Fairfax stock positions

[glider3834]

7 hours ago, KPO said:

https://www.barrons.com/articles/canadian-steelmaker-stelco-is-a-low-cost-producer-and-has-an-investor-friendly-ceo-how-that-could-boost-the-stock-51633365262

another one https://www.barrons.com/articles/steel-stocks-industry-revival-51633128537?tesla=y

[maplevalue]

https://www.bnnbloomberg.ca/watsa-out-as-head-of-blackberry-compensation-committee-1.1663163

 

 

Quote

 

BlackBerry Ltd. Has announced a refresh of his board of governors that will see Prem Watsa replaced at the helm of the board’s compensation committee.

The Fairfax Financial chief executive officer is being replaced by Michael Daniels, who has served on the committee since 2014. Watsa, however, will remain lead director of BlackBerry’s board and will continue to sit on the compensation committee, the company said.

Additionally, the Waterloo, Ont.-based cybersecurity firm said it has appointed committee member Lisa Disbrow, a former chief financial officer of the U.S. Air Force, as chair of the audit and risk management committee of the board, replacing Barbara Stymiest, who will remain a committee member.

"The rotations we announced today underscore our commitment to strong corporate governance and help to further enhance the Board's independent oversight,” said BlackBerry CEO John Chen, in a release. “We engaged with shareholders in connection with our 2021 Annual General Meeting and have considered their input and perspectives in making these leadership changes."

Amid a broader pullback for the sector, BlackBerry shares are down more than 13 per cent in the past month. The company’s most recent quarterly results revealed its net loss had widened to US$144 million for the three months ended Aug. 31, while revenue fell 32 per cent from one year ago.

 

 

[Spekulatius]

45 minutes ago, maplevalue said:

https://www.bnnbloomberg.ca/watsa-out-as-head-of-blackberry-compensation-committee-1.1663163

 

Now push the goddamn sell button, Prem!

 

 

[Gregmal]

No way he leaves the Board. These sort of status positions are what its all about for him at this stage of the game.

[Daphne]

Get real Greg. The last thing a man, of Prem’s accomplishments and contributions, needs is the “glory” of yet another Board position.  Projection  reads hollow.

[Gregmal]

LOL then why are we still here? There was NO reason to get involved in Blackberry outside of glory. Being a hero to a Canadian icon and getting credit for being the guy spearheading "the turnaround"....they shopped the entire company, and NO ONE wanted it, even thought BB at the time had like half the MC in cash! Thats why this dude ultimately ended up reneging on his fake buyout bid. Meanwhile, nearly a decade later, its still NOWHERE...every one of even the blind loyalists screams SELL BB.....and yet...... yes totally hollow. Perhaps you guys who have been muddling in this loser have the correct read.... not me.

 

The only logical reason he's in BB is because status/ego, IE nothing that benefits shareholders. 

[Crip1]

1 hour ago, maplevalue said:

https://www.bnnbloomberg.ca/watsa-out-as-head-of-blackberry-compensation-committee-1.1663163

 

Much

Ado

About

Nothing (IMHO)

 

But considering that FFH is up about 2.5% today where the market averages are up roughly half that much compels me to think that the market looks at any distancing from BBY is a positive for Fairfax.

 

-Crip

[Daphne]

There could be at least a dozen reasons for buying BB and and, for not yet selling.  Likely there’s more than linear thought processes involved. Speculating on what they are is what people like to do.  Fair enough.  Impugning Prem’s values and character crosses a line.

[Xerxes]

While i disagree on some/many Gregmal posts on FFH and Prem, and without commenting specifically on BB itself (which i dont know more than an anybody else), ... i would say that in Gregmal's defense, his comments on the situation are probably no different folks talking about Charlie Munger and Alibaba in the other thread. 

 

I dont think anyone in the Daily Journal or Alibaba thread has anything but respect for Charlie Munger.

But they are looking at it from a life cycle point of view, and great investors like everything else or everyone else have a life cycle, when they think about other things at different stage of their career/life etc. Gregmal is just more vocal about it.

Edited October 7, 2021 by Xerxes

[Gregmal]

Come on man. Saying Prem has other priorities that come before maximizing shareholder value isn’t impugning anything. He s fully earned that through his actions and lack of interest in correcting mistakes.
 

Even when every Joe Schmoe is begging him, “sell the past mistakes in a gift of a market”…he still won’t. And while we can say “maybe he knows better”… he doesn’t. Virtually every public market investor I know outside of John Paulson and David einhorn have better records than Prem Watsa over the past decade. Basically everyone has known better than Prem and rather than humbly admit that he keeps going. 

