Fairfax stock positions

[Viking]

Fairfax’s equity portfolio (that I track) increased in market value from December 31, 2024 to February 18, 2025, by about $726 million (pre-tax). The equity portfolio had a total value of about $22.0 billion at February 18, 2025.

 

Included in our estimates is information from Fairfax’s Q4-2024-13F and its year-end earnings news release on February 13, 2025. When Fairfax releases their annual report (March 7th) we will get updates to lots of important information, especially the YE 2024 carrying values of many of the large associate and consolidated equity holdings. 

 

 

Notes:

• The FFH-TRS position is included in the mark to market bucket and at its notional value. The warrants and debentures captured are also included in the mark to market bucket.

The ‘tracker portfolio’ is not an exact match to Fairfax’s actual holdings. It is useful only as a tool to understand the rough change in Fairfax’s equity portfolio (and not the precise change).

 

The ‘tracker portfolio’ does not include the following:

• Any change in value of Digit, Fairfax's publicly traded P/C insurance company in India.

Split of holdings by accounting treatment

 

About 47% of Fairfax’s equity holdings are mark to market - and will fluctuate each quarter with changes in equity markets. The other 53% are Associates and Consolidated holdings. The Sleep Country and Peak Achievement (Bauer) acquisitions closed in Q4. We have included a guess of the carrying value for these two holdings – it will be updated when Fairfax releases its annual report.

 

Over the past couple of years, the share of the mark to market holdings has been shrinking. This means Fairfax's quarterly reported results will be less impacted by volatility in equity markets.

 

 

Split of total gains by accounting treatment

• The total change is an increase of about $726 million = $33/share (pre-tax)
• The mark to market change is an increase of about $452 million = $21/share.

 

What were the big movers in the equity portfolio Q1-YTD?

 

The usual suspects continue to perform very well - Eurobank and FFH-TRS. Fairfax India's stock price has spiked higher to start the new year. Not sure what is up with Blackberry's big move higher. Orla Mining (a gold stock) continued to run higher which is not surprising given the big move in the price of gold. At the same time, after a strong 2-year run higher, stocks in India have been selling off in recent months.

 

 

Excess of fair value over carrying value (not captured in book value)

 

For Associate and Consolidated holdings (in my tracker), the excess of fair value to carrying value is about $1.48 billion pre-tax ($68/share). The 'excess of FV to CV’ has been materially increasing in recent years. This is economic value that has been created by Fairfax that is not captured in book value – it is a good example of how book value is understated at Fairfax.

 

Excess of FV over CV:

• Associates:           $838 million
• Consolidated:       $644 million

Equity Tracker Spreadsheet explained:

 

We have separated holdings by accounting treatment:

• Mark to market
• Associates – equity accounted
• Consolidated
• Other Holdings – total return swaps and warrants/debentures

The value of each holding is calculated by multiplying the share price by the number of shares. All holdings are tracked in US$, so non-US holdings have their values adjusted for currency.

 

This spreadsheet contains errors. It is updated as new and better information becomes available.

 

PS: I have attached the updated version of my Excel workbook at the bottom of this post. 

 

 

 

Fairfax Feb 18 2025.xlsx

Edited February 19 by Viking

[glider3834]

11 hours ago, Viking said:

Fairfax’s equity portfolio (that I track) increased in market value from December 31, 2024 to February 18, 2025, by about $726 million (pre-tax). The equity portfolio had a total value of about $22.0 billion at February 18, 2025.

 

Included in our estimates is information from Fairfax’s Q4-2024-13F and its year-end earnings news release on February 13, 2025. When Fairfax releases their annual report (March 7th) we will get updates to lots of important information, especially the YE 2024 carrying values of many of the large associate and consolidated equity holdings. 

 

 

Notes:

• The FFH-TRS position is included in the mark to market bucket and at its notional value. The warrants and debentures captured are also included in the mark to market bucket.

The ‘tracker portfolio’ is not an exact match to Fairfax’s actual holdings. It is useful only as a tool to understand the rough change in Fairfax’s equity portfolio (and not the precise change).

 

The ‘tracker portfolio’ does not include the following:

• Any change in value of Digit, Fairfax's publicly traded P/C insurance company in India.

