TwoCitiesCapital Posted June 27, 2017 Share Posted June 27, 2017 It's interesting how sentiment has shifted so quickly. When the company was hedged and expected return was pretty low (<6%), shares traded at 1.5x adj. BV. Now that the hedges have lifted, expected returns should be much higher (>10%), shares are trading at 1.0x adj. BV. :o Also, expected returns don't get close to 10% annually until the $10B sitting in cash gets invested - particularly after considering the share issued for Allied. Maybe you get 10-12% nominally from insurance in a good year...but that's not counting years of loss/under-performance when a catastrophic event occurs. To get consistent performance in the double-digits at today's price, you need the cash deployed. This requires two assumptions: 1) The cash will be deployed quickly 2) Those opportunities will be value additive I don't know about 1) and 2) is sketchy given that they removed hedges when asset prices were extremely expensive. The hope for many of us is actually that 1) doesn't happen which may increase the likelihood of 2). I am increasing my position myself just because I have faith in the long-term prospects of the company, but on a short-to-mid term basis, I understand why people aren't buying this and that it may get cheaper. Link to comment Share on other sites More sharing options...
Luckyone77 Posted June 27, 2017 Share Posted June 27, 2017 It is not really the hedges that are a problem, it is the difference between their stock selection and the hedges that is/was the problem. If their equities had done as well as the S&p and Russel , it wouldn't have hurt that much. But I am buying now. I do believe they have taken a radical but briliant decision to sell all their bonds a week before Trump. Some positions have gone up strongly in recent months. What you get is a good insurer with lots of cash , not too far from book anymore. In these rather expensive markets I believe FFH is one of the better propositions. And if in the coming years they find good opportunities to reinvest the cash, it could be a very strong performer with book value going up and much higher p/b ratio. The assumption here is that "they find good opportunities to reinvest the cash". Their terrible recent track record on that is why the stock price is so low and why it's hard to believe they will. It's one thing to just miss. It's another thing to be 180 degrees wrong. If they do regain their sanity, it's a steal at this price. If they maintain the same philosophy and gamble their money on a bad thesis and declining company then watch out below. It's tempting at this price. Link to comment Share on other sites More sharing options...
netnet Posted June 27, 2017 Share Posted June 27, 2017 ...during the last 5 years I have made good money in FFH, increasing my position while it was trading near 1.1xBVPS and lightening my position up while it was trading near 1.4xBVPS. If something similar happens in the future, buying at current levels might turn out to be quite profitable. Cheers, Gio Gio, So you have been trading in and out between 1.1 and 1.4 book? I have never been in FFH, nor have I tracked the P/BV ratio. How often does in hit the top and bottom ranges? once per year? Do you trade around 20%-30% of your position? I have done that with other names myself. (Speaking out loud, mostly to myself, but I know that some would really pooh, pooh this as a strategy, as in if you like the name then you should just buy and hold it, I am inclined your way, that is to trade a portion of the holding, which really would work when you are trading off of a set variable, like P/BV.) Link to comment Share on other sites More sharing options...
StubbleJumper Posted June 27, 2017 Share Posted June 27, 2017 ...during the last 5 years I have made good money in FFH, increasing my position while it was trading near 1.1xBVPS and lightening my position up while it was trading near 1.4xBVPS. If something similar happens in the future, buying at current levels might turn out to be quite profitable. Cheers, Gio Gio, So you have been trading in and out between 1.1 and 1.4 book? I have never been in FFH, nor have I tracked the P/BV ratio. How often does in hit the top and bottom ranges? once per year? Do you trade around 20%-30% of your position? I have done that with other names myself. (Speaking out loud, mostly to myself, but I know that some would really pooh, pooh this as a strategy, as in if you like the name then you should just buy and hold it, I am inclined your way, that is to trade a portion of the holding, which really would work when you are trading off of a set variable, like P/BV.) Back in the good old days when Odyssey Re was listed on the NYSE, some of us made good money by swapping back and forth from ORH to FFH depending on the relative valuation. In retrospect, ORH offered a number of opportunities for easy money... Link to comment Share on other sites More sharing options...