[Parsad]

22 minutes ago, Gregmal said:

LOL then why are we still here? There was NO reason to get involved in Blackberry outside of glory. Being a hero to a Canadian icon and getting credit for being the guy spearheading "the turnaround"....they shopped the entire company, and NO ONE wanted it, even thought BB at the time had like half the MC in cash! Thats why this dude ultimately ended up reneging on his fake buyout bid. Meanwhile, nearly a decade later, its still NOWHERE...every one of even the blind loyalists screams SELL BB.....and yet...... yes totally hollow. Perhaps you guys who have been muddling in this loser have the correct read.... not me.

 

The only logical reason he's in BB is because status/ego, IE nothing that benefits shareholders. 

 

They had to step into managing BB because the board was killing the company under Thorsten Heins.  Whatever you want to say, BB under Chen has been a relative turnaround with much work left to do.  Getting out of the hardware business and focusing on the QNX software business was the right move.  Should they sell BB...I agree, they should.  But suggesting that Prem's ego is the only reason he's there is just plain silly!  The whole reason he put Paul in as President was to remove himself from alot of these things.  Cheers!

[Daphne]

My apologies Greg…..you apparently don’t limit your misrepresentations to Prem….you’ve now broadened your scope to include what me too.  I’m honoured!

[Gregmal]

9 minutes ago, Parsad said:

 

They had to step into managing BB because the board was killing the company under Thorsten Heins.  Whatever you want to say, BB under Chen has been a relative turnaround with much work left to do.  Getting out of the hardware business and focusing on the QNX software business was the right move.  Should they sell BB...I agree, they should.  But suggesting that Prem's ego is the only reason he's there is just plain silly!  The whole reason he put Paul in as President was to remove himself from alot of these things.  Cheers!

Why was that his or FFH shareholders problem? BB was a disaster...NOBODY wanted it, including many outfits who actually knew tech. Prem and FFH have NO credibility in tech..insurance, sure, commodity(poor results aside) maybe, you get my drift. Tech? WTF and rather than cut bait, which is one of the benefits of public market investing, he decided to waste what? 7-8 years on this project? At best throwing good money after bad trying to bail out a losing investment and at worst as a project that had motivations outside of his fiduciary responsibilities. 

[Viking]

I view Fairfax as a turnaround. They have been cleaning up past errors for at least the past three or four years. As i have done my deep dive into the various equity holdings this is a recurring theme. Most of the equity holdings are now positioned pretty well. Eurobank. Fixed (merged with Grivalia, dramatically reduced non-performing loan portfolio etc). APR. Fixed (sold to Atlas). Fairfax Africa. Fixed (I think); merged with Helios. EXCO. Fixed (restructured). Boat Rocker. IPO (can now execute growth strategy). Farmers Edge. IPO (can now execute growth strategy). Carillion/Dexterra. Reverse takeover of Horizon North (executing growth strategy). Toys R Us retail operations. Fixed (sold); now just own real estate. RFP. Fixed (aggressive pivot to lumber). BB. Pivot to software (cars and cybersecurity) and restructure debentures ($6 strike).

 

Other equity holdings have continued to chug away. Their various Indian holdings (direct and through Fairfax India) are on fire. 
 

And new purchases (the past couple of years) have been good to very good. Atlas has already been a grand slam home run and it is just getting started; and it is now almost 20% of the whole equity portfolio. Stelco is looking like a home run. I think the Carillion purchase is going to be a good one. Buying 30% of Eurolife from OMERS is a good decision. 
 

Will all the equity holdings perform well from here? No, of course not. Farmers Edge looks shaky to me. But taken as a whole, the Fairfax equity portfolio looks better positioned than any time in the last 7 or 8 years (perhaps longer). 
 

At the same time the insurance side of the business is performing very well. Digit? Absolutely smoking. 
 

And all some people want to talk about is Blackberry? Its become a fetish of sort for some people (especially when the name ‘Prem’ is inserted into the same sentence). Was it a bad purchase 7 or 8 years ago? Yes. Is it going out of business? No. Is it a good or bad holding today at US $9 or $10? No idea. It is in a bunch of technology sweet spots. Is it in the early innings of a turn around? Yes. Will it work out? No idea. Will Fairfax sell it? No idea, but probably at some point (just like all the other equity positions Fairfax owns). 
 

My point is Blackberry no longer matters all that much to the overall Fairfax thesis. Yes, it is a large holding. But it steadily falling as a percentage of the overall investment portfolio.
 

