Fairfax stock positions

[mananainvesting]

.

 

Edited February 9 by mananainvesting

[mananainvesting]

.

 

Edited February 9 by mananainvesting

[mananainvesting]

.

 

Edited February 9 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!

 

[Haryana]

17 hours ago, mananainvesting said:

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

Is your option to delete disabled?

[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

 

 

[Haryana]

On 2/9/2025 at 7:05 PM, mananainvesting said:

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

Do you join from a mobile app?

Try log in from a web browser?

[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 by Viking

[nwoodman]

I've attached some notes on Vacatia. I sound like a broken record, but I love these structured deals.  I doubt its lost on anyone here but this is such a sweet spot for Fairfax.  There seems to be no shortage of deals to be done.  Hopefully we hear some more color from the Fairfax team in a few hours time.  

 

 

Caroline Shin Bio:
 

Caroline Shin is a seasoned tech entrepreneur and hospitality executive best known for co-founding Vacatia, a platform modernizing timeshare management.

 

Key highlights of her career:
•    Built and sold Hotwire: As a founding team member, she helped scale the travel site before its $685 million sale to InterActiveCorp in 2003.
 •    Led Starwood Hotels’ CRM strategy: Boosted market share by 20–40% for top properties through data-driven pricing and loyalty programs.
 •    Founded Vacatia (2015): Created a tech platform serving 750+ resorts, helping owners rent/sell timeshares and manage operations digitally.
 •    Launched Vacatia Partner Services (2023): Expanded into hands-on resort management, now overseeing 4,750+ units across the U.S..
•    Co-founded Store Vantage: A SaaS tool optimizing staffing and customer relationships for small businesses.

 

Trained as a nuclear engineer at MIT, she applies analytical rigor to solving hospitality challenges. Outside Vacatia, she runs a pet grooming business and advocates for Korean American community initiatives.

 

Edit: Updated following Q4 24 CC, very good of Wade to break it out

 

 

*Note: actual interest on the $170M warehouse will vary with SOFR. At a 5% base rate, SOFR+4% = 9% (≈$15.3M/year). If rates decline, interest expense will fall (and vice versa).

 

The Secured Overnight Financing Rate (SOFR) is a benchmark interest rate that reflects the cost of borrowing cash overnight using U.S. Treasury securities as collateral. It is widely used in financial markets as a replacement for LIBOR (London Interbank Offered Rate) for pricing loan bonds and derivatives.

 

Weighted Average Yield: Fairfax's weighted average cash yield is robust based on the structured notes alone (excluding equity). On $810M of combined loan investment, the annual interest of ~$87M equates to roughly a 10.7% blended yield. Including the floating portion at current rates, the overall yield is in the low double-digits, which is very attractive for a secured, asset-backed investment. This reflects the risk profile (timeshare assets are somewhat niche and less liquid), but Fairfax negotiated rich terms.

 

Company Comps

 

 

 

Vacatia and Blizzard Vacatia: Company Analysis V3.pdf

Edited Monday at 12:37 AM by nwoodman

[petec]

On 2/14/2025 at 7:34 AM, nwoodman said:

I've attached some notes on Vacatia. I sound like a broken record, but I love these structured deals.  I doubt its lost on anyone here but this is such a sweet spot for Fairfax.  There seems to be no shortage of deals to be done.  Hopefully we hear some more color from the Fairfax team in a few hours time.  

 

 

Caroline Shin Bio:
 

Caroline Shin is a seasoned tech entrepreneur and hospitality executive best known for co-founding Vacatia, a platform modernizing timeshare management.

 

Key highlights of her career:
•    Built and sold Hotwire: As a founding team member, she helped scale the travel site before its $685 million sale to InterActiveCorp in 2003.
 •    Led Starwood Hotels’ CRM strategy: Boosted market share by 20–40% for top properties through data-driven pricing and loyalty programs.
 •    Founded Vacatia (2015): Created a tech platform serving 750+ resorts, helping owners rent/sell timeshares and manage operations digitally.
 •    Launched Vacatia Partner Services (2023): Expanded into hands-on resort management, now overseeing 4,750+ units across the U.S..
•    Co-founded Store Vantage: A SaaS tool optimizing staffing and customer relationships for small businesses.

