Fairfax stock positions

[Jaygo]

This whole crash is really just a rotation so far. I'm down maybe 1% on the year as I tend to keep most assets in Canadian small cap companies short of BRK, my Dogs and some housing stuff.

[Viking]

My guess is Fairfax has been selling off over the past 2 weeks because some investors are concerned about the impact of the current stock market correction on the value of their equity portfolio. Pre 2020 this would have been a legitimate concern. Back then investment gains (losses) represented about 50% of Fairfax's income streams. So Fairfax's short term results were impacted in a pretty significant way when equities markets sold off aggressively.

 

That is no longer the case. For three reasons:

1.) Today, investment gains (losses) represent only about 20% of Fairfax's income streams.

2.) Fairfax has been aggressively increasing its associate and consolidated equity holdings (as a share of the total equity bucket) - the value of these holdings are not impacted by Mr. Market (Fairfax's income statement and balance sheet).  

3.) Fairfax has been improving the quality of its collection of equity holdings over the past 6 years. This should result in less volatility in their market value (than when they were of much lower quality). 

 

As a result, stock market sell offs will impact Fairfax's reported results much less than in the past. Investors probably just don't understand that yet. 

 

So the current sell off in Fairfax's shares is a gift. For Fairfax - a lower share price will simply allow them to buy back more shares. And for long term investors.

-----------

Volatility is Fairfax's friend.

 

I have been saying for quite some time that Fairfax investors should be praying for a shit-storm in financial markets. I am talking about investors in Fairfax (those with a long term time horizon) not traders in Fairfax (those with a short term time horizon). Times of extreme volatility are when value investors get their best opportunities (the needle movers). The 20 'punch card' moments that Buffett talks about. And the senior management team at Fairfax is on a hot streak (their execution over the past 5 years has been outstanding) and the company is all cashed up - that is a great set-up for long term shareholders of Fairfax. 

Edited March 14, 2025 by Viking

[Viking]

19 minutes ago, gfp said:

Market crash!

 

 

+1. If your big positions are performing you are probably going to do pretty well.  

[nwoodman]

It means nothing (too short a time frame), but this must be the best YTD portfolio alpha Fairfax has achieved in quite a while.  Weighting is everything but the graph below gives a win/loss flavour in a soft market.
 

SPY -3.2%and NASDAQ -6.2% (17/3/25)

 

[SafetyinNumbers]

2 hours ago, nwoodman said:

It means nothing (too short a time frame), but this must be the best YTD portfolio alpha Fairfax has achieved in quite a while.  Weighting is everything but the graph below gives a win/loss flavour in a soft market.
 

SPY -3.2%and NASDAQ -6.2% (17/3/25)

 

Over $15/sh from the mark to market (including ORLA converts, warrants) as it stands now in Q1 while consensus is only $30/sh in EPS. Seems like another beat is brewing. 

[Viking]

3 hours ago, SafetyinNumbers said:

Over $15/sh from the mark to market (including ORLA converts, warrants) as it stands now in Q1 while consensus is only $30/sh in EPS. Seems like another beat is brewing. 

Two other tailwinds to earnings are the drop in interest rates and currency (US$ weakness vs Euro). The drop in interest rates will spike investment gains from the fixed income portfolio (with an offset from IFRS 17). Netting the two, we should see a gain (+$100 million?). Euro strength will be good for a holding like Eurobank. Weak US$ will also be a tailwind to growth in book value (comprehensive income).

 

With the California wildfires, underwriting will likely be a headwind. 

Edited March 18, 2025 by Viking

[SafetyinNumbers]

2 hours ago, Viking said:

Two other tailwinds to earnings are the drop in interest rates and currency (US$ weakness vs Euro). The drop in interest rates will spike investment gains from the fixed income portfolio (with an offset from IFRS 17). Netting the two, we should see a gain (+$100 million?). Euro strength will be good for a holding like Eurobank. Weak US$ will also be a tailwind to growth in book value (comprehensive income).

 

With the California wildfires, underwriting will likely be a headwind. 