A lot of good things have been going on at Fairfax for a couple of years now. On balance, the company is very well positioned to deliver solid returns for investors.

Edited October 7, 2021 by Viking

[glider3834]

couple of things to jump in probably not saying anything new but

- Prem implied that they would have sold BB in Q1 but couldn't due to an SEC rule & during the second spike this year (near US$15)  it occured during a quiet period.

- in renegotating the convertible debentures they brought down their average cost 

- they do have intent to exit BB but only at the right price. Fairfax investment team sold their BB positons in Q1 (Wade,Lace)

- I don't think their methodology for investing in BB was wrong (JC had a good track record & BB had significant assets) at the beginning but sitting on it for such a long time was a big mistake 

- as gregmal said they have domain experience in insurance & so they have invested successfully in insurtech but they probably need a partner like a VC/fund/partnership specialist in tech investing to basically manage their tech investments outside of insurance like they do with property (eg Kennedy Wilson)

- if BB had started off as a small position & stayed that way we probably wouldn't be talking about it much but it was a big, concentrated position & that is the issue. 

- it does raise issues around portfolio positioning (sector,geography) - how do Fairfax think about this in the context of their insurance liabilities - maybe I will submit this one to next AGM.

 

Edited October 7, 2021 by glider3834

[glider3834]

5 minutes ago, glider3834 said:

couple of things to jump in probably not saying anything new but

- Prem implied that they would have sold BB in Q1 but couldn't due to an SEC rule & during the second spike this year (near US$15)  it occured during a quiet period.

- in renegotating the convertible debentures they brought down their average cost (some credit here)

- they do have intent to exit BB but only at the right price. Fairfax investment team sold their BB positons in Q1 (Wade,Lace)

- I don't think their methodology for investing in BB was wrong (JC had a good track record & BB had significant assets) at the beginning but sitting on it for such a long time was a big mistake 

- as gregmal said they have domain experience in insurance & so they have invested successfully in insurtech but they probably need a partner like a VC/fund/partnership specialist in tech investing to basically manage their tech investments outside of insurance like they do with property (eg Kennedy Wilson)

- if BB had started off as a small position & stayed that way we probably wouldn't be talking about it much but it was a big, concentrated position & that is the issue. 

- it does raise issues around portfolio positioning (incl sector,geography) - how do Fairfax think about this in the context of their insurance liabilities - maybe I will submit this one to next AGM.

 

Also even though FFH was unable to sell - BB did have opportunity to raise capital at high price when meme stocks spiked - that would have benefited FFH -why didn't JC do it.

Edited October 7, 2021 by glider3834

[Viking]

4 minutes ago, glider3834 said:

couple of things to jump in probably not saying anything new but

- Prem implied that they would have sold BB in Q1 but couldn't due to an SEC rule & during the second spike this year (near US$15)  it occured during a quiet period.

- in renegotating the convertible debentures they brought down their average cost 

- they do have intent to exit BB but only at the right price. Fairfax investment team sold their BB positons in Q1 (Wade,Lace)

- I don't think their methodology for investing in BB was wrong (JC had a good track record & BB had significant assets) at the beginning but sitting on it for such a long time was a big mistake 

- as gregmal said they have domain experience in insurance & so they have invested successfully in insurtech but they probably need a partner like a VC/fund/partnership specialist in tech investing to basically manage their tech investments outside of insurance like they do with property (eg Kennedy Wilson)

- if BB had started off as a small position & stayed that way we probably wouldn't be talking about it much but it was a big, concentrated position & that is the issue. 

- it does raise issues around portfolio positioning (sector,geography) - how do Fairfax think about this in the context of their insurance liabilities - maybe I will submit this one to next AGM.

 

glider, my one big wish for Fairfax is that Prem stops talking in public (other than saying a few words and kissing some babies). I find when he talks too much on any topic he inevitably says something that leads to misunderstandings.

 

Its like what he says, what he thinks he says and what people think they hear are three different things. And he has been doing it for as long as i have followed Fairfax (close to 20 years). 
 

