Fairfax stock positions

[gfp]

I found this in a Q3 Odyssey Re filing.  Seems possible that Fairfax increased their ownership in AGT to 65.66%.

 

 

AGT uses a lot of debt in their business and some of that debt does not show up on the consolidated financial statements because it is intercompany.  Much like NICO at Berkshire.  

("the Company" below is Odyssey.  "Holdings" is Odyssey Group Holdings)

 

Edited Thursday at 03:44 AM by gfp

[gfp]

BTW, I didn't know Fairfax owned 33% of the largest egg producer in Ukraine.

https://interfax.com/newsroom/top-stories/104051/

 

https://open4business.com.ua/en/ovostar-owners-complete-squeeze-out-and-announce-delisting/

Edited Thursday at 03:50 AM by gfp

[Viking]

4 hours ago, glider3834 said:

viking assuming no changes since Dec-23, I suspect Fairfax may be carrying their AGT equity interest at nil - see Odyssey AR 2023 below 

 

 

 

 

@glider3834 , this makes sense. When Fairfax reports their equity holdings in the AR, when they report non-insurance consolidated holdings they have a zero value for 'other'. It makes sense that is where AGT should be captured... and it looks like it is. 

 

Solves a riddle. 

 

Another question the Odyssey summary gives us is the approximate total value for Meadow Foods = $250 million (carrying value). I don't think we have ever been told how much Fairfax owns today. On the Q3 conference call, Wade Burton called out Meadow Foods as one of the large private investments over the past 2 years (along with Sleep country and Peak).

 

It's interesting... when running my numbers, the carrying value that Odyssey reports (using US GAAP) did not match up with what Fairfax reports (using IFRS 17) for lots of the holdings. But the market values kind of did match up for most holdings. Which actually makes sense.

 

[nwoodman]

1 hour ago, Viking said:

 

Another question the Odyssey summary gives us is the approximate total value for Meadow Foods = $250 million (carrying value). I don't think we have ever been told how much Fairfax owns today. On the Q3 conference call, Wade Burton called out Meadow Foods as one of the large private investments over the past 2 years (along with Sleep country and Peak).

 

 

It looks like this is disclosed on Page 6 (Note 3) of the Odyssey filing

 

 

Edit: This seems to be upstreaming, as Newline UK is a sub of Odyssey.  Quite confusing as I thought the Chandler Family and Exponent Private Equity were still participating. However if that is no longer the case maybe the 35% and the 250m give the total amount, as other Fairfax insurance subs hold the remaining 64.9%.  See Schedule Y:

Odyssey Reinsurance Company: 35.06%

Crum and Foster United States Fire Insurance Company: 12.68%

 Zenith Insurance Company: 20.30%

Federated Insurance Company of Canada: 1.01%

Northbridge General Insurance Corporation: 3.55%

Allied World Assurance Company (Europe) dac: 3.55%

Allied World Assurance Company (U.S.) Inc.: 4.06%

Allied World National Assurance Company: 7.61%

Allied World Insurance Company: 4.06%

Allied World Specialty Insurance Company: 4.06%

Allied World Surplus Lines Insurance Company: 4.06% 

Edited Thursday at 07:28 AM by nwoodman

[Viking]

12 minutes ago, nwoodman said:

It looks like this is disclosed on Page 6 (Note 3) of the Odyssey filing

 

 

Edit: This seems to be upstreaming, as Newline UK is a sub of Odyssey.  Quite confusing.

@nwoodman, my problem is i am not an accountant. So it takes me some time (and lots of questions to others on the board) to get some things figured out. But we do get there eventually. As always, thanks for the help.

[nwoodman]

28 minutes ago, Viking said:

@nwoodman, my problem is i am not an accountant. So it takes me some time (and lots of questions to others on the board) to get some things figured out. But we do get there eventually. As always, thanks for the help.

