Fairfax stock positions

[petec]

20 minutes ago, Hoodlum said:

Fairfax has successfully sold 80 million ordinary shares (the “Shares”) of Eurobank, corresponding to approximately 2.2% of Eurobank’s share capital, at a price of Euro 2.33 per Share, through an accelerated book building procedure reserved for qualified investors (the “Transaction”).

 

It's actually really good to see that they can liquidate chunks of this holding reasonably close to the market price. I have always felt there was a risk around that. 

Edited January 23 by petec

[villainx]

8 hours ago, petec said:

I have always felt there was a risk around that. 

 

That's partly why I haven't sold my 2.2% position in  ...   okay, I don't have 2.2% in any non controlling corporation.

[SafetyinNumbers]

8 hours ago, petec said:

 

It's actually really good to see that they can liquidate chunks of this holding reasonably close to the market price. I have always felt there was a risk around that. 

It’s the biggest company in the Greek ETF. It’s like saying it would be hard to do a secondary in Royal Bank. 

[villainx]

What's Royal Bank?  A UK thing?

[mananainvesting]

16 minutes ago, villainx said:

What's Royal Bank?  A UK thing?

Its a canadian Bank, #1 in marketcap on the TSX. 

[ValueNation]

19 minutes ago, villainx said:

What's Royal Bank?  A UK thing?

Biggest bank in Canada

[Dazel]

Viking,

 

Our work horse.

 

What number should we expect for annual earnings…unless Bradstreet sold bonds at the beginning of the quarter  they will be down in the fourth quarter mark to market…$800m paper gain in the third quarter.

[dartmonkey]

21 hours ago, petec said:

 

It's actually really good to see that they can liquidate chunks of this holding reasonably close to the market price. I have always felt there was a risk around that. 

I dunno, count me as disappointed - I don't see why they would expose themselves to being a forced seller below market prices. Sure, a 5-10c discount on 80m shares is just EU4-8m, but that shouldn't happen. I wonder why they couldn't get a friendly partner like OMERS to 'buy' them with a deal to buy them back at some point, but maybe it's not enough money to be worth the bother. It seems like such a good deal, I have bought a few shares recently, so it kind of grates to see them selling them below market price.

[KFRCanuk]

16 hours ago, ValueNation said:

Biggest bank in Canada

 

Yoga pants are 18th. FFH is 24th.

Edited January 24 by KFRCanuk

[Viking]

5 hours ago, Dazel said:

Viking,

 

Our work horse.

 

What number should we expect for annual earnings…unless Bradstreet sold bonds at the beginning of the quarter  they will be down in the fourth quarter mark to market…$800m paper gain in the third quarter.

 

@Dazel , my last earnings update was mid-November. My guess then was basic earnings would come in around $160/share. I think $160 to $165/share is a reasonable number to use as a 'normalized' level of earnings for Fairfax today. 

 

There will be lots of puts and takes in Q4 (some of these have not been incorporated into my mid-Nov update);

- do we see growth resume in net premiums at Odyssey and Brit?

- spike in interest rates further out on the curve will likely be a modest headwind (unrealized losses on bonds > IFRS impact on insurance liabilities).

- mark to market investment gains = $200 million?

- Stelco sale  = $366 million gain

- Peak revaluation = ? gain

- AGT Food Ingredients sale of rail business = ? gain

- currency will be a headwind, perhaps meaningful (US$ strength) 

- adverse development at runoff of $150 to $200 million?

- tax rate has been a headwind (22 to 25% guide, from low 20%)

- fall in shares outstanding is a tailwind

 

Bottom line, my guess is we get a good quarter. 

 

Edited January 24 by Viking

[Hoodlum]

23 hours ago, Viking said:

 

@Dazel , my last earnings update was mid-November. My guess then was basic earnings would come in around $160/share. I think $160 to $165/share is a reasonable number to use as a 'normalized' level of earnings for Fairfax today. 

 

There will be lots of puts and takes in Q4 (some of these have not been incorporated into my mid-Nov update);

- do we see growth resume in net premiums at Odyssey and Brit?

- spike in interest rates further out on the curve will likely be a modest headwind (unrealized losses on bonds > IFRS impact on insurance liabilities).

