ICUMD Posted February 5, 2018 Share Posted February 5, 2018 Does anyone here have a purchase target price? I'm willing to jump in at the $550 range. Link to comment Share on other sites More sharing options...
cwericb Posted February 5, 2018 Share Posted February 5, 2018 It is definitely going to be interesting to see how this all settles out. They have been very patient sitting on their cash, so they must be pretty sure they have picked this up at the right price. (Reuters) - Insurer Fairfax Financial Holdings Ltd said on Monday it would buy some Canadian assets of bankrupt UK-based construction and services company Carillion for an undisclosed amount. The deal would include facilities management at airports, commercial and retail properties, defense and select healthcare units, Fairfax said. Carillion collapsed on Jan. 15 after its banks halted funding, triggering Britain's biggest corporate failure in a decade and forcing the government to step in to guarantee public services from school meals to roadworks. Fairfax will also assume certain liabilities related to Carillion's Canadian operations. Canada is one of the largest markets for Carillion outside the UK. Canadian unions had previously urged Ontario's provincial government to end hospital services privatization after the collapse of Carillion. Link to comment Share on other sites More sharing options...
Dazel Posted February 6, 2018 Share Posted February 6, 2018 Fall baby fall...buy Prem buy. Cheers all! We have been waiting for this for awhile...... Link to comment Share on other sites More sharing options...
Dazel Posted February 6, 2018 Share Posted February 6, 2018 I expect at the end of quarter one Fairfax to have invested 85% of the $20 billion cash. Old wife Old dog And ready cash Link to comment Share on other sites More sharing options...
petec Posted February 6, 2018 Share Posted February 6, 2018 I expect at the end of quarter one Fairfax to have invested 85% of the $20 billion cash. Come off it! This selloff hasn't created the kinds of values that would make them go all in. Unless it's in the 2y treasury for a yield pickup over cash with little duration risk. They'll keep leveraging their position as a preferred provider of capital but the fact that the S&P is back where it was 6 weeks ago isn't going to tempt them. Link to comment Share on other sites More sharing options...
StubbleJumper Posted February 6, 2018 Share Posted February 6, 2018 I expect at the end of quarter one Fairfax to have invested 85% of the $20 billion cash. Come off it! This selloff hasn't created the kinds of values that would make them go all in. Unless it's in the 2y treasury for a yield pickup over cash with little duration risk. They'll keep leveraging their position as a preferred provider of capital but the fact that the S&P is back where it was 6 weeks ago isn't going to tempt them. Agreed. We seem to have collectively forgotten what constitutes a sea-change in the markets. That's what FFH is waiting for. As you said, the bump in short term interest rates won't hurt them any, but I don't see many bargains yet in equities. The one exception to that might soon be FFH's own shares. Another few days of this fun, and we might be bouncing around BV, which IMO, would be a decent place to initiate a large repurchase. SJ Link to comment Share on other sites More sharing options...
petec Posted February 6, 2018 Share Posted February 6, 2018 I expect at the end of quarter one Fairfax to have invested 85% of the $20 billion cash. Come off it! This selloff hasn't created the kinds of values that would make them go all in. Unless it's in the 2y treasury for a yield pickup over cash with little duration risk. They'll keep leveraging their position as a preferred provider of capital but the fact that the S&P is back where it was 6 weeks ago isn't going to tempt them. Agreed. We seem to have collectively forgotten what constitutes a sea-change in the markets. That's what FFH is waiting for. As you said, the bump in short term interest rates won't hurt them any, but I don't see many bargains yet in equities. The one exception to that might soon be FFH's own shares. Another few days of this fun, and we might be bouncing around BV, which IMO, would be a decent place to initiate a large repurchase. SJ Yes but even there they can only invest the holdco cash, not the float. Link to comment Share on other sites More sharing options...
StubbleJumper Posted February 6, 2018 Share Posted February 6, 2018 I expect at the end of quarter one Fairfax to have invested 85% of the $20 billion cash. Come off it! This selloff hasn't created the kinds of values that would make them go all in. Unless it's in the 2y treasury for a yield pickup over cash with little duration risk. They'll keep leveraging their position as a preferred provider of capital but the fact that the S&P is back where it was 6 weeks ago isn't going to tempt them. Agreed. We seem to have collectively forgotten what constitutes a sea-change in the markets. That's what FFH is waiting for. As you said, the bump in short term interest rates won't hurt them any, but I don't see many bargains yet in equities. The one exception to that might soon be FFH's own shares. Another few days of this fun, and we might be bouncing around BV, which IMO, would be a decent place to initiate a large repurchase. SJ Yes but even there they can only invest the holdco cash, not the float. Some time over the next few months they'd need to dividend up a pile of money to the parent. Last I checked, there was plenty of cash and plenty of statutory capital in the subs, so they could dividend a healthy amount to the holdco without really affecting underwriting capacity. But, my guess is that they sit tight and wait for the next shoe(s) to drop. SJ Link to comment Share on other sites More sharing options...