He has lots of strengths… look at the company he has built and the people he has assembled. Impressive. But ‘less is more’ when it comes to Q and A with analysts/public  

[glider3834]

19 minutes ago, Viking said:

I view Fairfax as a turnaround. They have been cleaning up past errors for at least the past three or four years. As i have done my deep dive into the various equity holdings this is a recurring theme. Most of the equity holdings are now positioned pretty well. Eurobank. Fixed (merged with Grivalia, dramatically reduced non-performing loan portfolio etc). APR. Fixed (sold to Atlas). Fairfax Africa. Fixed (I think); merged with Helios. EXCO. Fixed (restructured). Boat Rocker. IPO (can now execute growth strategy). Farmers Edge. IPO (can now execute growth strategy). Carillion/Dexterra. Reverse takeover of Horizon North (executing growth strategy). Toys R Us retail operations. Fixed (sold); now just own real estate. RFP. Fixed (aggressive pivot to lumber). BB. Pivot to software (cars and cybersecurity) and restructure debentures ($6 strike).

 

Other equity holdings have continued to chug away. Their various Indian holdings (direct and through Fairfax India) are on fire. 
 

And new purchases (the past couple of years) have been good to very good. Atlas has already been a grand slam home run and it is just getting started; and it is now almost 20% of the whole equity portfolio. Stelco is looking like a home run. I think the Carillion purchase is going to be a good one. Buying 30% of Eurolife from OMERS is a good decision. 
 

Will all the equity holdings perform well from here? No, of course not. Farmers Edge looks shaky to me. But taken as a whole, the Fairfax equity portfolio looks better positioned than any time in the last 7 or 8 years (perhaps longer). 
 

At the same time the insurance side of the business is performing very well. Digit? Absolutely smoking. 
 

And all some people want to talk about is Blackberry? Its become a fetish of sort for some people (especially when the name ‘Prem’ is inserted into the same sentence). Was it a bad purchase 7 or 8 years ago? Yes. Is it going out of business? No. Is it a good or bad holding today at US $9 or $10? No idea. It is in a bunch of technology sweet spots. Is it in the early innings of a turn around? Yes. Will it work out? No idea. Will Fairfax sell it? No idea, but probably at some point (just like all the other equity positions Fairfax owns). 
 

My point is Blackberry no longer matters all that much to the overall Fairfax thesis. Yes, it is a large holding. But it steadily falling as a percentage of the overall investment portfolio.
 

A lot of good things have been going on at Fairfax for a couple of years now. On balance, the company is very well positioned to deliver solid returns for investors.

I agree Viking - lets put BB in context - Fairfax are firing this year on so many fronts.

 

 

[Gregmal]

Couple things....

 

1) When every day is a new day, the "you're talking about the past...." rhetoric gets old. The past matters. 

2) All the vague "they've turned the corner" stuff...yet they still arent exactly transparent to a degree that would actually confirm it is true. @ERICOPOLY had a good point in a separate thread about how Prem has basically refused to disclose certain stuff, or even just answer basic questions about the short book. 

3) For an entire DECADE, we had the greatest bull run probably ever. EVERYBODY made tons of money, except for a couple people who inexplicably seemed to strike out on almost everything they touched, consistently. It was breathtaking how they managed to consistently pick disasters when you could throw darts at a board and make gobs of money. FINALLY, in 2021, even the absolute poo poo, like GME and AMC even went bananas...but now folks are all enamored with, and impressed with the equity portfolio? LOLOL WTF? The dog finally has its day on paper, and people are pleased...what an incredibly low bar. The majority of these companies are still crap, no different than GME is still garbage despite it run and so is AMC. Take your gift, sell, and move on. Still refuses to do so. He still "knows better" on things he's been repeatedly wrong about. Just as he's waiting for the "right price" on BB. As Ive said a million times, 1) why get into in the first place? 2) why stay in if you cant even capitalize on insanity like a $20 print. 3) Its at $10, where it was when he started this project, best case he gets what? What it trades for earlier in the year? Move on already. 

4) There is still nothing concrete that really emphasizes ANYTHING has been learned. What, he finally agreed shorting in a raging bull market is a bad idea??? Oh thank god! How blessed we are. But whatever. To each their own. Covid presented the greatest gift an investor ever could have asked for and this even there has been a total dog. But the bar is low and we're pleased with a measly 30% and his crapco's have increased in price so all is well I guess.....

 

I mean asking for a real buyback is too much, asking him to liquidate losers is too much, asking for a real NYSE listing is too much...the guy is still scared of short seller boogey men or whatever and that comes at the expense of a better valuation for shareholders....I mean he's one of the only guys I follow who can basically do no wrong to some, despite more or less refusing to do some very, very EASY things to reward all the loyalists. 

[StubbleJumper]

@Viking and @glider3834

 

One of the reasons that FFH's share price is in the shit-hole might be that market participants have lost confidence in Prem's decision making, and frankly the shorting episode and the deflation derivatives make that a reasonable position to hold.  My view is that there are a great many good things going on with FFH, but frankly it can take a long time to re-establish confidence after episodes like that and you need a long string of clear and consistently rational decisions to convince people that you are back on the rails. 