- mark to market investment gains = $200 million?

- Stelco sale  = $366 million gain

- Peak revaluation = ? gain

- AGT Food Ingredients sale of rail business = ? gain

- currency will be a headwind, perhaps meaningful (US$ strength) 

- adverse development at runoff of $150 to $200 million?

- tax rate has been a headwind (22 to 25% guide, from low 20%)

- fall in shares outstanding is a tailwind

 

Bottom line, my guess is we get a good quarter. 

 

At the end of q3, asset duration was almost the same as liability duration. This gap may have shrunk further towards the end of q4.  I wonder if due to IFRS reporting, we will not see much of an impact going forward with bond volatility. 
 

AGT Food mentioned that the rail sale would provide significant capital to them and was expected to close in late 2024 or early 2025. I haven’t heard anything on this, so I presume they are only waiting for regulatory approval. Fairfax may receive a special dividend from this, albeit in Q1 now. 
 

 

Edited January 25 by Hoodlum

[Viking]

2 hours ago, Hoodlum said:

At the end of q3, asset duration was almost the same as liability duration. This gap may have shrunk further towards the end of q4.  I wonder if due to IFRS reporting, we will not see much of an impact going forward with bond volatility. 
 

AGT Food mentioned that the rail sale would provide significant capital to them and was expected to close in late 2024 or early 2025. I haven’t heard anything on this, so I presume they are only waiting for regulatory approval. Fairfax may receive a special dividend from this, albeit in Q1 now. 

 

@Hoodlum , on bond volatility, I agree - given the bond portfolio and insurance liabilities are likely roughly balanced, the net impact to Fairfax should be pretty neutral. But the line items (where it shows up in the earnings report) will see some pretty big changes. Importantly, investment gains will take a big hit and IFRS 17 will see a big benefit from the big change in interest rates in Q4. 

 

AGT has become something of a 'phantom' type of holding since Fairfax took it private in Dec 2018. It has been chugging away for 6 years now. My guess is value has been building in this holding that is not being captured in Fairfax's reported results (and not captured in BV). So we will see if we get an update when the rail sale closes (with a possible dividend payment to Fairfax). I might be wrong.

 

I would love to get an update on Grivalia Hospitality (what the assets are worth). My guess is that investment will work out well for Fairfax.  

Edited January 25 by Viking

[Hoodlum]

56 minutes ago, Viking said:

 

@Hoodlum , on bond volatility, I agree - given the bond portfolio and insurance liabilities are likely roughly balanced, the net impact to Fairfax should be pretty neutral. But the line items (where it shows up in the earnings report) will see some pretty big changes. Importantly, investment gains will take a big hit and IFRS 17 will see a big benefit from the big change in interest rates in Q4. 

 

AGT has become something of a 'phantom' type of holding since Fairfax took it private in Dec 2018. It has been chugging away for 6 years now. My guess is value has been building in this holding that is not being captured in Fairfax's reported results (and not captured in BV). So we will see if we get an update when the rail sale closes (with a possible dividend payment to Fairfax). I might be wrong.

 

I would love to get an update on Grivalia Hospitality (what the assets are worth). My guess is that investment will work out well for Fairfax.  

I was actually surprised when AGT mentioned in their press release that they had over $3B in annual revenue.  This could be another asset to monitor for valuation. 
 

I came across this recent interview with Grivalia Hospitality’s CEO, that provides some insight on how they develop their properties. 
 

https://www.hospitalityinvestor.com/investment/interview-grivalia

[nwoodman]

2 hours ago, Hoodlum said:

I was actually surprised when AGT mentioned in their press release that they had over $3B in annual revenue.  This could be another asset to monitor for valuation. 
 

I came across this recent interview with Grivalia Hospitality’s CEO, that provides some insight on how they develop their properties. 
 

https://www.hospitalityinvestor.com/investment/interview-grivalia

Great interview.  Natalia Strafti is a class act, quick bio:

 

2000: Began her career at EFG Eurobank as Investment Analyst, later becoming Deputy Head of Advisory and Asset Management.

2008-2014: Head of Investments and Asset Management, managing 1.5B+ in real estate investments, including green-certified office redevelopments.