ourkid8 Posted February 6, 2018 Share Posted February 6, 2018 Based on my quick and dirty estimate, we are around 1.1x book which includes sale of First Capital and The Keg, retained earnings from operations, reducing interest expense etc... I expect at the end of quarter one Fairfax to have invested 85% of the $20 billion cash. Come off it! This selloff hasn't created the kinds of values that would make them go all in. Unless it's in the 2y treasury for a yield pickup over cash with little duration risk. They'll keep leveraging their position as a preferred provider of capital but the fact that the S&P is back where it was 6 weeks ago isn't going to tempt them. Agreed. We seem to have collectively forgotten what constitutes a sea-change in the markets. That's what FFH is waiting for. As you said, the bump in short term interest rates won't hurt them any, but I don't see many bargains yet in equities. The one exception to that might soon be FFH's own shares. Another few days of this fun, and we might be bouncing around BV, which IMO, would be a decent place to initiate a large repurchase. SJ Link to comment Share on other sites More sharing options...
racemize Posted February 6, 2018 Share Posted February 6, 2018 Based on my quick and dirty estimate, we are around 1.1x book which includes sale of First Capital and The Keg, retained earnings from operations, reducing interest expense etc... I expect at the end of quarter one Fairfax to have invested 85% of the $20 billion cash. Come off it! This selloff hasn't created the kinds of values that would make them go all in. Unless it's in the 2y treasury for a yield pickup over cash with little duration risk. They'll keep leveraging their position as a preferred provider of capital but the fact that the S&P is back where it was 6 weeks ago isn't going to tempt them. Agreed. We seem to have collectively forgotten what constitutes a sea-change in the markets. That's what FFH is waiting for. As you said, the bump in short term interest rates won't hurt them any, but I don't see many bargains yet in equities. The one exception to that might soon be FFH's own shares. Another few days of this fun, and we might be bouncing around BV, which IMO, would be a decent place to initiate a large repurchase. SJ If you add in the unmarked gains I think it will get you to book value or less. Link to comment Share on other sites More sharing options...
StubbleJumper Posted February 6, 2018 Share Posted February 6, 2018 Based on my quick and dirty estimate, we are around 1.1x book which includes sale of First Capital and The Keg, retained earnings from operations, reducing interest expense etc... I expect at the end of quarter one Fairfax to have invested 85% of the $20 billion cash. Come off it! This selloff hasn't created the kinds of values that would make them go all in. Unless it's in the 2y treasury for a yield pickup over cash with little duration risk. They'll keep leveraging their position as a preferred provider of capital but the fact that the S&P is back where it was 6 weeks ago isn't going to tempt them. Agreed. We seem to have collectively forgotten what constitutes a sea-change in the markets. That's what FFH is waiting for. As you said, the bump in short term interest rates won't hurt them any, but I don't see many bargains yet in equities. The one exception to that might soon be FFH's own shares. Another few days of this fun, and we might be bouncing around BV, which IMO, would be a decent place to initiate a large repurchase. SJ If you add in the unmarked gains I think it will get you to book value or less. By unmarked gains, you mean investments like BB that have gone up, but haven't been marked to market? I haven't paid any attention over the past few days, but I wonder whether all of those unmarked gains still exist. Pretty much everybody's gotten a haircut over the past week, but I haven't specifically looked at FFH's major holdings. SJ Link to comment Share on other sites More sharing options...
racemize Posted February 6, 2018 Share Posted February 6, 2018 No, I meant the unmarked gains on the various equity accounted entities (mostly the Indian investments). They list the amount in the shareholder reports. Link to comment Share on other sites More sharing options...
StubbleJumper Posted February 6, 2018 Share Posted February 6, 2018 No, I meant the unmarked gains on the various equity accounted entities (mostly the Indian investments). They list the amount in the shareholder reports. Yes, it's always necessary to add in those amounts to the BV calc, and I guess now we ought to subtract US$10 for the divvy. I did an adjusted BV calc a couple of months ago, but I don't have it handy. My memory was that it was less than US$500 at the time, and now it would be $10 less because of the dividend. But, in any case, we are not far from BV today. SJ Link to comment Share on other sites More sharing options...
naboo Posted February 6, 2018 Share Posted February 6, 2018 It will make me nervous to see FFH use most of its cash to buy at this level. FFH should have opportunity to purchase back below book value. Link to comment Share on other sites More sharing options...
