucks if you ask me and it has been for a long long time. Why is that? Blaming the shorts does not cut it anymore.

 

Cardboard      

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I just got of the phone with etrade and they said it would be no problem having FFH in an IRA or ESA account.  They just have to figure out how they will transition when they get more information themselves.  At the very least, I was told, etrade would just convert to the otc symbol after hours on the 19th.

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I appreciate the home loan ideas -- I agree though that it is off topic.  I walked in the door and checked my messages and was hit with the 40% down news and the delisting news at the same time (that's the only relation). 

 

What are you referring to when you mentioned the '40% down news and the delisting news....' ?

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I appreciate the home loan ideas -- I agree though that it is off topic.  I walked in the door and checked my messages and was hit with the 40% down news and the delisting news at the same time (that's the only relation). 

 

What are you referring to when you mentioned the '40% down news and the delisting news....' ?

 

 

In my first mention of the loan I was trying to get, I mentioned that they required me to put 40% down (I don't want to put more than 20%, which is the standard if I had income).  Within a few seconds I saw the news that FFH was being delisted (which set off a round of questions in my head), and then a few seconds later saw that I had to double my down payment if I want that house (There is nothing like being mentally anchored at 20%!).

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Ericopoly,

 

I know your pain. A friend of mine plays in the National Hockey League with the Columbus Blue Jackets and gets shut down for almost everything!

 

He is not overly business savvy, so he usually calls me for advice and I can't believe some of the stuff I hear. He has a 3 year contract(one way) for over half a million dollars a year and routinely gets shut down for things like American Express, Target and other cards. He just bought a condo and had a hell of a time getting approved as well. He had to eventually get his loan from a smaller, regional bank that does almost all the lending to the Blue Jackets, as no other bank will touch the players as many are Canadians and have little to no credit in the US. The banker at the regional bank said that in all the loans they have given to the players, they have never had one missed or late payment!

 

Common sense just isn't very common I guess!

 

P.S- He was buying some furniture the other day, and got embarrassingly declined for a card that would have allowed him to save 10% on his purchases. Is actually quite comical at this point!!

 

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