2014-2021: Chief Operating Officer (COO) of Grivalia Properties REIC, leading operations and sustainability initiatives, and driving successful share capital increases and IPO efforts.

2021: Appointed Deputy CEO of Grivalia Hospitality, overseeing acquisitions, development, and luxury hospitality projects.

2025: Promoted to CEO of Grivalia Hospitality, focusing on innovation, sustainability, and expanding in the ultra-luxury sector.

 

Intuitively a rise to CEO after 25 years with the same company just seems so much more culturally valuable than an outside appointment.  Very consistent with Fairfax’s approach and their value of tenure.

 

 

 

 

Edited January 26 by nwoodman

[petec]

On 1/24/2025 at 2:29 AM, SafetyinNumbers said:

It’s the biggest company in the Greek ETF. It’s like saying it would be hard to do a secondary in Royal Bank. 

 

Right. Because Greece is as liquid as Canada. GREK has net assets of $150m 

 

Also: it might well be tricky to do a secondary in RBC if you owned 33%. No stock wants that kind of overhang.

[SafetyinNumbers]

14 minutes ago, petec said:

 

Right. Because Greece is as liquid as Canada. GREK has net assets of $150m 

 

Also: it might well be tricky to do a secondary in RBC if you owned 33%. No stock wants that kind of overhang.

It’s all relative but it wasn’t hard was it? That’s also why they agreed to a 6 month lock up. 

[Dazel]

Thanks for the numbers Viking.

 

my spidey senses feel that Bradstreet sold short duration and went long duration in the fourth quarter and is continuing to do so now. Because it’s what I have been looking at. Long bond yields (UST’s) have peaked in my opinion. That’s where the money is….stabilizes operating earnings for decades.
 

[gfp]

5 hours ago, Dazel said:

Thanks for the numbers Viking.

 

my spidey senses feel that Bradstreet sold short duration and went long duration in the fourth quarter and is continuing to do so now. Because it’s what I have been looking at. Long bond yields (UST’s) have peaked in my opinion. That’s where the money is….stabilizes operating earnings for decades.
 

 

Yeah, I feel like this 5 handle on 20 year treasury bonds would have been hard for him to resist but we'll see!

[Hoodlum]

Fairfax is acquiring more shares of Quess on the open market after the latest pullback of the stock price.  The demerger of Quess into 3 tradeable companies is expected to be completed this year. 
 

https://www.business-standard.com/amp/markets/capital-market-news/quess-corp-shares-surge-following-promoter-share-purchase-125020100420_1.html

 

Quess Corp climbed 4.86% to Rs 624.30, following the announcement of a share purchase by Fairbridge Capital (Mauritius), a promoter of the company.

 

Fairbridge Capital (Mauritius), a subsidiary of Fairfax Financial Holdings, acquired 3,77,218 equity shares of Quess Corp, representing 0.25% of the company's paid-up capital. The purchase was executed through open market transactions on stock exchanges.

 

As on December 2024, Fairbridge Capital Mauritius held 5,04,76,237 shares, or 33.95% stake in the company. Total promoter stake in the company stood at 56.57%

[Hoodlum]

It looks like Amazon was the seller of the Quess shares

 

https://www.devdiscourse.com/article/business/3248958-amazon-sells-stake-in-quess-corp-fairfax-boosts-holdings

 

In a notable move within the business services sector, Amazon has sold a portion of its stake in Quess Corp. The global e-commerce leader offloaded 7.54 lakh shares, constituting a 0.50% stake, for Rs 46 crore through an open market deal.

 

This transaction involved Amazon's investment arm, Amazon.com NV Investment Holdings, and was marked by shares being sold at an average price of Rs 610.20 apiece. The decision to divest comes as other significant stakeholders in Quess Corp, such as Fairfax Capital and Ajit Isaac, expanded their holdings.

 

Fairfax Financial Holdings' unit, Fairbridge Capital (Mauritius), alongside Quess Corp's chairman Ajit Isaac, increased their stakes by purchasing an additional 3.77 lakh shares each. 

 

 

Edited Saturday at 02:13 PM by Hoodlum