 

Trained as a nuclear engineer at MIT, she applies analytical rigor to solving hospitality challenges. Outside Vacatia, she runs a pet grooming business and advocates for Korean American community initiatives.

 

Edit: Updated following Q4 24 CC, very good of Wade to break it out

 

 

*Note: actual interest on the $170M warehouse will vary with SOFR. At a 5% base rate, SOFR+4% = 9% (≈$15.3M/year). If rates decline, interest expense will fall (and vice versa).

 

The Secured Overnight Financing Rate (SOFR) is a benchmark interest rate that reflects the cost of borrowing cash overnight using U.S. Treasury securities as collateral. It is widely used in financial markets as a replacement for LIBOR (London Interbank Offered Rate) for pricing loan bonds and derivatives.

 

Weighted Average Yield: Fairfax's weighted average cash yield is robust based on the structured notes alone (excluding equity). On $810M of combined loan investment, the annual interest of ~$87M equates to roughly a 10.7% blended yield. Including the floating portion at current rates, the overall yield is in the low double-digits, which is very attractive for a secured, asset-backed investment. This reflects the risk profile (timeshare assets are somewhat niche and less liquid), but Fairfax negotiated rich terms.

 

Company Comps

Vacatia and Blizzard Vacatia: Company Analysis V2.pdf 291.3 kB · 1 download

 

I also love these deals. But having skimread your pdf, I have questions.

 

You seem to suggest that Vacatia's existing business is included in the deal. Where are you seeing that?

 

From the (very limited) detail given in the press releases, Vacatia will run Blizzard, but I don't think Vacatia is being merged into Blizzard. As I read it, in effect Fairfax is buying the assets with high yield debt, Vacatia will run them, and Fairfax and Vacatia share the upside 50/50 via equal participation in the equity (which is virtually worthless on day 1).

 

If so it's an incredible incentive for Vacatia, who make out like bandits if they create value, but don't have to put up any capital. It's also a good structure for Fairfax, who get lots of interest income secured on real assets, and equity upside driven by yet another world class operating partner.

 

That said, not all of these deals have worked out beautifully. The KW equity investment is underwater, the Westaim deal went nowhere, etc.

 

 

[nwoodman]

10 hours ago, petec said:

You seem to suggest that Vacatia's existing business is included in the deal. Where are you seeing that?

Corrected in V3 above,  it should have read Vacatia contribute their business model to the Vacatia Blizzard JV.  Vacatia is definitely still a stand-alone.  I also corrected the EV/Owner table on the basis that Berkley got done at $835m (Fairfax) and $25m (Vacatia)=$860m.  We don't know this for sure (chance of financing outside of Fairfax), but on face value it does seem like a decent margin on safety.  However I know SFA about the the timeshare industry so take it with a pinch of salt.  

 

The Vacatia business model of timeshare plus overnight rentals isn't unique but might make a real difference to legacy assets like Berkley.  I guess that's Vacatia's bet and if it doesn't turn out well Fairfax flips the underlying assets.  Each year Fairfaxearns $80+m so the margin of safety improves.   I would love to know how this deal orginated, perhaps yet another question for the AGM.  

 

Wade Burton from the CC

" Second, I wanted to discuss an investment that closed just after year-end 2024. We invested in the largest independent timeshare company in America called the Berkeley Group. Caroline Shin and her team at Vacatia are Fairfax partners here. The investment is underpinned by asset value, where we directly own 4,950 full-service vacation units mostly located in Las Vegas, Orlando, and other high-traffic vacation areas in the U.S. The opportunity here is for Caroline and her team to generate overnight rental income from the huge stock of nightly vacancies. Her experience designing Hotwire online booking software and then as an executive at Starwood is perfect for what Vacatia is trying to do with Berkeley.

