Fairfax stock positions

[gary17]

SSW is doing well.

8)

[petec]

SSW is doing well.

8)

 

And I felt so smart (briefly) for lightening up at $11.50!

 

Thankfully I still have most of my position. Seaspan is the next Brookfield*. You heard it here first.

 

*This is a joke. Sort of.

[FFHWatcher]

SSW is doing well.

8)

 

And I felt so smart (briefly) for lightening up at $11.50!

 

Thankfully I still have most of my position. Seaspan is the next Brookfield*. You heard it here first.

 

*This is a joke. Sort of.

 

I heard it here 2nd...

 

ieb4

Comments288 | + Follow

i am not in disbelief, management has been saying for some time that they will be diversifying the business while at the same time maintaining dominance in container space and expanding there as well. was the Swiber deal not a hint that this was a path forward? also, it is not as if they are abandoning shipping (witness their two deals in last few months to expand fleet).

but it is clear they want a higher multiple for the stock, going the asset manager route is certainly one way if they execute and make smart, accretive acquisitions. i again point to brookfield asset management and brookfield infrastructure as entities for comparison (although brookfields are not maritime, more railroads, toll roads, data-center, communications etc)

definite fork in the road here...i'm choosing to stay the course and go with management's vision of future, not selling any shares and reinvesting all dividends.

good luck to all who sell.

 

[petec]

Ha - where’s that from?

[FFHWatcher]

Ha - where’s that from?

 

It's from Seeking Alpha.  SA has quite a few SSW followers. J Mintzmyer is a contributor at SA and he seems to spend all or most of his time analyzing the shipping sector.  He seems to be a good resource and knows his stuff.

 

[ValuePadawan]

I like Mintzmyer I like his sector analysis but he seems to have a bit of man with a hammer syndrome and when he talks about Seaspan he doesn't see the value in the new direction the management team is taking.

[steph]

Thomas Cook was down 50% last week. Is that related to spin off of Guess?

[petec]

Thomas Cook was down 50% last week. Is that related to spin off of Guess?

 

Yes. Adjusted for that I believe it was actually up quite a bit, although I haven’t double checked that.

[steph]

Thomas Cook was down 50% last week. Is that related to spin off of Guess?

 

Yes. Adjusted for that I believe it was actually up quite a bit, although I haven’t double checked that.

 

Thx! Momentum seems positive recently on some important positions

[Viking]

Here is an article discussing Quess demerger from Thomas Cook India (written Dec 5) and what TC India looks like moving forward.

 

After demerger of Quess Corp, the standalone business of Thomas Cook India looks interesting with a reasonable valuation- https://www.freepressjournal.in/business/thomas-cook-india-is-the-noise-hiding-an-undervalued-gem

 

“What exactly is happening with Thomas Cook India? Thomas Cook India holds about 50% stake in Quess Corp. In order to simplify the corporate structure, the management decided to demerge the company’s holding in Quess Corp. Essentially, shareholders of Thomas Cook will receive shares of Quess after about 2 weeks. The ratio, which was announced about a year ago, stands such that for every 100 shares of Thomas Cook, shareholders will receive 18.89 shares of Quess Corp.

[Viking]

Fairfax’s second largest investment is Eurobank. The recent election of a pro-business government (and the fact they secured a majority) is a big deal. For Eurobank, positive that ‘Hercules’ plan is moving forward (will remove a large chunk of non-performing loans from balance sheet of banks). Real estate prices are up 7% year over year; expected to increase at faster rate over next year; also very positive for banks (their main form of colateral). While Greece continues to have its share of issues, it does look to be improving with an improving outlook and this bodes well for Eurobank stock in the coming years.

 

Dec.09 -- Alex Patelis, chief economic adviser to Greek Prime Minister Kyriakos Mitsotakis, discusses his expectations for Greece's economy and the Hercules plan. He speaks on "Bloomberg Markets: European Close."

- https://www.msn.com/en-us/money/videos/greece-could-cut-np-stock-by-half-with-hercules-scheme-patelis-says/vi-BBY0t8W

 

[Viking]

Here is an update of Fairfax’s Seaspan investment as of today:

1.) $500 million / $6.50 per share = 77 million shares

- $14 (share price today) - $6.50 (cost) = $7.50 = $578 million

- investment was made in two stages; 1/2 in early 2018 and 1/2 in early 2019

2.) 25 million warrants: $14 - $8.05 (exercise price) = $5.95 x 25 mill shares = $149 million

- awarded early 2019

- not sure how FFH values these as i dont think they have been exercised

 

3.) APR Energy: $300 mill / $11.10 per share = 27 million shares

- $14 (share price today) - $11.10 (cost) = $2.90 x 27 million shares = $78 million

- my estimate of what FFH will get when deal closes in Q1 2020 (deal was announced Nov 2019)

 

Bottom line, as of today FFH is up on its Seaspan investment (since inception) $578 + $149 + $78 = $805 million. Yes, it is a paper gain as Seaspan looks to be a long term hold. It does demonstrate how FFH swings for the fences when it invests. And when it connects the returns can be very good (in thiscase 24 months later).