 

The problem with BB and RFP is not the money (well, for me it's the money because I'm a cheapskate!), it's that the continued hold strikes people as irrational when there has been six months of good exit opportunities.  So, is the bizarre decision making over, or is it not?  Well, I don't blame anyone who is hesitant about Prem and who looks that BB and RFP with a jaundiced eye.

 

Now, let's move on from impressions and deal with the money, because there's a bit of a bifurcation there.  FFH has had *two* good opportunities to dump BB at US$14-ish and it is now trading at US$10-ish.  That's US$400 million that has at least temporarily evaporated.  Same deal with RFP, it trades at ~US12.25 and it could easily have been dumped at US$14.25, which is another US$60m.  It is what it is.  We have 27m shares outstanding and Prem has flushed *multiple* opportunities to exit legacy positions that would have provided US$460m more value to shareholders.  He has basically flushed US$17/share through those decisions (so far).  He might end up being right, in the end, and maybe it's not a permanent flush.  And US$17/sh isn't a death-blow by any means.  But the impression is not great.

 

So, let us move to the reason *why* the impression isn't great.  Prem flushed enormous amounts a shareholders capital on the shorts and to a lesser extent the deflation derivatives.  Was it US$175/sh, or thereabouts (seriously, I haven't done that depressing math, but someone on this board must have).  All that bullshit about ridiculously ill-conceived and stubbornly held decisions was supposed to be over, right?  Well, here we go again, another US$17 of bad decisions.  What's the annual quota of losses from shitty decisions, anyway?  Is it US$25, or is it higher?  Maybe flushing US$17 is a "good performance" in the context of the past.  That's a tough sell.

 

But, if you want to convince people that you've refocused your investment decisions and are better managing the downside, the failure to sell a couple of positions this year might have cost FFH a bit of market confidence.  And rightly so.

 

 

SJ

[Parsad]

3 hours ago, Gregmal said:

Why was that his or FFH shareholders problem? BB was a disaster...NOBODY wanted it, including many outfits who actually knew tech. Prem and FFH have NO credibility in tech..insurance, sure, commodity(poor results aside) maybe, you get my drift. Tech? WTF and rather than cut bait, which is one of the benefits of public market investing, he decided to waste what? 7-8 years on this project? At best throwing good money after bad trying to bail out a losing investment and at worst as a project that had motivations outside of his fiduciary responsibilities. 

 

Actually it wasn't Prem's problem.  Balsillie and Lazaridis were on the board when Prem joined.  The board pushed for Heins and his vision...so Balsillie resigned.  Then the board pushed out Lazaridis, and Prem was left the lone voice in the wilderness pushing for John Chen and directing the company to focus on software.  It BECAME a Fairfax problem, since they had a substantial investment in the company.  Either Fairfax got involved, or BB would have disappeared a long-time ago. 

 

You can then argue...should they have cut bait and let it fail...or get involved, get Chen on board and perhaps save the company, its employees, its shareholders, the community built around BB and FFH's investment.  In hindsight, which is where we all sit, including you...I'd be happy if they sold.  But arbitrarily throwing around your opinions without any experience or being there...armchair quarterback at best!  Cheers!

[Parsad]

2 hours ago, Gregmal said:

Couple things....

 

1) When every day is a new day, the "you're talking about the past...." rhetoric gets old. The past matters. 

2) All the vague "they've turned the corner" stuff...yet they still arent exactly transparent to a degree that would actually confirm it is true. @ERICOPOLY had a good point in a separate thread about how Prem has basically refused to disclose certain stuff, or even just answer basic questions about the short book. 

3) For an entire DECADE, we had the greatest bull run probably ever. EVERYBODY made tons of money, except for a couple people who inexplicably seemed to strike out on almost everything they touched, consistently. It was breathtaking how they managed to consistently pick disasters when you could throw darts at a board and make gobs of money. FINALLY, in 2021, even the absolute poo poo, like GME and AMC even went bananas...but now folks are all enamored with, and impressed with the equity portfolio? LOLOL WTF? The dog finally has its day on paper, and people are pleased...what an incredibly low bar. The majority of these companies are still crap, no different than GME is still garbage despite it run and so is AMC. Take your gift, sell, and move on. Still refuses to do so. He still "knows better" on things he's been repeatedly wrong about. Just as he's waiting for the "right price" on BB. As Ive said a million times, 1) why get into in the first place? 2) why stay in if you cant even capitalize on insanity like a $20 print. 3) Its at $10, where it was when he started this project, best case he gets what? What it trades for earlier in the year? Move on already. 