 

In fact, prior to this acquisition, her group at Vacatia made investments in five smaller timeshare assets from 2019 to 2024, and in each case, they were very successful at significantly growing EBITDA in a short period of time. The total deal was $835 million, which we funded with a $275 million five-year preferred note at 13.5%, a $365 million seven-year senior secured note at 9.5%, and $170 million mortgage warehouse loan with a five-year maturity at SOFR plus 400. The $50 million equity is funded 50% by Fairfax and 50% by Caroline and her partners. We are absolutely thrilled to be her partner on this."

Edited Monday at 01:16 AM by nwoodman

[petec]

7 hours ago, nwoodman said:

Corrected in V3 above,  it should have read Vacatia contribute their business model to the Vacatia Blizzard JV.  Vacatia is definitely still a stand-alone.

 

Great, thanks. What I love about these deals is the ability to use fixed income investments to create equity optionality.

[nwoodman]

1 hour ago, petec said:

 

Great, thanks. What I love about these deals is the ability to use fixed income investments to create equity optionality.

Indeed, as you pointed out above if it works the leverage will be pretty phenomenal albeit on $25m of equity.   It will be interesting to get some color on the terms of the note,  perhaps AR or at least Q1.

[adventurer]

9 hours ago, nwoodman said:

Corrected in V3 above,  it should have read Vacatia contribute their business model to the Vacatia Blizzard JV.  Vacatia is definitely still a stand-alone.  I also corrected the EV/Owner table on the basis that Berkley got done at $835m (Fairfax) and $25m (Vacatia)=$860m.  We don't know this for sure (chance of financing outside of Fairfax), but on face value it does seem like a decent margin on safety.  However I know SFA about the the timeshare industry so take it with a pinch of salt.  

 

The Vacatia business model of timeshare plus overnight rentals isn't unique but might make a real difference to legacy assets like Berkley.  I guess that's Vacatia's bet and if it doesn't turn out well Fairfax flips the underlying assets.  Each year Fairfaxearns $80+m so the margin of safety improves.   I would love to know how this deal orginated, perhaps yet another question for the AGM.  

 

Wade Burton from the CC

" Second, I wanted to discuss an investment that closed just after year-end 2024. We invested in the largest independent timeshare company in America called the Berkeley Group. Caroline Shin and her team at Vacatia are Fairfax partners here. The investment is underpinned by asset value, where we directly own 4,950 full-service vacation units mostly located in Las Vegas, Orlando, and other high-traffic vacation areas in the U.S. The opportunity here is for Caroline and her team to generate overnight rental income from the huge stock of nightly vacancies. Her experience designing Hotwire online booking software and then as an executive at Starwood is perfect for what Vacatia is trying to do with Berkeley.

 

In fact, prior to this acquisition, her group at Vacatia made investments in five smaller timeshare assets from 2019 to 2024, and in each case, they were very successful at significantly growing EBITDA in a short period of time. The total deal was $835 million, which we funded with a $275 million five-year preferred note at 13.5%, a $365 million seven-year senior secured note at 9.5%, and $170 million mortgage warehouse loan with a five-year maturity at SOFR plus 400. The $50 million equity is funded 50% by Fairfax and 50% by Caroline and her partners. We are absolutely thrilled to be her partner on this."

Is nobody concerned about the high yields? Seems too good to be true almost. 13,5% and 9,5% is crazy high to my mind. But they will have secured a good margin of safety on this I suppose... 

[nwoodman]

1 hour ago, adventurer said:

Is nobody concerned about the high yields? Seems too good to be true almost. 13,5% and 9,5% is crazy high to my mind. But they will have secured a good margin of safety on this I suppose... 

I am a Fairfax investor, so it crossed my mind of course.  Vacatia is obviously the price taker here and Fairfax didn’t have to do the deal.  
 

There needs to be enough cashflow to service the 80m of financing (unless there is a PIK provision to the note) and whatever Vacatia needs to set up their system at Berkeley to start clipping tickets.  You would hope the assets were some way to this target and then Vacatia generates the rest through the overnight rental market plus some asset sprucing. 
 

In the pdf I outlined some thoughts on how it might work but it’s speculation.  If it goes tits up then you hope that the Berkley assets can be sold at cost.  My only other thoughts are Wade Burton’s tie ins with KW and Eurobank, he seems to like (tourism) property but as @petec said there has been a few flops or works-in-progress depending on your timing.  As I said above I would love to know how this originated and whether it came via KW or an associate.  Out of the blue seems unlikely but possible. 
 