It will be interesting if reserve releases keep ticking up to offset some of the cat loss pressure. I assume that grows over time as premiums were growing pretty fast 4 years ago. I think the consensus reflects the impact of wildfires on underwriting income.

[nwoodman]

Atlas/Poseidon Q4 is out.  Another CFO departs.

 

https://www.sec.gov/Archives/edgar/data/1794846/000162828025013894/sc-6kq42024.htm

 

 

 

 

 

Key Highlights from Q4 2024.pdf

Edited March 22, 2025 by nwoodman

[glider3834]

4 hours ago, nwoodman said:

6. Management Turnover

• CFO William Kostlivy resigned in February 2025.

• CEO Bing Chen appointed as interim CFO, raising governance and leadership continuity questions.

It looks like WK joined Seaspan in Sep-21 as SVP, Head of Corporate Development & Investor Relations https://www.linkedin.com/in/william-kostlivy/details/experience/ then moved to Deputy CFO Sep-23 and then Group CFO from May-24 to Feb-25 - so looks like he has been at Seaspan/Atlas for at least 3.5 years - I think thats worth noting - also commentary from SEC 6-K see below 

 

Resignation of Chief Financial Officer

On February 11, 2025, Atlas Corp. (the “Company”) received the resignation of William Kostlivy as Chief Financial Officer, effective February 11, 2025. Mr. Kostlivy has chosen to resign to pursue other opportunities and his decision to resign was not related to any disagreement with the Company on any matter relating to its operations, policies or practices. Bing Chen, President and Chief Executive Officer of the Company, will assume the role of Interim Chief Financial Officer upon Mr. Kostlivy’s departure.

Edited March 21, 2025 by glider3834

[nwoodman]

24 minutes ago, glider3834 said:

It looks like WK joined Seaspan in Sep-21 as SVP, Head of Corporate Development & Investor Relations https://www.linkedin.com/in/william-kostlivy/details/experience/ then moved to Deputy CFO Sep-23 and then Group CFO from May-24 to Feb-25 - so looks like he has been at Seaspan/Atlas for at least 3.5 years - I think thats worth noting - also commentary from SEC 6-K see below 

 

Resignation of Chief Financial Officer

On February 11, 2025, Atlas Corp. (the “Company”) received the resignation of William Kostlivy as Chief Financial Officer, effective February 11, 2025. Mr. Kostlivy has chosen to resign to pursue other opportunities and his decision to resign was not related to any disagreement with the Company on any matter relating to its operations, policies or practices. Bing Chen, President and Chief Executive Officer of the Company, will assume the role of Interim Chief Financial Officer upon Mr. Kostlivy’s departure.

Hopefully nothing in it but I felt like we never got a decent explanation for the departure of Graham Talbot.  You get used to such longevity of tenure for Fairfax in general that it probably stands out more than it should.

Edited March 21, 2025 by nwoodman

[nwoodman]

Achieving investment grade for Atlas will be an important development especially if we are H4L.  Not 100% sure of the criteria but it may look something like this:

 

 

Likely a ‘26 or ‘27 development but Atlas is still on a credible path.

Edited March 22, 2025 by nwoodman

[glider3834]

Overall Ki franchise wrote US$1039M in GWP in 2024

 

 

Ki 1618 syndicate represented US$801M with a 90 CR

Which leaves US$238M GWP that appears to have been written by Ki Digital Services on behalf of 3rd party carriers in its first year of offering 3rd party capacity. It will be interesting to see what they can do in 2025.

 

Ki Digital Services receives a commission from Ki Syndicate 1618, so would assume similar arrangement with these other 3rd party carriers

 

 

Also worth highlighting that the expense ratio for Ki continues to drop in 2024 and they do have a growth R&D spend in there as well.

 

 

 

 

 

Edited March 22, 2025 by glider3834

[nwoodman]

1 hour ago, glider3834 said:

Overall Ki franchise wrote US$1039M in GWP in 2024

 

 

Ki 1618 syndicate represented US$801M with a 90 CR

Which leaves US$238M GWP that appears to have been written by Ki Digital Services on behalf of 3rd party carriers in its first year of offering 3rd party capacity. It will be interesting to see what they can do in 2025.