4) There is still nothing concrete that really emphasizes ANYTHING has been learned. What, he finally agreed shorting in a raging bull market is a bad idea??? Oh thank god! How blessed we are. But whatever. To each their own. Covid presented the greatest gift an investor ever could have asked for and this even there has been a total dog. But the bar is low and we're pleased with a measly 30% and his crapco's have increased in price so all is well I guess.....

 

I mean asking for a real buyback is too much, asking him to liquidate losers is too much, asking for a real NYSE listing is too much...the guy is still scared of short seller boogey men or whatever and that comes at the expense of a better valuation for shareholders....I mean he's one of the only guys I follow who can basically do no wrong to some, despite more or less refusing to do some very, very EASY things to reward all the loyalists. 

 

Hi Greg, you do understand the chart below, correct?

 

 

You don't find it interesting that the period in which distressed value investors underperformed looks like that?  And that you have massive distortions from the Fed's balance sheet.

 

I'm not saying that Prem couldn't make money from 2009-2014 and certainly again in 2020, but you can see that the next decade cannot repeat itself.  And that outcomes for equity markets are almost certainly to be well negative between now and 2031.  

 

Fairfax will have their time...which doesn't negate your argument presently.  Nor does your argument presently negate the fact that Fairfax is cheap and will return to a more historical mean value over the next couple of years.  Cheers!

[Gregmal]

17 minutes ago, Parsad said:

You don't find it interesting that the period in which distressed value investors underperformed looks like that?  And that you have massive distortions from the Fed's balance sheet.

 

I'm not saying that Prem couldn't make money from 2009-2014 and certainly again in 2020, but you can see that the next decade cannot repeat itself.  And that outcomes for equity markets are almost certainly to be well negative between now and 2031.  

 

I agree its a wrench but investing is about deciphering this type of stuff. You should have seen the type and style of investment I employed in 2012-2014...And after a while you get tired of making excusing or saying "valuations are nuts"...maybe they are, maybe they arent, but the only certainty is that 1) what you are doing isnt working and 2) you are likely wrong. Theres always a risk adjusted approach to investing. Its something thats taken me time to learn and appreciate but in no way should a guy who's been doing this professionally for half a century be oblivious to this. One look at long term charts tells you its ideal to maybe be a bit of a perm bull...or at least not be massively net short...you seem to have a bit of a bearish outlook(my inference from your post)...so....is it at all ironic that now Prem is vowing not to be bearish anymore, perhaps right when you'd want to be? I dont have a problem with people being wrong...its part of the game and how you learn and even at 60/70/80 with investing, you never stop learning. But Prem for lack of a better term just seems clueless and/or chasing his tail and refusing to learn with the US investments. Didnt(as Eric also mentioned) he vow to only buy quality companies a while ago and then sold them a short while later and got back into junk? I typically have a rule of thumb that if something isnt working after 3 years its probably best to reevaluate and figure out why and if you cant then you're best to move on. So again in that context, Blackberry...what was his thesis at $40 or whenever he started buying? Or RFP at $20....what was he like "yo, in 8 years theres gonna be a pandemic that busts the supply chain?"....some of these are inexcusable and the problem is theres a super high correlation/thread amongst most of his public investments....problem companies and secular decliners. I dont buy at all the renewed BS about how "RFP pivoted perfectly" and "BB is dominant in auto"....those things have been known for a while so its silly to get hyped about them now just cuz the stocks have moved(which psychologically always seems to be more believable when price action validates it, although its not one and the same. Stocks go up/people buy into the bull case and vice versa). 

 

My issue is Prem just doesnt seem to have consistent or logical framework based on the aggregate of everything experienced over the past decade. Unlike some others, no, I dont think crapcos catching a bid means he's turned the corner....not at all. If someone was in GME for 5 years from $50+ and got lucky, I still wouldn't say that although I'd have respect if they flipped it on the spike. However imagine someone being long GME and at various points down MASSIVELY from some of their purchase points, and then getting a total gift(if you've been an UBER BEAR from the past DECADE! how do you not blow out of these positions on such a short term move?!?!)..and just sitting tight and making excuses for continuing to hold?

 

So as SJ kind of mentioned, its still the thought process. I dont think we can say thats changed until he AT THE VERY LEAST, liquidates something. As we all know, unless you're willing to monetize, your discount to NAV in the public markets doesnt mean shit and can persist in perpetuity. However(as is on display currently as I clean house in the REITs), the second you put things in play or start ringing the register that discount to NAV can disappear quick....when TF is he going to start ringing the register?