nwoodman Posted June 29, 2017 Share Posted June 29, 2017 If it makes you feel better. Brian Bradstreet is also buying at these levels https://www.thecerbatgem.com/2017/06/21/fairfax-financial-holdings-ltd-ffh-director-f-brian-bradstreet-purchases-1000-shares.html cheers nwoodman Michael Wacek, VP & Chief Risk Officer at Odyssey Re, has also picked up 500 shares SVTItdOneLineDetailDerivIns_-_Wacek.pdf Link to comment Share on other sites More sharing options...
giofranchi Posted June 29, 2017 Share Posted June 29, 2017 How often does in hit the top and bottom ranges? once per year? Do you trade around 20%-30% of your position? I have done that with other names myself. Yes, I guess that might be approximately correct. Right now I prefer to hold a diversified portfolio of stocks and etfs. But for many years I was much more concentrated, basically because at times FFH was 30%-35% of my portfolio. And that’s why when FFH traded close to 1.4xBVPS I probably sold more than 20%-30% of my position. Sometimes FFH has gone from 35% of my portfolio to 15%, which means I have sold more than 50% of my position. On the other hand, at a minimum of 15% FFH has always remained a meaningful position in my portfolio during the last 5-7 years. Of course, results have not been spectacular, but I would say they have been satisfactory enough. Right now my position in FFH is much smaller than 15%: as I have said, it is not because I think their business prospects have deteriorated, but because I don’t want to let any position of mine influence the overall results of my portfolio too much. Cheers, Gio Link to comment Share on other sites More sharing options...
cwericb Posted June 29, 2017 Author Share Posted June 29, 2017 “Michael Wacek, VP & Chief Risk Officer at Odyssey Re, has also picked up 500 shares” So between Wacek (500 shares) and Bradstreet (2,000 shares) they have accumulated over $1.5 million dollars in Faitfax stock over the past week and a half. That has to tell you something when they are purchasing that sort of volume of Fairfax shares. The short write up in the Canadian Insider said... “F. Brian Bradstreet, a Subsidiary Executive, acquired 1,000 Subordinate Voting Shares on a direct ownership basis at a price of $562.314 and 1,000 Subordinate Voting Shares on an indirect ownership basis for registered holder The Bradstreet Family Foundation at a price of $562.416 on June 16th, 2017. This represents a $1,124,730 investment into the company's shares and an account share holdings change of 4.9%.” Link to comment Share on other sites More sharing options...
LightWhale Posted July 16, 2017 Share Posted July 16, 2017 Longleaf funds picked up at least 500,000 shares in the 2nd quarter (about 292m CAD worth of stocks) They seem to have bought it on TSX rather than OTCMKTS. Link to comment Share on other sites More sharing options...
Santayana Posted September 5, 2017 Share Posted September 5, 2017 I'm not a chartist, but there seems to be a lot of support around the $510 USD level. It makes me wonder if they have started buying back. Link to comment Share on other sites More sharing options...
investmd Posted September 9, 2017 Share Posted September 9, 2017 Since this thread started 3 months ago, there has been positive news about First Capital sale, institutional/large investor purchases, and good results from Fairfax India. Share price rose from C$550 up to C$650. The last week has seen a drop below $600. Is this pullback due to liabilities associated with Hurricane Irma or something else...or no good reason as might often be the case. Link to comment Share on other sites More sharing options...
Daphne Posted September 9, 2017 Share Posted September 9, 2017 A combination of strengthening Can $ and the Hurricanes. Link to comment Share on other sites More sharing options...
Dazel Posted September 11, 2017 Share Posted September 11, 2017 Fairfax average repurchase price under last years buy back programme was $676. I do not think we have seen or will see significant repurchases until the ICICI Lombard iPo is done this week as they will have significant cash infusion from their sale of shares at the holding company level. If we remain at these share price levels when the Fairfax Asia deal closes it is possible we will see a Dutch auction which is outside the annual repurchase program. Link to comment Share on other sites More sharing options...
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