All good, I fumble around in the dark at times on these filings so see the edit above.  Can you point me in the direction of the $250m you referenced previously?

[giulio]

4 hours ago, nwoodman said:

It looks like this is disclosed on Page 6 (Note 3) of the Odyssey filing

 

 

Edit: This seems to be upstreaming, as Newline UK is a sub of Odyssey.  Quite confusing as I thought the Chandler Family and Exponent Private Equity were still participating. However if that is no longer the case maybe the 35% and the 250m give the total amount, as other Fairfax insurance subs hold the remaining 64.9%.  See Schedule Y:

Odyssey Reinsurance Company: 35.06%

Crum and Foster United States Fire Insurance Company: 12.68%

 Zenith Insurance Company: 20.30%

Federated Insurance Company of Canada: 1.01%

Northbridge General Insurance Corporation: 3.55%

Allied World Assurance Company (Europe) dac: 3.55%

Allied World Assurance Company (U.S.) Inc.: 4.06%

Allied World National Assurance Company: 7.61%

Allied World Insurance Company: 4.06%

Allied World Specialty Insurance Company: 4.06%

Allied World Surplus Lines Insurance Company: 4.06% 

I believe this does NOT refer to Fairfax ownership in the Meadow UK. FF Meadow Holdings is a sub of Fairfax, 100% owned through its various insurance companies as you listed. FF Meadow then holds a minority stake in Meadow UK, the actual company.

 

Best,

G

[nwoodman]

11 minutes ago, giulio said:

I believe this does NOT refer to Fairfax ownership in the Meadow UK. FF Meadow Holdings is a sub of Fairfax, 100% owned through its various insurance companies as you listed. FF Meadow then holds a minority stake in Meadow UK, the actual company.

 

Best,

G

Good one, happy to have some clarity on this with some filing rigour.

[Viking]

Well, at least this is good news for Recipe and their +1,000 restaurants in Canada. Does Prem have Trudeau’s ear? “The government is proposing that the GST/HST be fully and temporarily relieved on holiday essentials, like groceries, restaurant meals, drinks, snacks, children’s clothing, and gifts, from December 14, 2024, to February 15, 2025.”

 

The GST on restaurant meals in Canada is 5%. More for provinces with the HST (harmonized federal and provincial taxes). So this is a meaningful reduction.

 

- https://www.canada.ca/en/department-finance/news/2024/11/more-money-in-your-pocket-a-tax-break-for-all-canadians.html#

 

The current federal Liberal government has to be the worst federal government in Canadian history - at least in my lifetime. And we have had some bad ones. The current $250 cheque per adult + 2 month tax break (on a few things) is just the latest in their bat shit crazy management of the Canadian economy, especially over the past 6 or 7 years. I have tried to keep away from politics - but this Liberal government just keeps setting new lows. I am completely dumbfounded by what they say and do. Fortunately, Canada is less than 12 months away from a federal election - my only hope is that Trudeau stays on as leader of the Liberals. 
 

PS: My family will now be getting cheques for 5 x $250 = $1,250. Money we do not need. I suppose i should be celebrating…

Edited Thursday at 09:39 PM by Viking

[Junior R]

2 hours ago, Viking said:

Well, at least this is good news for Recipe and their +1,000 restaurants in Canada. Does Prem have Trudeau’s ear? “The government is proposing that the GST/HST be fully and temporarily relieved on holiday essentials, like groceries, restaurant meals, drinks, snacks, children’s clothing, and gifts, from December 14, 2024, to February 15, 2025.”

 

The GST on restaurant meals in Canada is 5%. More for provinces with the HST (harmonized federal and provincial taxes). So this is a meaningful reduction.