 

Ki Digital Services receives a commission from Ki Syndicate 1618, so would assume similar arrangement with these other 3rd party carriers

 

 

Also worth highlighting that the expense ratio for Ki continues to drop in 2024 and they do have a growth R&D spend in there as well.

 

 

 

 

 

Syndicate -> Algo Platform ->Underwriting-as-a-Service (UAAS).  It’s a beautiful thing.  The investment banks will be falling over themselves to lead the IPO

 

[nwoodman]

https://www.ekathimerini.com/economy/1265036/fairfax-invests-further-into-metlen-group/

 

Fairfax Financial, one of the holding companies with the greatest exposure in Greece in recent years, is increasing its stake in leading Greek group Metlen Energy & Metals, investing a further 110 million euros, the Athens-listed company announced on Monday.

In a statement, Metlen said it has reached an agreement with Canada-based Fairfax to enter a €110 million exchangeable bond, through which Fairfax will have an option to acquire 2.75 million Metlen treasury shares within two years at a price of €40 per share, representing 1.92% of the Greek group’s share capital.

 

It added that following that acquisition, Fairfax’s total stake in Metlen will increase to 8.35%.

 

Some additional notes:

 

Strategic Implications
This transaction aligns with Metlen’s broader strategy to fund its “Big 3” transformation program, which includes expanding into critical raw materials (e.g., bauxite, gallium) and renewable energy infrastructure. The capital infusion arrives as Metlen prepares for its London Stock Exchange listing and potential inclusion in the FTSE 25 Index, enhancing its global visibility and access to institutional investors.

Historical Investment Timeline
Fairfax’s relationship with Metlen (formerly Mytilineos) dates to 2012, when it first acquired shares. Subsequent milestones include:
    •    2022: A €50 million equity purchase and €50 million exchangeable bond at €20 per share, raising Fairfax’s stake to 4.68%.
    •    February 2025: Exercise of prior exchangeable bonds increased Fairfax’s stake to 6.43%.
    •    March 2025: The latest €110 million bond extends this partnership, reflecting 13 years of collaborative growth.

Capital Markets Day and LSE Listing
Metlen has scheduled a Capital Markets Day on April 28, 2025, at the London Stock Exchange, where it will detail its €295.5 million investment in raw material production and renewable energy projects. The Fairfax deal strengthens Metlen’s balance sheet ahead of this event, providing liquidity to advance its 530 MW Australian solar portfolio and 71.5 MW Italian solar projects.

Financial Performance and Shareholder Returns
    •    2024 Results: Metlen reported €1,080 million EBITDA (+7% YoY) and proposed a €1.50 per share dividend.
    •    Debt Management: Adjusted net debt stood at €1,776 million (Net Debt/EBITDA: 1.7x), manageable despite aggressive CAPEX.

Valuation/Prospects
    •    Valuation Upside: The €40 conversion price implies a 12.5x P/E multiple on 2024 earnings, below peers in the European energy sector.
    •    FTSE 25 Prospects: Metlen’s London listing could attract $500 million–$1 billion in passive fund inflows, given FTSE 25 inclusion criteria.

 

Edit: Attached some MS coverage of the deal

METLEN_20250324_1310.pdf

Edited March 24, 2025 by nwoodman

[SafetyinNumbers]

4 hours ago, nwoodman said:

https://www.ekathimerini.com/economy/1265036/fairfax-invests-further-into-metlen-group/

 

Fairfax Financial, one of the holding companies with the greatest exposure in Greece in recent years, is increasing its stake in leading Greek group Metlen Energy & Metals, investing a further 110 million euros, the Athens-listed company announced on Monday.

In a statement, Metlen said it has reached an agreement with Canada-based Fairfax to enter a €110 million exchangeable bond, through which Fairfax will have an option to acquire 2.75 million Metlen treasury shares within two years at a price of €40 per share, representing 1.92% of the Greek group’s share capital.

 

It added that following that acquisition, Fairfax’s total stake in Metlen will increase to 8.35%.