Dazel Posted February 7, 2018 Share Posted February 7, 2018 They have $2.5b at the holdco level...I think. That will be used for buybacks...they are not able to get that many shares daily because the volumes are low and the are restricted on how much % Wise they can buy on a daily basis...they will not spend all the cash on Buybacks right away...tender offer at$650 for $250 million might make sense....to take advantage of this sell off...And continue to pick away is likely the course.... I would love for them to buy big at these levels however! ....I feel intrinsic value here is much higher than the share price...many are emotional here. Petec....slow down...most of the 85% investment of investment at the end of quarter one in accounts at the insurance level will go into bonds. Earnings power of Fairfax is being hidden by large cash balances. Buy Prem buy.... Link to comment Share on other sites More sharing options...
petec Posted February 7, 2018 Share Posted February 7, 2018 Petec....slow down...most of the 85% investment of investment at the end of quarter one in accounts at the insurance level will go into bonds. I'm well aware of that. But they're not going to go all in at the long end of the US sovereign curve either - like stocks, it's barely moved in the grand scheme of things. Hence my point that the only way they are going to put 85% to work is in the 2 year. Unless you think that they can find $17bn in individual high yield opportunities (e.g. corporate, EM sovereign) that have suddenly started screaming value, which would be great, but I just don't think the markets have moved that much. Link to comment Share on other sites More sharing options...
Dazel Posted February 8, 2018 Share Posted February 8, 2018 I expect a bit of everything but you are correct 2 yr yields have doubled.... If you think in terms of every 100 basis points is $400m in income like Fairfax is thinking...it does not make sense to have long periods of holding cash unless things are really stupid....they were correct yields were really stupid...they are becoming normalized. All Fairfax needs to do is have normal returns on their investements.....they have set up the future with all of the insurance companies they bought and consolidated cheaply after the crisis. Its time to invest the money....rising rateswill create value quickly...you can see in their last two deals. Opportunity is here... Link to comment Share on other sites More sharing options...
Dazel Posted February 8, 2018 Share Posted February 8, 2018 If they continue to follow Berkshire and Markel...they will do very very well over the next 10 years. As the brilliant Charlie Munger said “Warren and I figured out that we only had to do 10% and the magic of the float would give substantial returns over the long term”. Berkshire holds common stock for the long term because of their dividends...do you know what their yield is on Coca Cola!! Wells Fargo for example is similar to Fairfax other deals...it is yielding 2.7% and will yield 5% on purchases now over the next few years and maybe much more depending on what the shares do. If it were to fall great buy more and more and higher yields averaging cost and rising the yield on investments...it Is just math now for the majority of the investments...obviously India are greater risk reward....but the majority of the money should be Bradstreet’s and yields are the key... Link to comment Share on other sites More sharing options...
petec Posted February 8, 2018 Share Posted February 8, 2018 Dazel I agree with everything you're saying except that markets have moved enough for them to invest 85% of their cash by the end of q1. The 30y yield is 18bps higher than its peak in October, when to the best of my knowledge they didn't do much. That's not the opportunity they are waiting for. The 2 year has risen 60bps in the same time. That's a great place to park cash now. And I am sure they have found some individual values. But 85% invested - only if it's in the 2 year, IMHO. But there is no point arguing further - we'll get an update soon enough! Link to comment Share on other sites More sharing options...
gary17 Posted February 8, 2018 Share Posted February 8, 2018 Thanks for all the posts i certainly learned a lot i had AWH shares before and have been tempted to buy but can't 100% get comfortable with whether Prem has really learned from his mistakes... and what they are thinking now... looking forward to hearing from them again soon when the results are out and then see if it gets to a even better price to enter. Link to comment Share on other sites More sharing options...
gary17 Posted February 9, 2018 Share Posted February 9, 2018 does anyone know what is the following for FFH in $CAD/share? your guess for fairfax right now? - float - book value about $560 - net debt ? thanks Link to comment Share on other sites More sharing options...
gary17 Posted February 9, 2018 Share Posted February 9, 2018 i think i found my answers - anyway, i think the key question is if this thing can compound at 13% of book over the next 5 years... if it can and gets re-valued to 1.5x then that'll provide an attractive return.... Can rising interest rates cause a hard insurance market ? Link to comment Share on other sites More sharing options...
Dazel Posted February 16, 2018 Share Posted February 16, 2018 Some will recall.....record earnings.....just saying! Link to comment Share on other sites More sharing options...
Dazel Posted February 16, 2018 Share Posted February 16, 2018 And...$20b cash... Lucky I guess? Link to comment Share on other sites More sharing options...
gary17 Posted February 16, 2018 Share Posted February 16, 2018 why do i feel they bought a lemon with the AWH purchase Link to comment Share on other sites More sharing options...
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