Split of holdings by accounting treatment

 

About 47% of Fairfax’s equity holdings are mark to market - and will fluctuate each quarter with changes in equity markets. The other 53% are Associates and Consolidated holdings. The Sleep Country and Peak Achievement (Bauer) acquisitions closed in Q4. We have included a guess of the carrying value for these two holdings – it will be updated when Fairfax releases its annual report.

 

Over the past couple of years, the share of the mark to market holdings has been shrinking. This means Fairfax's quarterly reported results will be less impacted by volatility in equity markets.

 

 

Split of total gains by accounting treatment

• The total change is an increase of about $726 million = $33/share (pre-tax)
• The mark to market change is an increase of about $452 million = $21/share.

 

What were the big movers in the equity portfolio Q1-YTD?

 

The usual suspects continue to perform very well - Eurobank and FFH-TRS. Fairfax India's stock price has spiked higher to start the new year. Not sure what is up with Blackberry's big move higher. Orla Mining (a gold stock) continued to run higher which is not surprising given the big move in the price of gold. At the same time, after a strong 2-year run higher, stocks in India have been selling off in recent months.

 

 

Excess of fair value over carrying value (not captured in book value)

 

For Associate and Consolidated holdings (in my tracker), the excess of fair value to carrying value is about $1.48 billion pre-tax ($68/share). The 'excess of FV to CV’ has been materially increasing in recent years. This is economic value that has been created by Fairfax that is not captured in book value – it is a good example of how book value is understated at Fairfax.

 

Excess of FV over CV:

• Associates:           $838 million
• Consolidated:       $644 million

Equity Tracker Spreadsheet explained:

 

We have separated holdings by accounting treatment:

• Mark to market
• Associates – equity accounted
• Consolidated
• Other Holdings – total return swaps and warrants/debentures

The value of each holding is calculated by multiplying the share price by the number of shares. All holdings are tracked in US$, so non-US holdings have their values adjusted for currency.

 

This spreadsheet contains errors. It is updated as new and better information becomes available.

 

PS: I have attached the updated version of my Excel workbook at the bottom of this post. 

 

 

 

Fairfax Feb 18 2025.xlsx 342.72 kB · 2 downloads

cheers viking we can update John Keells to 24.3% now they have exercised the convertible 

 

 

https://keells.com/resource/reports/investor-presentations/investor-presentation-Q3-2025.pdf

[mananainvesting]

$ESI.TO - Bison Interests (Josh) on their new position in Ensign. I am long as well.

 

 

 

 

 

[Viking]

On 2/19/2025 at 8:19 PM, glider3834 said:

cheers viking we can update John Keells to 24.3% now they have exercised the convertible 

 

 

https://keells.com/resource/reports/investor-presentations/investor-presentation-Q3-2025.pdf

 

@glider3834 I appreciate the heads up. Board members, please let me know if you see any other items that can be updated. Your input helps me greatly in keeping the summary accurate/up to date. 

Edited February 21 by Viking

[nwoodman]

Eurobank results are out. Impressive!  Maybe this deserves to trade closer to €4 than my PT of €3.  
 

https://www.eurobankholdings.gr/-/media/holding/omilos/enimerosi-ependuton/enimerosi-metoxon-eurobank/oikonomika-apotelesmata-part-01/2025/fy-2024/4q2024-results-pr-en.pdf

 

FY2024 Key Financial Highlights:

• EPS: €0.39

• Net Profit: €1,448m (Adjusted Net Profit: €1,484m)

• Return on Tangible Book Value (RoTBV): 18.5%

• Tangible Book Value (TBV) per share: €2.31 (up from €2.07 in 2023)

• 50% Payout Ratio:

• Cash Dividend: €0.105 per share

• Share Buyback: €288m

• Loan & Deposit Growth:

• Performing loans grew by €3.9bn (+10%)

• Deposits increased by €6.2bn

• Net Interest Income: €2,507m (+15.3% YoY)

• Net Fee & Commission Income: €666m (+22.4% YoY)

• Total Capital Adequacy Ratio (CAD): 18.5%

• CET1 Ratio: 15.7%

• Non-Performing Exposures (NPE) Ratio: 2.9% (down from 3.5%)

• Provisions over NPEs: 88.4%

 

Regional Contribution:

• SEE (Southeastern Europe) Contribution to Profits: 48%

• Bulgaria: Adjusted Net Profit of €208m (+9.6% YoY)

• Eurobank Cyprus: Adjusted Net Profit of €210m (+5.1% YoY)

• Hellenic Bank: Contribution of €275m

• SEE Core Pre-Provision Income: €800m (+53.1% YoY)

• SEE Core Operating Profit: €739m (+58.9% YoY)

 

2025-2027 Business Plan:

• Sustainable RoTBV Target: ~15%

• SEE Contribution to Core Profit: Expected to increase to 55% by 2027

• Cumulative Payout: Expected to double vs. 2022-2024

• Loan Growth Target: ~7.5% CAGR

• Wealth Management Growth Target: ~15% CAGR

• TBV per Share Growth: Expected to increase by ~40% by 2027

 

Key Financial Targets for 2025-2027:

Metric	2025 Target	2027 Target
Core Operating Profit	~€1.7bn	~€1.9bn
RoTBV	~15.0%	~15.0%
TBV per Share	~€2.55	~€3.20
Payout Ratio	≥50%	≥50%
CET1 (post-payout)	~15.8%	~16.0%

Key Takeaways:

• Eurobank exceeded expectations in FY2024, delivering strong earnings and robust growth in loans and deposits.

• The 50% payout ratio aligns with the bank’s commitment to rewarding shareholders.

• The 2025-2027 business plan focuses on sustained profitability, regional expansion, and increased shareholder returns.

• The integration of Hellenic Bank and acquisitions like CNP Insurance are expected to drive further growth.

Edited February 27 by nwoodman

[nwoodman]

Brief MS coverage of the results.  They increased their PT to €2.77.  Pretty conservative IMHO but consistent with European peers.  Given Eurobanks management and growth prospects I think comps are not that useful.  

EUROBANK_20250227_1758.pdf

Edited February 27 by nwoodman

[Viking]

3 hours ago, nwoodman said:

Eurobank results are out. Impressive!  Maybe this deserves to trade closer to €4 than my PT of €3.  
 

https://www.eurobankholdings.gr/-/media/holding/omilos/enimerosi-ependuton/enimerosi-metoxon-eurobank/oikonomika-apotelesmata-part-01/2025/fy-2024/4q2024-results-pr-en.pdf

 

FY2024 Key Financial Highlights:

• EPS: €0.39

• Net Profit: €1,448m (Adjusted Net Profit: €1,484m)

• Return on Tangible Book Value (RoTBV): 18.5%

• Tangible Book Value (TBV) per share: €2.31 (up from €2.07 in 2023)

• 50% Payout Ratio:

• Cash Dividend: €0.105 per share

• Share Buyback: €288m

• Loan & Deposit Growth:

• Performing loans grew by €3.9bn (+10%)

• Deposits increased by €6.2bn

• Net Interest Income: €2,507m (+15.3% YoY)

• Net Fee & Commission Income: €666m (+22.4% YoY)

• Total Capital Adequacy Ratio (CAD): 18.5%

• CET1 Ratio: 15.7%

• Non-Performing Exposures (NPE) Ratio: 2.9% (down from 3.5%)

• Provisions over NPEs: 88.4%

 

Regional Contribution:

• SEE (Southeastern Europe) Contribution to Profits: 48%

• Bulgaria: Adjusted Net Profit of €208m (+9.6% YoY)

• Eurobank Cyprus: Adjusted Net Profit of €210m (+5.1% YoY)

• Hellenic Bank: Contribution of €275m

• SEE Core Pre-Provision Income: €800m (+53.1% YoY)

• SEE Core Operating Profit: €739m (+58.9% YoY)

 

2025-2027 Business Plan:

• Sustainable RoTBV Target: ~15%

• SEE Contribution to Core Profit: Expected to increase to 55% by 2027

• Cumulative Payout: Expected to double vs. 2022-2024

• Loan Growth Target: ~7.5% CAGR

• Wealth Management Growth Target: ~15% CAGR

• TBV per Share Growth: Expected to increase by ~40% by 2027

 

Key Financial Targets for 2025-2027:

Metric	2025 Target	2027 Target
Core Operating Profit	~€1.7bn	~€1.9bn
RoTBV	~15.0%	~15.0%
TBV per Share	~€2.55	~€3.20
Payout Ratio	≥50%	≥50%
CET1 (post-payout)	~15.8%	~16.0%

Key Takeaways:

• Eurobank exceeded expectations in FY2024, delivering strong earnings and robust growth in loans and deposits.