[Viking]

3 hours ago, Gregmal said:

Couple things....

 

1) When every day is a new day, the "you're talking about the past...." rhetoric gets old. The past matters. 

2) All the vague "they've turned the corner" stuff...yet they still arent exactly transparent to a degree that would actually confirm it is true. @ERICOPOLY had a good point in a separate thread about how Prem has basically refused to disclose certain stuff, or even just answer basic questions about the short book. 

3) For an entire DECADE, we had the greatest bull run probably ever. EVERYBODY made tons of money, except for a couple people who inexplicably seemed to strike out on almost everything they touched, consistently. It was breathtaking how they managed to consistently pick disasters when you could throw darts at a board and make gobs of money. FINALLY, in 2021, even the absolute poo poo, like GME and AMC even went bananas...but now folks are all enamored with, and impressed with the equity portfolio? LOLOL WTF? The dog finally has its day on paper, and people are pleased...what an incredibly low bar. The majority of these companies are still crap, no different than GME is still garbage despite it run and so is AMC. Take your gift, sell, and move on. Still refuses to do so. He still "knows better" on things he's been repeatedly wrong about. Just as he's waiting for the "right price" on BB. As Ive said a million times, 1) why get into in the first place? 2) why stay in if you cant even capitalize on insanity like a $20 print. 3) Its at $10, where it was when he started this project, best case he gets what? What it trades for earlier in the year? Move on already. 

4) There is still nothing concrete that really emphasizes ANYTHING has been learned. What, he finally agreed shorting in a raging bull market is a bad idea??? Oh thank god! How blessed we are. But whatever. To each their own. Covid presented the greatest gift an investor ever could have asked for and this even there has been a total dog. But the bar is low and we're pleased with a measly 30% and his crapco's have increased in price so all is well I guess.....

 

I mean asking for a real buyback is too much, asking him to liquidate losers is too much, asking for a real NYSE listing is too much...the guy is still scared of short seller boogey men or whatever and that comes at the expense of a better valuation for shareholders....I mean he's one of the only guys I follow who can basically do no wrong to some, despite more or less refusing to do some very, very EASY things to reward all the loyalists. 

1.) ‘the past matters’. Yes it does. But ‘come on’ the Blackberry purchase was 8 or 9 years ago. Seriously? 
 

i have laid out in great detail all the many things Fairfax has done over the past 3 or 4 years  to fix past mistakes. And where they have been putting new money to work. 
 

Yes, the past matters. But the decisions made the past 3 or 4 years matter way more than something they did almost a decade ago. 

 

So let’s start with the very recent past. I purchased my big slug of shares in Q4 of last year. So what have earnings been at Fairfax over the past 3 quarters (since purchase)?

 

          Net earnings.                   Change in Assoc (not in net earnings)

Q4     $909 million.   $32/share.    $250 million

Q1.     $806 million.   $29/share.    $700 million

Q2.      $1.2 billion.    $43/share.    $800 million

Total.   $2.9 billion = $104/share.   $1.75 billion = $67/share

 

We also know a gain on Digit of $1.4 billion gain ($47/share) is coming. 
 

So add it all up: $6 billion ($218/share) in value creation for shareholders in just the last 3 quarters. So, yes, i love how this company IS PERFORMING.
 

Just a friendly reminder… the stock is trading today at about $410. 

 

But the story gets even better. If you are looking forward. And you are interested in understanding what earnings will be in the future. 

 

Fairfax is actually an insurance company. (Not sure if you knew this with all the posting from you about the big Blackberry purchase 10 years or so ago). A big one. And we are in a hard market. And have been for a little over 2 years. We can expect that the current hard market will benefit Fairfax in a big way in future years - top and bottom line. Insurance hard markets are a BIG deal; they happen very infrequently (maybe every 15 years or so). But it takes time for the benefit to show up in the financial results (i know, i know, that future results thing that i keep bringing up that you find so annoying). 
 

And despite the huge run up the past 3 quarters the equity portfolio (as a whole) is still cheap (using June 30 marks). Atlas, about 20% of the equity holdings was $14.25. Cheap! Eurobank was EUR 0.85/share. 
 