 

Some additional notes:

 

Strategic Implications
This transaction aligns with Metlen’s broader strategy to fund its “Big 3” transformation program, which includes expanding into critical raw materials (e.g., bauxite, gallium) and renewable energy infrastructure. The capital infusion arrives as Metlen prepares for its London Stock Exchange listing and potential inclusion in the FTSE 25 Index, enhancing its global visibility and access to institutional investors.

Historical Investment Timeline
Fairfax’s relationship with Metlen (formerly Mytilineos) dates to 2012, when it first acquired shares. Subsequent milestones include:
    •    2022: A €50 million equity purchase and €50 million exchangeable bond at €20 per share, raising Fairfax’s stake to 4.68%.
    •    February 2025: Exercise of prior exchangeable bonds increased Fairfax’s stake to 6.43%.
    •    March 2025: The latest €110 million bond extends this partnership, reflecting 13 years of collaborative growth.

Capital Markets Day and LSE Listing
Metlen has scheduled a Capital Markets Day on April 28, 2025, at the London Stock Exchange, where it will detail its €295.5 million investment in raw material production and renewable energy projects. The Fairfax deal strengthens Metlen’s balance sheet ahead of this event, providing liquidity to advance its 530 MW Australian solar portfolio and 71.5 MW Italian solar projects.

Financial Performance and Shareholder Returns
    •    2024 Results: Metlen reported €1,080 million EBITDA (+7% YoY) and proposed a €1.50 per share dividend.
    •    Debt Management: Adjusted net debt stood at €1,776 million (Net Debt/EBITDA: 1.7x), manageable despite aggressive CAPEX.

Valuation/Prospects
    •    Valuation Upside: The €40 conversion price implies a 12.5x P/E multiple on 2024 earnings, below peers in the European energy sector.
    •    FTSE 25 Prospects: Metlen’s London listing could attract $500 million–$1 billion in passive fund inflows, given FTSE 25 inclusion criteria.

 

Edit: Attached some MS coverage of the deal

METLEN_20250324_1310.pdf 192.78 kB · 12 downloads

Is there a coupon on the exchangeable? I can’t seem to find it.

[nwoodman]

5 minutes ago, SafetyinNumbers said:

Is there a coupon on the exchangeable? I can’t seem to find it.

Not that I could find; I was interested in this as well.  Sent a request to IR, but not holding my breath.  The original press release is pretty light on

 

https://www.metlengroup.com/news/ase-announcements/corporate-actions/fairfax-increases-again-its-stake-in-metlen/

[SafetyinNumbers]

4 minutes ago, nwoodman said:

Not that I could find; I was interested in this as well.  Sent a request to IR, but not holding my breath.  The original press release is pretty light on

 

https://www.metlengroup.com/news/ase-announcements/corporate-actions/fairfax-increases-again-its-stake-in-metlen/

I assume it’s at least the dividend yield since the stock is trading at the conversion price. I wonder what the rationale is for the structure. Maybe better capital treatment for Fairfax. 

[nwoodman]

44 minutes ago, SafetyinNumbers said:

I assume it’s at least the dividend yield since the stock is trading at the conversion price. I wonder what the rationale is for the structure. Maybe better capital treatment for Fairfax. 

Without knowing the coupon, it is hard to say. Typically, the coupon might be 2-4% less than straight debt.  As you say, this might bring the coupon in line with the div.  From Metlen's perspective, the interest rather than dividend is tax deductible, so there is that. I don't know their credit situation and whether they are close to covenants (job for another day).  If Fairfax is earning 3-4% interest income and has the option, it would be a good deal. Whether it is a sweetheart deal, time will tell. If they can grow as they have in recent times, even a zero coupon might work 

 

Edited March 25, 2025 by nwoodman

[Parsad]

On Orla Mining:

 

https://www.bcbusiness.ca/industries/natural-resources/pacific-trader-whats-behind-orla-minings-rapid-rise/

 

Cheers!