 

- https://www.canada.ca/en/department-finance/news/2024/11/more-money-in-your-pocket-a-tax-break-for-all-canadians.html#

 

The current federal Liberal government has to be the worst federal government in Canadian history - at least in my lifetime. And we have had some bad ones. The current $250 cheque per adult + 2 month tax break (on a few things) is just the latest in their bat shit crazy management of the Canadian economy, especially over the past 6 or 7 years. I have tried to keep away from politics - but this Liberal government just keeps setting new lows. I am completely dumbfounded by what they say and do. Fortunately, Canada is less than 12 months away from a federal election - my only hope is that Trudeau stays on as leader of the Liberals. 
 

PS: My family will now be getting cheques for 5 x $250 = $1,250. Money we do not need. I suppose i should be celebrating…

 

I am hoping they don't use this to sucker in NDP and pass through the capital gains tax changes in 2024 ...If they delay that and pass it in 2025 its better as tax returns for many companies and people are going be hard...6 weeks left

[glider3834]

12 hours ago, giulio said:

I believe this does NOT refer to Fairfax ownership in the Meadow UK. FF Meadow Holdings is a sub of Fairfax, 100% owned through its various insurance companies as you listed. FF Meadow then holds a minority stake in Meadow UK, the actual company.

 

Best,

G

as I understand Meadow is a consolidated sub - Fairfax (via FF Meadow Bidco) bought controlling interest in Swan Topco from Exponent and Swan Topco is the controlling shareholder of underlying Meadow Foods business

 

 

 

[Parsad]

7 hours ago, Viking said:

Well, at least this is good news for Recipe and their +1,000 restaurants in Canada. Does Prem have Trudeau’s ear? “The government is proposing that the GST/HST be fully and temporarily relieved on holiday essentials, like groceries, restaurant meals, drinks, snacks, children’s clothing, and gifts, from December 14, 2024, to February 15, 2025.”

 

The GST on restaurant meals in Canada is 5%. More for provinces with the HST (harmonized federal and provincial taxes). So this is a meaningful reduction.

 

- https://www.canada.ca/en/department-finance/news/2024/11/more-money-in-your-pocket-a-tax-break-for-all-canadians.html#

 

The current federal Liberal government has to be the worst federal government in Canadian history - at least in my lifetime. And we have had some bad ones. The current $250 cheque per adult + 2 month tax break (on a few things) is just the latest in their bat shit crazy management of the Canadian economy, especially over the past 6 or 7 years. I have tried to keep away from politics - but this Liberal government just keeps setting new lows. I am completely dumbfounded by what they say and do. Fortunately, Canada is less than 12 months away from a federal election - my only hope is that Trudeau stays on as leader of the Liberals. 
 

PS: My family will now be getting cheques for 5 x $250 = $1,250. Money we do not need. I suppose i should be celebrating…

 

+1!  I don't want to vote for the Conservatives or NDP...equally batshit crazy when it comes to policy and outcomes...but I can't vote for Trudeau.  I didn't in the last election, and I can't do it this time either.  All three parties like the Democrats and Republicans are now spend, spend, spend or cut taxes which will reduce revenues...no one cares about a deficit or the national debt!  Cheers!

[Xerxes]

1 hour ago, Parsad said:

 

+1!  I don't want to vote for the Conservatives or NDP...equally batshit crazy when it comes to policy and outcomes...but I can't vote for Trudeau.  I didn't in the last election, and I can't do it this time either.  All three parties like the Democrats and Republicans are now spend, spend, spend or cut taxes which will reduce revenues...no one cares about a deficit or the national debt!  Cheers!

that leaves the Block !

[Parsad]

1 hour ago, Xerxes said:

that leaves the Block !

 

Can't vote for them.  Irony is they've also always been batshit crazy until recently and now may be the most sane of the four parties. 

 

Although if I move to a beautiful cottage outside of either Quebec City or Montreal on some acreage, it might be worth voting for them.  I'm thinking about it!

 

Cheers!