 

4.) senior notes 2023 = $500 million at 5.5% = $27.5 million interest income each year

 

This part of their investment is icing on the cake.

 

On Sept 30 Seaspan was trading at $10.63. Trading at about $14 today stock is up 32% in past 10 weeks.

[petec]

Here is an update of Fairfax’s Seaspan investment as of today:

1.) $500 million / $6.50 per share = 77 million shares

- $14 (share price today) - $6.50 (cost) = $7.50 = $578 million

- investment was made in two stages; 1/2 in early 2018 and 1/2 in early 2019

2.) 25 million warrants: $14 - $8.05 (exercise price) = $5.95 x 25 mill shares = $149 million

- awarded early 2019

- not sure how FFH values these as i dont think they have been exercised

 

3.) APR Energy: $300 mill / $11.10 per share = 27 million shares

- $14 (share price today) - $11.10 (cost) = $2.90 x 27 million shares = $78 million

- my estimate of what FFH will get when deal closes in Q1 2020 (deal was announced Nov 2019)

 

Bottom line, as of today FFH is up on its Seaspan investment (since inception) $578 + $149 + $78 = $805 million. Yes, it is a paper gain as Seaspan looks to be a long term hold. It does demonstrate how FFH swings for the fences when it invests. And when it connects the returns can be very good (in thiscase 24 months later).

 

4.) senior notes 2023 = $500 million at 5.5% = $27.5 million interest income each year

 

This part of their investment is icing on the cake.

 

On Sept 30 Seaspan was trading at $10.63. Trading at about $14 today stock is up 32% in past 10 weeks.

 

It's been a spectacular investment.

 

I posted an updated valuation on the SSW thread yesterday, if that's of interest.

[Xerxes]

Howdy folks,

My new year resolution has been to join this board and stop being cheap (the $29 fee) and start to contribute to a great forum that I have been over-learning from.

So I joined:

 

I will add this company as well to this list of FFH's holding: AGT Food and Ingredients.

It was taken private a while back. Here is an article from earlier this year on how the likes of Beyond Meat are creating more demand for AGT Foods. Unrelated to peas, the podcast talks also about how their (AGT/FFH) control of railway to the Port of Churchill present them with a nice long-term play real option (as Arctic recedes) as that is the only major railway heading that way, and IIRC Churchill is the only Arctic port on the Canadian side .. vs .. several or so on the Russian side.

 

https://business.financialpost.com/commodities/agriculture/peas

 

Here is the CEO on podcast with the Canadian Club of Toronto that I had found to be super interesting. You will find many other interesting podcasts well.

 

https://player.fm/series/series-2416203/murad-al-katib-president-and-ceo-agt-food-and-ingredients-inc

 

 

[Sombunall]

Welcome Xerxes. And thank you for this. I look forward to your future contributions!

[Viking]

Question. At Dec 31, 2018 what was Fairfax's 2nd largest equity holding? My guess is most board members would get this question wrong (even if given multiple guesses).

 

Answer: BDT Capital Partners (Oak Fund) = $443 million

Source: Fairfax 2018 Annual Meeting presentation

Currently, after Seaspan and Eurobank, BDT Capital Partners is likely Fairfax's third largest equity holding.

A year earlier (Dec 31, 2017) its value was $355 million (#5 in equity holding that year)

Given Fairfax has about $10-$11 billion in equity holdings this one represents about a 4% position.

 

I tried to find information on the fund in Fairfax quarterly and annual reports but am striking out. So I am assuming they still hold their position :-). Interesting holding. Not domiciled in India. Not in a declining industry... Looks like a quality holding with well regarded management. Byron Trott (founder and CEO) used to work at Goldman Sacks where he was Warren Buffett's private banker. Anyone have any information on the company and/or the Oak Fund (what it owns)?

 

Who are they? "BDT Capital Partners, LLC is a private equity arm of BDT & Company, LLC, specializing in investments in family-owned and entrepreneurial businesses. It also co-invests. BDT Capital Partners, LLC was founded in 2009 and is based in Chicago, Illinois."

 

Here is an article: https://heavy.com/news/2019/06/bdt-capital-partners/

[petec]

Question. At Dec 31, 2018 what was Fairfax's 2nd largest equity holding? My guess is most board members would get this question wrong (even if given multiple guesses).

 

Answer: BDT Capital Partners (Oak Fund) = $443 million

Source: Fairfax 2018 Annual Meeting presentation

Currently, after Seaspan and Eurobank, BDT Capital Partners is likely Fairfax's third largest equity holding.

A year earlier (Dec 31, 2017) its value was $355 million (#5 in equity holding that year)

Given Fairfax has about $10-$11 billion in equity holdings this one represents about a 4% position.