Now i can hear you whining about Eurobank. I have a question… have you actually done the deep dive on Eurobank? Looked at financials, followed the multi year restructuring, listened to management team on a couple of calls, tried to figure out what GDP growth in Greece might be etc etc? And then put it all together to try and figure out what they will actually earn in 2022, 2023 and 2024? (Remember, i don’t give a shit what Eurobank earned in 2019, 2018, 2017, 2016, 2015…) My guess is your analysis of Eurobank probably involved ordering Calamari and a beer at your favourite pub. (That comment made me hungry and thirsty

 

Bottom line, their investment portfolio is well positioned. And VERY well positioned should we see another leg up in the reopening trade (as the world gets to the other side of the Delta virus). 

 

Now do i give a shit what earnings were at Fairfax in 2019, 2018, 2017, 2016, 2015, 2014, 2013? NO! Because, as i said, i bought my core position in Q4 of last year.

 

What i REALLY care about is what earnings are going to come in at for 2021, 2022, 2023, 2024. Future earnings are what matters. 

 

Now i realize i have only responded to the first of your 4 points; but i think this post is already too long so i am going to stop here (for now). 

Edited October 8, 2021 by Viking

[Gregmal]

6 minutes ago, Viking said:

1.) ‘the past matters’. Yes it does. But ‘come on’ the Blackberry purchase was 8 or 9 years ago. Seriously? 
 

i have laid out in great detail all the many things Fairfax has done over the past 3 or 4 years  to fix past mistakes. And where they have been putting new money to work. 
 

Yes, the past matters. But the decisions made the past 3 or 4 years matter way more than something they did almost a decade ago. 

 

So let’s start with the very recent past. I purchased my big slug of shares in Q4 of last year. So what have earnings been at Fairfax over the past 3 quarters (since purchase)?

 

          Net earnings.                   Change in Assoc (not in net earnings)

Q4     $909 million.   $32/share.    $250 million

Q1.     $806 million.   $29/share.    $700 million

Q2.      $1.2 billion.    $43/share.    $800 million

Total.   $2.9 billion = $104/share.   $1.75 billion = $67/share

 

We also know a gain on Digit of $1.4 billion gain ($47/share) is coming. 
 

So add it all up: $6 billion ($218/share) in value creation for shareholders in just the last 3 quarters. So, yes, i love how this company IS PERFORMING.
 

Just a friendly reminder… the stock is trading today at about $410. 

 

But the story gets even better. If you are looking forward. And you are interested in understanding what earnings will be in the future. 

 

Fairfax is actually an insurance company. (Not sure if you knew this with all the posting from you about the big Blackberry purchase 10 years or so ago). A big one. And we are in a hard market. And have been for a little over 2 years. We can expect that the current hard market will benefit Fairfax in a big way in future years - top and bottom line. Insurance hard markets are a BIG deal; they happen very infrequently (maybe every 15 years or so). But it takes time for the benefit to show up in the financial results (i know, i know, that future results thing that i keep bringing up that you find so annoying). 
 

And despite the huge run up the past 3 quarters the equity portfolio (as a whole) is still cheap (using June 30 marks). Atlas, about 20% of the equity holdings was $14.25. Cheap! Eurobank was EUR 0.85/share. 
 

Now i can hear you whining about Eurobank. I have a question… have you actually done the deep dive on Eurobank? Looked at financials, listened to management team on a couple of calls, tried to figure out what GDP growth in Greece might be etc etc? And then put it all together to try and figure out what they will actually earn in 2022, 2023 and 2024? (Remember, i don’t give a shit what Eurobank earned in 2019, 2018, 2017, 2016, 2015…) My guess is your analysis of Eurobank probably involved ordering Calamari and a beer at your favourite pub. (That comment made me hungry and thirsty

 

Bottom line, their investment portfolio is well positioned. And VERY well positioned should we see another leg up in the reopening trade (as the world gets to the other side of the Delta virus). 

 

Now do i give a shit what earnings were at Fairfax in 2019, 2018, 2017, 2016, 2015, 2014, 2013? NO! Because, as i said, i bought my core position in Q4 of last year.

 

What i REALLY care about is what earnings are going to come in at for 2021, 2022, 2023, 2024. Future earnings are what matters. 

 

Now i realize i have only responded to the first of your 4 points; but i think this post is already too long so i am going to stop here (for now). 

I just headed out fishing for the night so the response is simple, but here goes….

 

do you not believe something needs to change for FFH to get appreciated by the market? IE a corporate action or repositioning? Or do you believe that nothing needs to change and that they’re right and everyone else in the market is wrong?

 

Further off that;

would the following help?

 

-NYSE listing

-A real buyback

-Monetizing big pieces of the equity portfolio 

 

if so, why aren’t they doing this?