• The 50% payout ratio aligns with the bank’s commitment to rewarding shareholders.

• The 2025-2027 business plan focuses on sustained profitability, regional expansion, and increased shareholder returns.

• The integration of Hellenic Bank and acquisitions like CNP Insurance are expected to drive further growth.

 

@nwoodman , I agree... what an exceptional year. Its interesting... over a 12 month period (July 2024 to July 2025), Eurobank will have 'provided' Fairfax with about $450 million in proceeds ($250 million in dividends and $200 million from sale of shares - rough math). Fairfax's equity investments are increasingly becoming significant sources of cash for Fairfax. That is an important development. 

 

The Eurobank management team is best-in-class. One of the things I really like is they underpromise and over-deliver. Below is the slide for 2024. The middle column is what they promised at the start of the year. The column to the right is what they delivered. 

• https://www.eurobankholdings.gr/-/media/holding/omilos/enimerosi-ependuton/enimerosi-metoxon-eurobank/oikonomika-apotelesmata-part-01/2025/fy-2024/4q2024-results-presentation.pdf

 

 

Edited February 28 by Viking

[nwoodman]

2 hours ago, Viking said:

The Eurobank management team is best-in-class. One of the things I really like is they underpromise and over-deliver. Below is the slide for 2024. The middle column is what they promised at the start of the year. The column to the right is what they delivered. 

This is really important, and I was thinking exactly that on my dog-walk this morning.  For them to forward forecast 15% returns on Tangible Book, they must be pretty confident in something a little higher.  Also means there was no skeleton’s in Hellenic’s closet.  Well played Eurobank team.

[Hoodlum]

I found it interesting that RBC posted a small writeup on AGT Foods this week.  I wonder if Fairfax is considering an IPO at some point after taking it private 6 years ago.  AGT had $3B in revenue last year.

 

https://thoughtleadership.rbc.com/food-first-how-agriculture-can-lead-a-new-era-for-canadian-exports/

 

How to be a global champion

AGT Food and Ingredients—The value of processing clusters

Pulses and plant-based product supplier exports to more than 100 countries.
Primary markets: Türkiye, Algeria, Iraq and the U.S.
Growth markets: India, South Africa, Saudi Arabia, and United Arab Emirates.

• Export strategy:
  • Its ability to handle and process high volumes of pulses grown in close proximity to processing facilities in western Canada has boosted its export ambitions.
  • AGT has an integrated supply chain from farm gate to global distribution, and has expanded its ownership into export-oriented packaged foods and value-added processing infrastructure and bulk and containerized freight handling and transportation.
  • International business has also been driven by expanding offices and processing capacity in Türkiye, Kazakhstan, United Kingdom, Australia, Europe, U.S., South Africa, and India.
     
• Growth strategy:
  • Acquisitions and new capacity to expand processing within production clusters have enabled AGT to become a global exporter of value-added pulse and durum wheat food products. It has also positioned AGT to go from a buyer and exporter of commodities to retail products with over 21 facilities across Western Canada.
  • AGT is investing and engaged in research and development to create novel products and processing systems.
     

Edited February 28 by Hoodlum

[Viking]

Eurobank is turning into a very good investment for Fairfax. It has increased in value by about $2.3b over the past 10 years (with all of the return coming in the last 4 years). More importantly, Eurobank is poised to grow TBV at +15% in the coming years. It has a stellar management team.

 

Yes, my total return estimate is calculated at a very high level (like counting the 2025 dividend payment which hasn't happened yet). Given all the moving parts, I am simply trying to find a way to evaluate how the investment has performed. Eurobank is a great example of the pivot of Fairfax's equity holdings from 'old Fairfax' to 'new Fairfax.' Eurobank always had a good management team. They needed (and got) external help:

1. Greece elected a pro business government - to 2 terms.
2. Global central banks ended zero interest rate experiment. 

The result has been magic for Fairfax shareholders over the past 4 years.