Will  be watching this one with great interest due to the quantum but also an insight into Wade’s deal making and risk management.  In both areas  I think he excels BTW.  Always difficult due to the way Fairfax allocates capital to attribute a decision to one person though.

Edited Monday at 11:44 AM by nwoodman

[OCLMTL]

@Viking having a mid quarter update on your positions spreadsheet would be awesome. With the big moves we have seen this year, it’s probably a meaningful contributor to BVPS growth. CVS up 47% YTD. CLF up 21%. BB up 56%. EUROB up 9%. FIH up 21%. MYTIL up 7.5%. ORLA up 27%. FFH up only 3.5% but big $$$ amounts on TRS. Firing on all cylinders. Thanks, as always. 

[Txvestor]

Anyone know/heard how their $2.1B CRE portfolio they bought with KW at low LTV from Pacwest bank during the crisis around failure of SVB has been performing. It's been about 2yrs of memory serves me right. 
It was clearly done at an opportunistic time and IDK if it was marked to market and adds to interest income. 

[gfp]

6 hours ago, Txvestor said:

Anyone know/heard how their $2.1B CRE portfolio they bought with KW at low LTV from Pacwest bank during the crisis around failure of SVB has been performing. It's been about 2yrs of memory serves me right. 
It was clearly done at an opportunistic time and IDK if it was marked to market and adds to interest income. 

 

They are whole loans so they don't get marked to market.  They show up in level 3 assets.  Of the original ~$2 Billion they hedged interest rates on $1.9 Billion (fixed interest rate) but haven't hedged rates on the new loans.  The all in yields are very high and have pulled up average yields on their fixed maturity basket.  Almost all of these first mortgage loans show up in the 1-3 year basket.  They probably would have made a little bit of money on the fixed for floating swap over the ~2 years.

 

The balance of this pool of whole loans at Fairfax had increased to $4.97 Billion at 9/30 through additional loan funding partially offset by repayments.

 

The most detail on performance will be in Kennedy Wilson's filings

https://ir.kennedywilson.com

[petec]

On 2/17/2025 at 10:06 AM, nwoodman said:

Indeed, as you pointed out above if it works the leverage will be pretty phenomenal albeit on $25m of equity.   It will be interesting to get some color on the terms of the note,  perhaps AR or at least Q1.

 

Yes. I feel we need to get some board members onto the calls. We would ask far better questions than the analysts!

[petec]

On 2/17/2025 at 11:28 AM, nwoodman said:

I am a Fairfax investor, so it crossed my mind of course.  Vacatia is obviously the price taker here and Fairfax didn’t have to do the deal.  
 

There needs to be enough cashflow to service the 80m of financing (unless there is a PIK provision to the note) and whatever Vacatia needs to set up their system at Berkeley to start clipping tickets.  You would hope the assets were some way to this target and then Vacatia generates the rest through the overnight rental market plus some asset sprucing. 
 

In the pdf I outlined some thoughts on how it might work but it’s speculation.  If it goes tits up then you hope that the Berkley assets can be sold at cost.  My only other thoughts are Wade Burton’s tie ins with KW and Eurobank, he seems to like (tourism) property but as @petec said there has been a few flops or works-in-progress depending on your timing.  As I said above I would love to know how this originated and whether it came via KW or an associate.  Out of the blue seems unlikely but possible. 
 

Will  be watching this one with great interest due to the quantum but also an insight into Wade’s deal making and risk management.  In both areas  I think he excels BTW.  Always difficult due to the way Fairfax allocates capital to attribute a decision to one person though.

 

I would add two things:

1) there's virtually no equity in the deal, so the junior part of the debt is effectively equity, and is earning equity-like returns as a result, which looks right.

2) these rates are not out of line with what I read about in the secured private credit market.

 

Obviously we don't know the asset economics so we can't judge whether Fairfax are getting adequately paid for the risk, but the rates don't stand out to me as worrying per se.