Fairfax stock positions

[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, 2025 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, 2025 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, 2025 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 February 1, 2025 by Hoodlum

[Viking]

The share price of Orla Mining has been on fire the past 13 months. Gold has been in a strong uptrend for the past year. And a Trump presidency appears to be the latest catalyst. 

 

Fairfax finished building out their common share position in Feb of 2024. They own about 57 million shares = 18% of common shares outstanding (not including convertible note issued in Nov 2024). The market value of Fairfax's stock holding is about US$400 million today. It is up about $200 million over the past 13 months (+100%). 

 

In November, 2024, Fairfax also participated in a convertible notes offer by Orla of US$200 million (not sure how much of the $200 million that Fairfax purchased). There are three components to the convertible notes offer:

• Interest rate = 4.5%
• Convertible into shares of Orla at C$7.90/share
• Warrant = .66 share convertible at C$11.50/share

At current market value, Orla is likely a +$500 million investment for Fairfax (including the convertible notes).  

 

 

 

 

 

[Viking]

Gold prices are at record highs. In 2023, Fairfax built out its position in gold producer Orla Mining (partnering with Newmont Mining and Pierre Lassonde. How is its investment performing? It's up +$200m in 13 months, more than a double. This does not include the convertible notes they purchased in November. OLA.TO ORLA

 

Orla provides a good case study of how Fairfax does business today: partner with the best in that field - in the gold space that is Newmont Mining and Pierre Lassonde. 

 

It is impressive the relationships/networks of expert external capital allocators that Fairfax/Hamblin Watsa/Fairbridge has slowly built out over the decades in many different industries and geographies. It is an important part of their moat - and it is grossly misunderstood/under-appreciated by the broader investment community.  
 

The many relationships/networks they have established also likely helps big time with deal flow ( @nwoodman has pointed this out before). My guess is Fairfax is viewed as being an ideal partner for other competent capital allocators (Fairfax wants to be a passive investor/partner). That is important with all the capital Fairfax will have to allocate in the coming year(s).

 

This also highlights an important difference in how Fairfax allocates capital compared to Berkshire Hathaway. Fairfax is much more comfortable leaning on the expertise of others. Buffett instead prefers to rely on his own expertise. 

 

Looking forward, to when Prem and Buffett are gone, I think Fairfax's approach might work better/be more sustainable. 

 

What do others think?

-----------

Orla's purchase of the Musselwhite mine in November is looking very well done. 

- https://wp-orlamining-2024.s3.ca-central-1.amazonaws.com/media/2025/01/Orla-Acquires-Musselwhite-November-2024.pdf

 

Edited February 9, 2025 by Viking

[This2ShallPass]

6 hours ago, Viking said:

It is impressive the relationships/networks of expert external capital allocators that Fairfax/Hamblin Watsa/Fairbridge has slowly built out over the decades in many different industries and geographies. It is an important part of their moat - and it is grossly misunderstood/under-appreciated by the broader investment community.  

Very true, even many shareholders (like me) have under appreciated this aspect. Thanks for your continuous coverage of the various facets of Fairfax!

 

Orla seems to be another big winner, I would have put it in the low quality bucket because of the industry. 

[Viking]

1 hour ago, This2ShallPass said:

Very true, even many shareholders (like me) have under appreciated this aspect. Thanks for your continuous coverage of the various facets of Fairfax!

 

Orla seems to be another big winner, I would have put it in the low quality bucket because of the industry. 

 

@This2ShallPass, after reading your comment, I remembered another important point mentioned by @nwoodman in the past - the importance of deal flow. My guess is Fairfax’s phone is ringing often these days.

—————

I added the following paragraph to my post above:

The many relationships/networks they have established also likely helps big time with deal flow ( @nwoodman has pointed this out before). My guess is Fairfax is viewed as being an ideal partner for other competent capital allocators (Fairfax wants to be a passive investor/partner). That is important with all the capital Fairfax will have to allocate in the coming year(s).

Edited February 9, 2025 by Viking

[mananainvesting]

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Edited February 9, 2025 by mananainvesting

[mananainvesting]

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Edited February 9, 2025 by mananainvesting

[mananainvesting]

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Edited February 9, 2025 by mananainvesting

[mananainvesting]

$DXT.TO is another holding of Fairfax that has gone up ~40% over the last 12 months. I own some $DXT.TO and hope Fairfax just takes it private once the tax losses are harvested. 

 

$ESI.TO - This is up ~35%, company is paying down debt at $200M per year, imo lots of room for the stock to keep inching up as the company pays down debt! Another excellent investment by Fairfax team. 

 

Both are small positions, but clearly shows Fairfax’s investment at work! 

 

[mananainvesting]

Sorry, had issues posting my comment and ended up posting the same comment multiple times. 

[villainx]

 

It was worth it!

 

[mananainvesting]

1 hour ago, Haryana said:

Is your option to delete disabled?

Looks like it, as I did’nt have the option to delete,  just the option to edit, which i did. 

[petec]

On 2/8/2025 at 7:01 PM, Viking said:

This also highlights an important difference in how Fairfax allocates capital compared to Berkshire Hathaway. Fairfax is much more comfortable leaning on the expertise of others. Buffett instead prefers to rely on his own expertise. 

 

I'm not sure Buffett has an issue with partnering - look at Berkadia. But he does have a LOT more capital to deploy and that lends itself to owning 100% of large deals rather than 18% of a startup miner, if you see what I mean.

[Hoodlum]

Fairfax exchanged METLEN (Mytilineos) convertible bonds to acquire additional 2.5M shares.  This increases Fairfax ownership from 4.68% to 6.43%.  

 

https://www.metlengroup.com/news/ase-announcements/insiders-announcements/announcement-of-regulated-information-fairfax-10-02-25/

 

[Hoodlum]

Eurobank has completed the acquisition of Hellenic Bank shares that brings it ownership of Hellenic Bank to 93%.  Eurobank has submitted the mandatory offer to remaining shareholders and then will exercise it's squeeze-out rights for any remaining shares.   

 

https://cyprus-mail.com/2025/02/11/eurobank-raises-stake-in-hellenic-bank-to-93-47-per-cent-eyes-full-control

 

 

[Viking]

On 2/11/2025 at 4:24 AM, Hoodlum said:

Eurobank has completed the acquisition of Hellenic Bank shares that brings it ownership of Hellenic Bank to 93%.  Eurobank has submitted the mandatory offer to remaining shareholders and then will exercise it's squeeze-out rights for any remaining shares.   

 

https://cyprus-mail.com/2025/02/11/eurobank-raises-stake-in-hellenic-bank-to-93-47-per-cent-eyes-full-control

 

@Hoodlum, great news. It will be interesting to hear Eurobanks updated business plan 2025-2027 when they report Feb 27. I am wondering what they will do with capital return in 2025 - do they pay another dividend, or do they take a pass given the cash outlay to buy out Hellenic Bank.  
 

The synergies of integrating the two banks and insurance company in Cypress should be significant. They are also expanding in wealth management in all countries. 
—————

Eurobank Ergasias Services and Holdings S.A. informs the investment community that the announcement for the Full Year 2024 Financial Results and Business Plan 2025-2027 will take place on Thursday, 27 February 2025 after the close of trading on the ATHEX.

On the same day a conference call for the presentation and discussion of results is scheduled to follow at 18:00 Greek time.

 

https://www.eurobankholdings.gr/en/grafeio-tupou/etairiki-anakoinosi-12-02-2025

 

Edited February 13, 2025 by Viking