 

Eurobank is Fairfax's largest equity holding, with a MV of $3 billion. If it performs strongly that bodes well for the return will generate on its total equity portfolio in the coming years.

 

 

Edited February 28 by Viking

[dartmonkey]

Quote

 

Yes, my total return estimate is calculated at a very high level (like counting the 2025 dividend payment which hasn't happened yet). Given all the moving parts, I am simply trying to find a way to evaluate how the investment has performed. Eurobank is a great example of the pivot of Fairfax's equity holdings from 'old Fairfax' to 'new Fairfax.' Eurobank always had a good management team. They needed (and got) external help:

1. Greece elected a pro business government - to 2 terms.
2. Global central banks ended zero interest rate experiment. 

The result has been magic for Fairfax shareholders over the past 4 years.

 

Eurobank is Fairfax's largest equity holding, with a MV of $3 billion. If it performs strongly that bodes well for the return will generate on its total equity portfolio in the coming years.

 

 

 

It certainly has been a wonderful investment, after a long slow start, but a 10-y CAGR of about 11% is great when you're investing other people's money (float)!

 

I think the market has been slow to recognize all the good things happening at Eurobank, and I'm amazed the stock is not up more, after the stellar earnings announcement. They are now trading at 6.6x last year's earnings, when we know that the big acquistion of another 37.5% of Hellenic Bank in November, and, soon, the remaining 6.5%, is going to boost 2025 earnings substantially, apart from the underlying growth in Eurobank itself. 

 

My one quibble is that you can't count the $129m future dividend, which is already baked into the present share price. This is not material to your estimate, but I believe the total return should be $2342-$129=$2213. Since the July 2024 dividend and the forced January 2025 share sale are both recent, the timing of these returns is not material but ideally, the total return should be adjusted for the timing of the different components of the return stream, and this will become material as Eurobank continues to issue dividends over the coming years. 

[Viking]

5 hours ago, dartmonkey said:

My one quibble is that you can't count the $129m future dividend, which is already baked into the present share price. This is not material to your estimate, but I believe the total return should be $2342-$129=$2213. Since the July 2024 dividend and the forced January 2025 share sale are both recent, the timing of these returns is not material but ideally, the total return should be adjusted for the timing of the different components of the return stream, and this will become material as Eurobank continues to issue dividends over the coming years. 

@dartmonkey , great point. Thanks for pointing out my mistake. Much appreciated (as that is how I learn). 

[nwoodman]

On 2/28/2025 at 11:50 PM, Hoodlum said:

I found it interesting that RBC posted a small writeup on AGT Foods this week.  I wonder if Fairfax is considering an IPO at some point after taking it private 6 years ago.  AGT had $3B in revenue last year.
 

Thanks @Hoodlum for pointing this out.  It is an intriguing possibility.  

 

In pulling together some notes (attached) on AGT, it was not lost on me that they privatised AGT at pretty much the lows.  It is a much better business today, and I wouldn't be surprised if margins improved due to some of their moves up the value chain.  Apart from the apparent value investing bias to these ag-companies, I wonder if Fairfax finds something thematically appealing.  In the notes, I have tried to touch on this but haven't quite figured out whether there is an angle they see that I am missing.  I guess they are long life and consistent with the 100-year company thesis, bottom rung of Maslow's hierarchy etc

AGT Foods Overview.pdf

[cwericb]

8 hours ago, nwoodman said:

Thanks @Hoodlum for pointing this out.  It is an intriguing possibility.  

 

In pulling together some notes (attached) on AGT, it was not lost on me that they privatised AGT at pretty much the lows.  It is a much better business today, and I wouldn't be surprised if margins improved due to some of their moves up the value chain.  Apart from the apparent value investing bias to these ag-companies, I wonder if Fairfax finds something thematically appealing.  In the notes, I have tried to touch on this but haven't quite figured out whether there is an angle they see that I am missing.  I guess they are long life and consistent with the 100-year company thesis, bottom rung of Maslow's hierarchy etc

AGT Foods Overview.pdf 367.7 kB · 16 downloads

 

That PDF is well worth reading and it gives the reader an appreciation for some of the types of innovative companies that Fairfax has under its wing. Brett Horne should be reading this stuff before he voices his opinions on Fairfax. 