[dartmonkey]

10 hours ago, Parsad said:

I don't want to vote for the Conservatives or NDP...equally batshit crazy when it comes to policy and outcomes...but I can't vote for Trudeau.  I didn't in the last election, and I can't do it this time either.  All three parties like the Democrats and Republicans are now spend, spend, spend or cut taxes which will reduce revenues...no one cares about a deficit or the national debt! 

You are like my son, then. He finds something to disagree about with both the Liberals and the Conservatives, so he won't vote. (He doesn't like that the conservatives have not promised to eliminate supply management for milk, eggs and poultry.) The fact that the conservatives would be a more sensible choice than the liberals for 90% of the issues he cares about doesn't matter to him.

 

For the deficit, the liberals would keep increasing spending, make nonsensical cuts to taxes (GST holidays, exempting arbitrary items, etc.) and increase income and capital gains taxes, with an increasing deficit, while the conservatives would cut spending, and cut a few taxes (the carbon tax, which provides no net income to the government), and maybe cut corporate and capital gains taxes, reducing the deficit but not eliminating it, at least not in the short term. So if I want the deficit completely eliminated (as I do), I have no party to vote for, right? Or I could vote for the conservatives, and get 90% of what I want. They're all batshit crazy, but some are more batshit crazy than others.

[Xerxes]

11 hours ago, Parsad said:

 

Can't vote for them.  Irony is they've also always been batshit crazy until recently and now may be the most sane of the four parties. 

 

Although if I move to a beautiful cottage outside of either Quebec City or Montreal on some acreage, it might be worth voting for them.  I'm thinking about it!

 

Cheers!

if you are ever in QC for a visit, do let me know. I ll arrange to meet with you. 

[Viking]

Orla Mining - Planting a Seed

 

Orla Mining is Fairfax’s newest large resource/commodity investment. Fairfax quietly built up their position in Orla over the past 2 years (from Q3-2022 to Q3-2024), spending about $217 million. They own about 18% of the company. The investment today has a market value of US$261 million. The return on Fairfax’s investment to date has been about $44 million or 20%.

 

The real play with this investment:

1. That gold prices stay higher for longer.
2. That the management team at Orla is above average. And will be able to expand the company from a single asset producer to a multi asset intermediate-sized producer.
3. That the strong ownership structure (Fairfax, Newmont, Lassonde, Agnico Eagle) will also provide to be a competitive advantage. This allows the management team at Orla to be strategic and think long-term with its decisions. This should help ensure that the capital allocation decisions made by the management team at Orla are rational and very shareholder friendly (which is what we have seen with Orla's most recent acquisition). 

With its investment in Orla, Fairfax has planted another seed in its large equity portfolio. This investment has significant upside potential in the coming years. And if gold prices stay elevated, it could turn into a home run (a multi-bagger).

 

Orla recently made a large acquisition - the Musselwhite gold mine in Canada. As part of the financing, Fairfax invested (not sure how much) in the US$200 million convertible note issuance:

• Coupon: 4.5%; Premium: 42%1; Term: 5 years
• Convertible at C$7.90
• 18-month non-call, callable at 130% of strike thereafter
• Warrant: 0.66x warrant exercisable at C$11.50 – Five-year term from closing

This is likely a significant increase in the size of Fairfax’s investment in Orla Mining. 

 

The purchase of Musselwhite looks like another solid move by the Orla management team. There appears to be significant optionality to the purchase (significant opportunity for resource growth, which is part of the Pierre Lasonde playbook).

 

 

Who is Orla Mining?

 

Orla Mining Ltd. is a Vancouver-based company that acquires, explores, develops, and operates mineral properties to produce gold, silver, zinc, lead, and copper: 

 

Orla Mining's projects include:

• Camino Rojo: A 100% owned, operating oxide heap leach mine in Zacatecas, Mexico 
• South Railroad: A feasibility-stage heap leach project in Nevada 
• Cerro Quema: A pre-feasibility-stage heap leach project in Panama 
• Musselwhite Gold Mine: An acquired project in Ontario, Canada

CEO: is Jason Simpson, who has over 27 years of experience in mining engineering, project construction, and operations leadership. 