 

I tried to find information on the fund in Fairfax quarterly and annual reports but am striking out. So I am assuming they still hold their position :-). Interesting holding. Not domiciled in India. Not in a declining industry... Looks like a quality holding with well regarded management. Byron Trott (founder and CEO) used to work at Goldman Sacks where he was Warren Buffett's private banker. Anyone have any information on the company and/or the Oak Fund (what it owns)?

 

Who are they? "BDT Capital Partners, LLC is a private equity arm of BDT & Company, LLC, specializing in investments in family-owned and entrepreneurial businesses. It also co-invests. BDT Capital Partners, LLC was founded in 2009 and is based in Chicago, Illinois."

 

Here is an article: https://heavy.com/news/2019/06/bdt-capital-partners/

 

3rd largest, not 2nd! You had me confused for a sec!

[Xerxes]

Toys R us was bought for $300 million in early 2018.

2-3 years later, i imagine that at the very least this might have gained some value, given that it was bought at distress price.

 

i think that would make it contender for 3rd spot as illiquid as it is.

[petec]

Toys R us was bought for $300 million in early 2018.

2-3 years later, i imagine that at the very least this might have gained some value, given that it was bought at distress price.

 

i think that would make it contender for 3rd spot as illiquid as it is.

 

I think the best that comes from TrU is that they extract cash while it still generates some and then sell the real estate for more than the price the paid. I don’t think it’s getting marked up.

[Viking]

Here is my guess for Fairfax’s largest equity holdings (US$) at Dec 31, 2019. Fairfax has a total of $10 to $11 billion in equity investments. Please point out any errors you see :-) or values that look incorrect.

1.) Eurobank              $1,255 - MTM

2.) Seaspan              $1,096 - MTM (not included: APR = $381; warrants = $355)

3.) BDT Capital Partners $500 - Guess (Dec 31, 2018 = $443)

4.) Recipe                    $404 - MTM

5.) Commerce International Bank $395 - MTM

6.) Quess                    $324 - MTM

7.) Blackberry              $300 - MTM (not include: convertible bonds which doubles share count)

8.) Kennedy Wilson      $297 - MTM

9.) Toys R Us              $234 - Guess (purchase price = US$234)

10.) Thomas Cook India  $222 - MTM

 

Seaspan and Quess are not captured mark-to-market in Fairfax’s financials. Quess MTM value is considerably less than where it is carried on FFH financial statements (carried at $1 billion which i think is pre-demerger from 67% owned Thomas Cook and their 71 million shares) and Seaspan is the opposite. In Q3 fair value of Investment in Associates was $600 million below carried value; this should shrink considerably when the Q4 report comes out.

 

Not included:

Fairfax India                $660 - MTM (largest investment Bangalore Airport)

Fairfax Africa                $208 - MTM

 

Others to research/watch (a few of these would likely make it in to the top 10 if we knew their current value).

Digit: Fairfax’s stake may be worth $400 million

AGT: Fairfax owns 59.6%

Peak Achievement (Bauer/Easton)

Dexterra (formerly Carillion)

Farmers Edge: Fairfax has invested $159 million

KWF Real Estate LP’s

KWF Ireland

Exco Resources  $221 fair value (42.8% equity ownership); June 8 ‘19 emerged from bankruptcy protection

 

[wondering]

Perhaps you missed Resolute.  Although the stock has fallen quite a bit, so it might be grouped in the "misc" category

[Viking]

Wondering, i was trying to list only the largest holdings (over $200 million). Yes, these are a bunch more (values at Dec 31):

- Resolute        $128

- Stelco            $102

- IIFL Finance    $55 (the three IIFL co’s are also held in Fairfax India)

- IIFL Securities  $16

- IIFL Wealth      $70

.... and more smaller holdings

 

[Xerxes]

One interesting thing to note about FFH' equity portfolio is that it has very low cross asset correlation between its major tent poles.

What does Blackberry, Eurobank, Toys R Us and Seaspan have in common (aside their common shareholder) ?  .. nothing, in fact serving very different industries and often very focused geographical location in some cases.

[Viking]

One interesting thing to note about FFH' equity portfolio is that it has very low cross asset correlation between its major tent poles.

What does Blackberry, Eurobank, Toys R Us and Seaspan have in common (aside their common shareholder) ?  .. nothing, in fact serving very different industries and often very focused geographical location in some cases.

 

A large chunk of Fairfax’s equity holdings are being negatively impacted by the Coronavirus risk off environment: Eurobank, Seaspan, Emerging Markets equities (Fairfax India, Fairfax Africa, Thomas Cook India).

 

[omagh]

A large chunk of Fairfax’s equity holdings are being negatively impacted by the Coronavirus risk off environment: Eurobank, Seaspan, Emerging Markets equities (Fairfax India, Fairfax Africa, Thomas Cook India).

Coronavirus is looking increasingly contained.  Logarithmic scale shows the rate of increase is tailing off.

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

 

At most, coronavirus could impact the 1st quarter of 2020 for just about any global business as a fraction of sales.  Will it really harm any business models?  Of course not.