 

AGT's website: https://www.agtfoods.com/

 

AGT's Solieos Fertilizer:

https://soileos.com/

Edited March 2 by cwericb

[Hoodlum]

8 hours ago, nwoodman said:

Thanks @Hoodlum for pointing this out.  It is an intriguing possibility.  

 

In pulling together some notes (attached) on AGT, it was not lost on me that they privatised AGT at pretty much the lows.  It is a much better business today, and I wouldn't be surprised if margins improved due to some of their moves up the value chain.  Apart from the apparent value investing bias to these ag-companies, I wonder if Fairfax finds something thematically appealing.  In the notes, I have tried to touch on this but haven't quite figured out whether there is an angle they see that I am missing.  I guess they are long life and consistent with the 100-year company thesis, bottom rung of Maslow's hierarchy etc

AGT Foods Overview.pdf 367.7 kB · 22 downloads

thanks @nwoodman for putting that together.  I noticed that FCL paused the Canola crush facility in January due to political uncertainties 

 

https://www.fcl.crs/news-reports/news/article/FCL-pauses-projects-related-to-proposed-Integrated-Agriculture-Complex

 

Also, the rail acquisition by GCM Grosvenor which was expected to close in late q4/q1, seems to be hung up at the government approval stage. The optics would look very bad if the Canadian government would approve this right now.  So it would not surprise me to see this get cancelled or delayed. 
 

[gfp]

8 hours ago, nwoodman said:

Thanks @Hoodlum for pointing this out.  It is an intriguing possibility.  

 

In pulling together some notes (attached) on AGT, it was not lost on me that they privatised AGT at pretty much the lows.  It is a much better business today, and I wouldn't be surprised if margins improved due to some of their moves up the value chain.  Apart from the apparent value investing bias to these ag-companies, I wonder if Fairfax finds something thematically appealing.  In the notes, I have tried to touch on this but haven't quite figured out whether there is an angle they see that I am missing.  I guess they are long life and consistent with the 100-year company thesis, bottom rung of Maslow's hierarchy etc

AGT Foods Overview.pdf 367.7 kB · 19 downloads

 

Thanks for putting this together (and sharing it with us!) - a very comprehensive case study on AGT!

[SafetyinNumbers]

SCR reported earnings and put out their annual reserves letter to shareholders. I estimate FFH owns ~7-7.5% of the company which is a ~$260m position which is a much lower mark than a few years ago when it was private and the CAD was much stronger. 
 

The earnings were in line. They kept 2025 guidance despite the impact of tariffs based on a combination of spreads tightening, hedging and CAD weakness. They highlighted YTD production is at the high end of guidance so it’s possible it will be upgraded mid year. They also increased their regular dividend from $0.25/q to 0.26/q explaining its linked to production increase and/or decrease in costs. Recall during the investor day, they suggested the regular dividend could be $3 in 2030 and now we know how they will get there.
 

Regular dividend increases should make SCR attractive to dividend ETFs and benchmarks over time. First it has to get into the S&P/TSX Composite though which is just a matter of time.

 

I think the shareholder letter is a terrific read so I have attached it. Over time, I think their execution and communication will result in a very loyal shareholder base that will hold it even when the stock trades above NAV as opposed to well below it as it does now. That’s my plan at least. 

Strathcona-2024-Reserves-Letter-Final.pdf

[nwoodman]

3 hours ago, SafetyinNumbers said:

SCR reported earnings and put out their annual reserves letter to shareholders. I estimate FFH owns ~7-7.5% of the company which is a ~$260m position which is a much lower mark than a few years ago when it was private and the CAD was much stronger. 
 

The earnings were in line. They kept 2025 guidance despite the impact of tariffs based on a combination of spreads tightening, hedging and CAD weakness. They highlighted YTD production is at the high end of guidance so it’s possible it will be upgraded mid year. They also increased their regular dividend from $0.25/q to 0.26/q explaining its linked to production increase and/or decrease in costs. Recall during the investor day, they suggested the regular dividend could be $3 in 2030 and now we know how they will get there.
 

Regular dividend increases should make SCR attractive to dividend ETFs and benchmarks over time. First it has to get into the S&P/TSX Composite though which is just a matter of time.

 

I think the shareholder letter is a terrific read so I have attached it. Over time, I think their execution and communication will result in a very loyal shareholder base that will hold it even when the stock trades above NAV as opposed to well below it as it does now. That’s my plan at least. 