 

Non-Executive Chairman, Director: Mr. Jeannes served as President and Chief Executive Officer of Goldcorp Inc. from 2009 until April 2016.

 

Orla recently announced a large acquisition: the Musselwhite Gold Mine

 

Strategic expanansion into Canada.

• No upfront equity dilution, supported by cornerstone shareholders.
• Takes advantage of significant disconnect between forward and consensus gold prices.
• Significant opportunity for resource growth.
• https://orlamining.com/site/assets/files/6118/orla_acquires_musselwhite_nov_18_2024.pdf

 

Bet on the jockey/partnering with outstanding investors

 

It should be noted that Fairfax is not blindly throwing darts with their resource/commodity investments. They are partnering with other highly successful people / investors - some of whom have extraordinary long term track records.

 

With Orla, Fairfax is partnering with Pierre Lassonde who is ‘recognized as one of Canada’s foremost
experts in the area of mining and precious metals.’ Lassonde co-founded Franco-Nevada in 1985.

 

Fairfax is also partnered with Lassonde with its investment in Foran Mining, a copper mining project in Canada.

 

Jurisdiction

The vast majority of the production for Fairfax’s resource/commodity investments is located in North America. This is a much lower risk jurisdiction than other parts of the world. My guess is this is not a fluke. All of Orla’s mines are located in North America.

 

Edited 7 hours ago by Viking

[nwoodman]

2 hours ago, Viking said:

Orla Mining - Planting a Seed

 

Orla Mining is Fairfax’s newest large resource/commodity investment. Fairfax quietly built up their position in Orla over the past 2 years (from Q3-2022 to Q3-2024), spending about $217 million. They own about 18% of the company. The investment today has a market value of US$261 million. The return on Fairfax’s investment to date has been about $44 million or 20%.

 

The real play with this investment:

1. That gold prices stay higher for longer.
2. That the management team at Orla is above average. And will be able to expand the company from a single asset producer to a multi asset intermediate-sized producer.
3. That the strong ownership structure (Fairfax, Newmont, Lassonde, Agnico Eagle) will also provide to be a competitive advantage. This allows the management team at Orla to be strategic and think long-term with its decisions. This should help ensure that the capital allocation decisions made by the management team at Orla are rational and very shareholder friendly (which is what we have seen with Orla's most recent acquisition). 

With its investment in Orla, Fairfax has planted another seed in its large equity portfolio. This investment has significant upside potential in the coming years. And if gold prices stay elevated, it could turn into a home run (a multi-bagger).

 

Orla recently made a large acquisition - the Musselwhite gold mine in Canada. As part of the financing, Fairfax invested (not sure how much) in the US$200 million convertible note issuance:

• Coupon: 4.5%; Premium: 42%1; Term: 5 years
• Convertible at C$7.90
• 18-month non-call, callable at 130% of strike thereafter
• Warrant: 0.66x warrant exercisable at C$11.50 – Five-year term from closing

This is likely a significant increase in the size of Fairfax’s investment in Orla Mining. 

 

The purchase of Musselwhite looks like another solid move by the Orla management team. There appears to be significant optionality to the purchase (significant opportunity for resource growth, which is part of the Pierre Lasonde playbook).

 

 

Who is Orla Mining?

 

Orla Mining Ltd. is a Vancouver-based company that acquires, explores, develops, and operates mineral properties to produce gold, silver, zinc, lead, and copper: 

 

Orla Mining's projects include:

• Camino Rojo: A 100% owned, operating oxide heap leach mine in Zacatecas, Mexico 
• South Railroad: A feasibility-stage heap leach project in Nevada 
• Cerro Quema: A pre-feasibility-stage heap leach project in Panama 
• Musselwhite Gold Mine: An acquired project in Ontario, Canada

CEO: is Jason Simpson, who has over 27 years of experience in mining engineering, project construction, and operations leadership. 