[Daphne]

AGT

https://www.theglobeandmail.com/business/rob-magazine/article-finger-on-the-pulse-lentil-king-of-saskatchewan-has-plenty-of-ideas-on/

[Hoodlum]

1 hour ago, Daphne said:

AGT

https://www.theglobeandmail.com/business/rob-magazine/article-finger-on-the-pulse-lentil-king-of-saskatchewan-has-plenty-of-ideas-on/

 

Thanks Daphne.  That was a great read on AGT and Trade in general.  It looks like this article is not behind the paywall and I would recommend others to read it as well.  This is looking like a great investment by Fairfax, under the leadership of Murad Al-Katib.

[villainx]

Paywalled when I clicked.

 

[SafetyinNumbers]

1 minute ago, villainx said:

Paywalled when I clicked.

 

Gift link not sure how long it will last:

 

https://www.theglobeandmail.com/gift/b04eb1bcd666173196423362ad31a8785d529ba1ad1cee14b25891c6ca2ccfbf/2Q4S3DIDL5CMVP6IPBZ33RY6WA/

[villainx]

Thanks!

[Viking]

On 3/24/2025 at 2:30 PM, nwoodman said:

https://www.ekathimerini.com/economy/1265036/fairfax-invests-further-into-metlen-group/

 

Fairfax Financial, one of the holding companies with the greatest exposure in Greece in recent years, is increasing its stake in leading Greek group Metlen Energy & Metals, investing a further 110 million euros, the Athens-listed company announced on Monday.

In a statement, Metlen said it has reached an agreement with Canada-based Fairfax to enter a €110 million exchangeable bond, through which Fairfax will have an option to acquire 2.75 million Metlen treasury shares within two years at a price of €40 per share, representing 1.92% of the Greek group’s share capital.

 

It added that following that acquisition, Fairfax’s total stake in Metlen will increase to 8.35%.

 

Some additional notes:

 

Strategic Implications
This transaction aligns with Metlen’s broader strategy to fund its “Big 3” transformation program, which includes expanding into critical raw materials (e.g., bauxite, gallium) and renewable energy infrastructure. The capital infusion arrives as Metlen prepares for its London Stock Exchange listing and potential inclusion in the FTSE 25 Index, enhancing its global visibility and access to institutional investors.

Historical Investment Timeline
Fairfax’s relationship with Metlen (formerly Mytilineos) dates to 2012, when it first acquired shares. Subsequent milestones include:
    •    2022: A €50 million equity purchase and €50 million exchangeable bond at €20 per share, raising Fairfax’s stake to 4.68%.
    •    February 2025: Exercise of prior exchangeable bonds increased Fairfax’s stake to 6.43%.
    •    March 2025: The latest €110 million bond extends this partnership, reflecting 13 years of collaborative growth.

Capital Markets Day and LSE Listing
Metlen has scheduled a Capital Markets Day on April 28, 2025, at the London Stock Exchange, where it will detail its €295.5 million investment in raw material production and renewable energy projects. The Fairfax deal strengthens Metlen’s balance sheet ahead of this event, providing liquidity to advance its 530 MW Australian solar portfolio and 71.5 MW Italian solar projects.

Financial Performance and Shareholder Returns
    •    2024 Results: Metlen reported €1,080 million EBITDA (+7% YoY) and proposed a €1.50 per share dividend.
    •    Debt Management: Adjusted net debt stood at €1,776 million (Net Debt/EBITDA: 1.7x), manageable despite aggressive CAPEX.

Valuation/Prospects
    •    Valuation Upside: The €40 conversion price implies a 12.5x P/E multiple on 2024 earnings, below peers in the European energy sector.
    •    FTSE 25 Prospects: Metlen’s London listing could attract $500 million–$1 billion in passive fund inflows, given FTSE 25 inclusion criteria.

 

Edit: Attached some MS coverage of the deal

METLEN_20250324_1310.pdf 192.78 kB · 22 downloads

Here is an updated summary for Fairfax’s investment in Metlen:

• With a market value of about $550 million, this is close to a top-10 holding for Fairfax. 
• The return on this investment over the past 2.5 years has been exceptional (more than a double).

Edited March 30, 2025 by Viking