Strathcona-2024-Reserves-Letter-Final.pdf 398.99 kB · 11 downloads

Thanks for this.  These guys seem right up my alley, might have to do some work.  Seems pretty cheap on a NAV basis at first pass.  A couple of paras jumped out at me:

 

“In a capital-intensive industry like oil and gas where capital is typically the largest expense, excluding DD&A in analyzing a company's profitability is akin to excluding the cost of the players on an NHL team. As aresult, popular Wall Street metrics which exclude DD&A such as "DACF" or "EBITDA" are four letter words in Strathcona's offices. Instead, we focus on post-DD&A metrics such as Operating Earnings, which reflect the profitability of the business after accounting for the very real capital costs required to maintain current earning power.”

 

“In a capital-intensive business such as oil and gas, the value of existing production can quickly evaporate due to poor go-forward drilling returns, just like large production bases can quickly form from small ones if capital is profitably deployed. In the case of Strathcona, our future investment opportunity ($31.2 billion of future development capital on a 2P reserves basis) dramatically outweighs our current PDP PV-10 ($6.1 billion). To invest based on the latter instead of the former is a little like choosing a spouse based on who will be most fun on the honeymoon instead of the marriage... what starts with bliss can end in misery.”

 

Edit: This is the very sort of long life asset that Fairfax should be investing in.  Would happily see them own 20-30%. 

 

 

 

 

Edited Wednesday at 09:06 AM by nwoodman

[nwoodman]

On 3/3/2025 at 2:16 AM, Hoodlum said:

thanks @nwoodman for putting that together.  I noticed that FCL paused the Canola crush facility in January due to political uncertainties 

 

https://www.fcl.crs/news-reports/news/article/FCL-pauses-projects-related-to-proposed-Integrated-Agriculture-Complex

 

Also, the rail acquisition by GCM Grosvenor which was expected to close in late q4/q1, seems to be hung up at the government approval stage. The optics would look very bad if the Canadian government would approve this right now.  So it would not surprise me to see this get cancelled or delayed. 
 

Thanks . Both interesting developments.

[Hoodlum]

Quess Corp received approval for their demerger today.  The 3 separate entities are expected to be listed within 2 months.  
 

https://m.economictimes.com/tech/technology/with-nclt-nod-in-place-business-services-provider-quess-to-list-new-firms-on-exchanges-in-two-months/amp_articleshow/118766297.cms

 

[Viking]

35 minutes ago, Hoodlum said:

Quess Corp received approval for their demerger today.  The 3 separate entities are expected to be listed within 2 months.  
 

https://m.economictimes.com/tech/technology/with-nclt-nod-in-place-business-services-provider-quess-to-list-new-firms-on-exchanges-in-two-months/amp_articleshow/118766297.cms

 

This was an very good move for IIFL when they split into 4 companies:

- Finance

- Wealth

- Securities

- 5paisa

 

Each company has prospered. The separation allowed each of the companies to get much more focussed/entrepreneurial. The value creation in the subsequent years for Fairfax and Fairfax India was material. 
 

Quess is a massive company. It houses many large, unrelated businesses. I love this move and my guess is it will be a very good move from both a business and financial (return) perspective for Quess shareholders. Quess’ stock is already up big time over the past year as investors anticipate/get positioned for what is to come (over the next 2 or 3 years).

 

These are two great examples of the benefits of partnering with Fairfax:

- patient partner

- loyal partner (there in tough times)

 

Great strategic advisor:

- step 1 - grow through acquisition

- step 2 - incubate

- step 3 - spin off 

 

The goal is to build value over the long term for shareholders. Not simply grow for growths sake - and become a lumbering, poorly performing conglomerate. We are getting closer to the ‘get paid’ stage - that should happen in the coming years (like we saw with IIFL as Fairfax and Fairfax India opportunistically exited big chunks of their IIFL positions).

Edited Thursday at 07:22 PM by Viking

[Santayana]

I visited my daughter at her new apartment in Seattle this week.  When I got to the main entrance, I saw a little Kennedy Wilson plaque!  it was a great building in a great location, right in the heart of the Amazon campus.  Seems like real estate to be happy owning.