 

Non-Executive Chairman, Director: Mr. Jeannes served as President and Chief Executive Officer of Goldcorp Inc. from 2009 until April 2016.

 

Orla recently announced a large acquisition: the Musselwhite Gold Mine

 

Strategic expanansion into Canada.

• No upfront equity dilution, supported by cornerstone shareholders.
• Takes advantage of significant disconnect between forward and consensus gold prices.
• Significant opportunity for resource growth.
• https://orlamining.com/site/assets/files/6118/orla_acquires_musselwhite_nov_18_2024.pdf

 

Bet on the jockey/partnering with outstanding investors

 

It should be noted that Fairfax is not blindly throwing darts with their resource/commodity investments. They are partnering with other highly successful people / investors - some of whom have extraordinary long term track records.

 

With Orla, Fairfax is partnering with Pierre Lassonde who is ‘recognized as one of Canada’s foremost
experts in the area of mining and precious metals.’ Lassonde co-founded Franco-Nevada in 1985.

 

Fairfax is also partnered with Lassonde with its investment in Foran Mining, a copper mining project in Canada.

 

Jurisdiction

The vast majority of the production for Fairfax’s resource/commodity investments is located in North America. This is a much lower risk jurisdiction than other parts of the world. My guess is this is not a fluke. All of Orla’s mines are located in North America.

 

Good one @Viking, Musselwhite is straight from the Lassonde playbook:

 

“1. Quality Jurisdiction

 

Musselwhite is located in Ontario, Canada, a Tier-1 jurisdiction with a rich history of mining. This aligns with Lassonde’s emphasis on safe, predictable operating environments. With Orla’s existing projects in North America (Mexico, Nevada, Panama), this acquisition reinforces their focus on stable regions with excellent infrastructure and skilled labor.

 

2. Untapped Exploration Potential

 

Musselwhite brings significant optionality to Orla’s portfolio:

• The mine has historically underexplored deeper zones and extensions of known ore bodies.

• The Superior Province, where Musselwhite is located, is one of the world’s most prolific greenstone belts, offering substantial upside for resource expansion.

This exploration potential is quintessential Lassonde: invest in an asset with a solid production history and use exploration to unlock long-term value.

 

3. Strategic Capital Allocation

 

Orla financed the acquisition with a mix of convertible notes and warrants, avoiding upfront equity dilution. This disciplined approach mirrors Lassonde’s focus on maximizing shareholder returns by maintaining ownership leverage while ensuring sufficient funding for growth. With cornerstone investors like Fairfax, Newmont, and Agnico Eagle, Orla also has the financial backing to execute this strategy effectively.

 

4. Strong Operational Foundation

 

Unlike a greenfield project, Musselwhite is an established mine with a proven production record. Orla inherits a functioning operation with existing infrastructure, immediate cash flow, and opportunities for optimization. This de-risks the acquisition while setting the stage for growth—a hallmark of Lassonde’s playbook.

 

5. Long-Term Upside in Gold Prices

 

Musselwhite adds another layer of leverage to gold price movements. Lassonde has often emphasized the disconnect between market and intrinsic valuations of gold, advocating for investments in assets that can thrive in both low- and high-price environments. If gold prices remain elevated, Musselwhite’s margins and reserves will compound Orla’s value exponentially.”

 

It is fascinating to watch all this come together and you can see the themes and influences of prior investments and importantly the key figures involved. Reminds me I need to read Lassonde’s The Gold Book.

 

https://archive.org/details/goldbookcomplete0000lass/page/n3/mode/2up

Edited 6 hours ago by nwoodman

[Parsad]

On 11/22/2024 at 10:08 AM, Xerxes said:

if you are ever in QC for a visit, do let me know. I ll arrange to meet with you. 

 

Thanks Xerxes...will do!  Cheers!